Feb 01, 2017
An excerpt from "After Two Extensions of Its DPA, Zimmer Biomet Settles Further FCPA Charges for $30M," The FCPA Report (February 1, 2017):
Joseph Moreno, a partner at Cadwalader, said the settlement showed that the government has little tolerance for repeat offenders and “a recidivist should fully expect to be treated significantly harsher the second time around.” He noted that because of the breach of the original DPA, Biomet “received no credit for voluntary self-disclosure, was unable to benefit from the FCPA Pilot Program and now faces another three years under a monitor.”
“Allowing a prohibited distributor to continue to serve as a sub-distributor was no doubt viewed as either a deliberate work-around or a breakdown in basic controls,” Moreno said. He advised companies to avoid Biomet’s Brazilian issues by requiring “third-party service providers to identify any sub-contractors or sub-distributors and to provide immediate updates of any new additions.” He also suggested creating and maintaining a list of prohibited third parties and implementing “controls within the procurement system to avoid intentionally or inadvertently hiring them going forward."
Moreno noted that customs brokers, freight forwarders and similar companies carry high corruption risks. In addition to thorough due diligence prior to engagement, including an understanding of the company’s history in the market and its ownership structure, he said companies should “be wary of red flags such as excessive service charges, requests for cash, payments to foreign bank accounts and ‘success fees’ or other non-standard charges for the promise of expedited services. Insist on itemized invoices and make sure to sample and test those transactions as part of a regular financial or FCPA/anti-corruption audit process.”
“If a higher risk vendor is engaged, insist on a written contract with FCPA representations and warranties, audit rights, termination rights and periodic FCPA certifications,” Moreno said. “Several of these enhancements have become standard in DPAs in recent years and Biomet was hit hard by the government for failing to implement them.”
September 3 Issue
On 13 September, the EBA updated its guidance in respect of the Securitisation Regulation.