FCPA Compliance: Third-Party Due Diligence - Strafford

presents
FCPA Compliance: Third-Party Due Diligence
Minimizing Corruption Risks When Using Foreign Agents,
Distributors and Other Intermediaries
A Live 90-Minute Teleconference/Webinar with Interactive Q&A
Today's panel features:
F. Joseph Warin, Partner, Gibson Dunn & Crutcher, Washington, D.C.
Tara Flanagan, Director, Global Public Sector Compliance, Cisco Systems, Inc., Herndon, Va.
Edward J. Fishman, Partner, K&L Gates, Washington, D.C.
Thursday, August 5, 2010
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FCPA Compliance: Third Party Due Diligence
Minimizing Corruption Risks When Using
Foreign Agents, Distributors and Other
Intermediaries
F. Joseph Warin and Michael S. Diamant, Gibson, Dunn & Crutcher LLP
August 5, 2010

A Brief Overview of the FCPA
The Foreign Corrupt Practices Act was enacted in
1977 in the wake of reports that numerous U.S.
businesses were making large payments to foreign
officials to secure business.
• Anti-Bribery Provisions: The FCPA prohibits giving or offering anything
of value to a foreign government official, political party, or party official
with the intent to influence that official in his or her official capacity or to
secure an improper advantage in order to obtain or retain business.
• Accounting Provisions: The FCPA also requires publicly traded U.S.
companies to maintain accurate “books and records” and reasonably
effective internal controls.
5

Scope of the FCPA: Who Is Covered
• Issuers: any company whose securities (including ADRs and registered
debt) are registered in the United States or that is required to file periodic
reports with the SEC
• Domestic Concerns: any individual who is a U.S. citizen, national, or
resident of the United States (not just U.S. citizens), or any business
organization that has its principal place of business in the United States or
which is organized in the United States
• Other Persons who take any act in furtherance of a corrupt payment while
within the territory of the United States
6

Definition of Foreign Official
The FCPA prohibits corrupt payments to “foreign officials,” which has been
expansively defined to include:
• Any officer or employee (including low-level
employees and officials) of a foreign government or
any department, agency, or instrumentality of the
government, including government-owned or
government-controlled businesses and enterprises.
• Officers and employees of public international
organizations, including the United Nations, World
Bank, and others.
The FCPA also prohibits corrupt payments to foreign
political parties, officials of foreign political parties,
and candidates for foreign political office.
7

A “Thing of Value”
Liability exists from the first dollar—there is no “de minimis” exception. It is
not limited i to tangible items of economic value and can include:
• Gifts
• Entertainment
• Internships
• Professional training
• Education
• Trips
• Loans
• Employment
• Meals
• Travel assistance
8

Third Party Liability: Indirect Payments (and Offers) Are
Prohibited
The FCPA prohibits indirect corrupt payments as well and imposes liability if
the U.S. company authorizes a payment to a third party while “knowing” that
the third party will make a corrupt payment.
– Third parties include local agents, consultants, attorneys, subsidiaries,
freight forwarders, etc.
– “Knowledge” means either
1. bi being aware of such conduct or substantially ill certain that such
conduct will occur, or
2. consciously disregarding a “high probability” that a corrupt
payment or offer will be made.
9

A Brief Overview of the UK Bribery Act
• The Bribery Act criminalizes bribery by UK incorporated companies, as
well as non-UK companies that do business in the United Kingdom.
• The Bribery Act cleared the final stages of the Parliamentary process on
April 8, 2010, and is expected to come into force in April 2011.
• The Bribery Act creates four separate
offenses:
1. Bribing,
2. Being bribed,
3. Bribing a foreign public official, and
4. Failing to prevent bribery (applicable to
corporate entities only).
10

Failing to Prevent Bribery and the “Adequate Procedures”
Defense
The Act also creates the offense of failing to prevent bribery. An entity
may be held liable for bribery y(public or private) committed for the benefit
of the entity by:
• an employee, agent, distributor, intermediary, subsidiary, etc.
An entity charged with violating this provision has a defense if it can
prove:
• it had “adequate procedures” in place that were designed to prevent bribery.
The U.K. Government is expected to issue guidance on what constitutes “adequate
procedures” in early 2011.
11

