Archive for the ‘OECD’ Category


Jun

17

FCPA Totally Useful As a Secondary Sanctions Program


Posted by at 6:14 pm on June 17, 2013
Category: Criminal PenaltiesDoJEconomic SanctionsFCPAIran SanctionsOECDSEC

Total Gas Station in France http://www.total.com/MEDIAS/MEDIAS_INFOS/1564/FR/station-service-morinvilliers-France-media.jpg [Fair Use]

The U.S. Department of Justice recently announced that Total, S.A., the French oil and gas company, agreed to pay $245.2 million to resolve charges that it paid bribes to an Iranian government official by way of purported consulting agreements from 1995 to 2004 in order to secure, among other things, oil and gas rights in Iran. The Justice Department described the case against Total as “the first coordinated action by French and U.S. law enforcement in a major bribery case.” The U.S. Securities and Exchange Commission also reached a settlement with Total pursuant to which Total agreed to pay $153 million to resolve related FCPA allegations.

There is a lot to be said about Total’s settlement. At almost $400 million combined, Total’s payments are in the pantheon of largest payments ever for FCPA matters, along with Siemens, KBR and BAE. Another interesting component to the Total case, however, is its potential effectiveness for economic sanctions enforcement vis-à-vis Iran.

In the past few weeks, Congress and the White House have been busy expanding U.S. economic sanctions against foreign persons for their dealings with Iran. We reported recently on the current House bill that would expand sanctions against foreign banks engaging in certain transactions with Iranian banks. The President last week issued an executive order expanding secondary sanctions against, for example, foreign banks’ rial-based transactions as well as certain dealings by anyone with most persons on the SDN List pursuant to sanctions against Iran.

These secondary sanctions, however, provide U.S. enforcement authorities with a great deal of discretion on if and when to designate foreign persons to the SDN List. Pushing the bounds of secondary sanctions beyond those against foreign persons with substantial ties to the Iranian government, of course, runs the risk of offending other countries who continue to permit their companies to do business with Iran.

Given these limitations, the FCPA would appear to be an effective tool the United States can use in applying pressure against foreign persons doing business with Iran. Although the FCPA carries its own extraterritorial criticisms, corruption is a global issue that many countries have committed itself to address whether by national law or membership to groups like the OECD.

While the United States differs with other countries on precisely what sanctions policies to adopt against Iran, Sudan, Syria or North Korea for current conflict or human rights concerns in those countries, there would seem to be a common allegiance to combat corruption there. It just so happens all four countries are among the most corrupt countries in the world as annually ranked by Transparency International. The Total case at least sends the message to foreign companies that business as usual in Iran can result in significant FCPA penalties and possible cooperation from authorities in the companies’ home countries in bringing them about.

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Feb

19

Export Complaint Filed with OECD


Posted by at 6:23 pm on February 19, 2013
Category: OECD

OECD's Château de la Muette and Conference Centre by OECD http://www.flickr.com/photos/oecd/4294496269/ (CC BY-NC-ND 2.0)
ABOVE: OECD Headquarters

Privacy International, Reporters Without Borders, and three other NGOs filed complaints with the OECD against two companies alleging that their export of surveillance software and systems to Bahrain violated the human rights of dissidents in the kingdom that were, thereafter, placed under surveillance by the Bahraini government. This blog has reported on one of these companies and export issues surrounding its surveillance tools here.

It is probably safe to say that neither company subject to the complaint is quaking in its boots.  Read this summary from the OECD of the complaint process and you will understand why. To begin with, the complaint process is, shall we say, completely toothless. An OECD complaint is filed with the National Contact Point (“NCP”) for the member state in which the company is located. That NCP has no power to impose any penalties on the companies involved or even to require any remedial action. The most it can do is issue a report and offer to mediate between the NGOs and the companies.

In fact, the companies subject to the complaint aren’t even required to participate. As the summary itself admits:

In 13 of the 45 NGO complaints submitted as of September 2005, companies refused the NCP’s offer of a dialogue. In one complaint filed with the US NCP, several companies never responded to correspondence offering to facilitate an informal dialogue.

Moreover, as the OECD itself admits in the aforementioned summary, the process may “take months, possibly more than a year.” And once the NCP has accepted the complaint, the proceedings are confidential. Finally, if the NGO is dissatisfied with any report issued by the NCP, there is no right of appeal to the Investment Committee of the OECD.

I don’t think there is any need to worry that the OECD will become a multinational export enforcement agency.

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