Recent Third Party Enforcement Cases: Frederic
Bourke
On July 20, 2009, a jury in New York federal court convicted Frederic Bourke of
conspiracy to violate the FCPA in connection with his $8 million investment in a failed
business concerning the privatization of the government-controlled petroleum industry in
Azerbaijan. On November 10, 2009, Judge Shira Scheindlin sentenced Bourke to one
year and one day in prison and ordered him to pay a $1 million fine.
• Bourke was not accused of bribery or directing others to commit
bribery; rather, he was charged with conspiring i to violate the FCPA
by investing in an entity that he knew or had every reason to know
was engaged in a scheme to bribe Azeri officials.
• When instructing the jury on “knowledge,” Judge Scheindlin
provided a so-called “ostrich” instruction: “Knowledge may be
established if a person is aware of a high probability [that corrupt
payments are being offered or made, but] consciously and
intentionally avoided confirming that fact . . . because he wanted to
be able to deny knowledge. . . . [However,] knowledge is not
established . . . if the person merely failed to learn the fact through
negligence.”
• Key lesson is that parties operating and investing in countries with
a high h risk of corruption must undertake due diligence and
implement controls to make good faith and reasonable efforts that
funds are not used to make improper payments to government
officials.
12

Recent Third Party Enforcement Cases: BAE Systems
On March 1, 2010, BAE pleaded guilty to participating in a criminal conspiracy
to impair and impede the lawful functions of the U.S. government by making
false statements concerning its FCPA compliance program and payments to third
party consultants in connection with suspected bribes to government officials in
the Czech Republic, Hungary, and Saudi Arabia.
• According to the charging documents, from the mid-1980s through 2002, BAE
regularly retained “marketing advisors” to assist the company in securing sales to
foreign governments. BAE allegedly made substantial payments to these third
parties with very little scrutiny as to their purpose and end use, while taking steps
to conceal the payments by routing them “through various offshore shell entities
beneficially owned by BAE[].”
• BAE agreed to pay a $400 million criminal fine. At twice the alleged gain from
the offense of $200 million, this fine represents the statutory maximum and the
third-largest disposition in the history of FCPA enforcement.
13

Recent Third Party Enforcement Cases: Daimler AG
On April 1, 2010, German automaker Daimler AG and three of its subsidiaries
resolved civil and criminal FCPA charges arising from the companies’ alleged
payments to government officials in a number of different countries.
• According to court documents, over a ten-year period, Daimler and its
subsidiaries allegedly funneled improper payments through internal “third-party
accounts,” which were on the companies’ books, but controlled by third parties,
subsidiaries, and affiliates. These accounts were allegedly used for the payments
because they were not subject to regular audits or the companies’ other standard
financial controls.
• To resolve the charges, Daimler AG and its subsidiaries agreed to pay a collective
criminal fine of $93.6 million, in addition to Daimler’s agreement to disgorge
$91.4 million in allegedly ill-gotten gains in connection with settling a related
SEC complaint alleging violations of the anti-bribery, books-and-records, and
internal controls provisions.
14

Unique Risks Created by Different Third Parties
• Sales and marketing agents
• Distributors/resellers
• Freight forwarders/logistics companies
• Other consultants
15

Risks Involving Agents
Many corporations have been prosecuted for making improper payments
through agents retained to pass along those payments to government officials.
• Datron Systems Inc. - From 1999 through 2003, an agent
for Datron Systems Inc., a subsidiary of Titan Corp.,
allegedly made payments to Filipino military officials to
obtain business for Datron and Titan. To resolve this and
other FCPA violations, Titan pleaded guilty to criminal
FCPA charges and settled related civil charges, agreeing to
pay a total of $28.5 million, including a $13 million
criminal penalty and $15.5 5 million in disgorgement and
prejudgment interest.
• Paradigm BV - Paradigm’s Chinese subsidiary was
alleged to have used an agent to make payments to
representatives ti of a subsidiary of the Chinese National
Offshore Oil Company.
• Faro Technologies: - Although Faro’s Chinese subsidiary made payments directly to
Chinese officials in 2004 and 2005, in 2005 it allegedly decided to route the payments
through an agent to “avoid exposure.” In its 2008 settlement with the SEC, Faro paid
approximately $2.95 million in total penalties.
16

Risks Involving Agents (cont.)
• UTStarcom, Inc. - On December 31, 2009, UTStarcom, Inc., a California-based
telecommunications company, settled FCPA charges arising from the company’s
operations in China, Mongolia, and Thailand. The government alleged that,
between 2001 and 2007, UTStarcom paid $1.5 million to the company’s agent in
Mongolia, claiming that it was for a “license fee,” when, in fact, the actual license
fee was only $50,000 and the balance was used to make improper payments to a
government official.
• United Industrial Corp. - On May 29, 2009, United Industrial Corp., a Maryland-
based aerospace and defense systems contractor, settled administrative charges
with the SEC and agreed to pay $337,679.42 in disgorgement and prejudgment
interest and a $35,000 civil penalty. The SEC claimed that, in 2001 and 2002,
UIC subsidiary ACL Technologies, Inc. made more than $100,000 in payments to
a third party agent with the expectation that the agent would pass portions of
those payments to Egyptian Air Force officials to influence the award of a
contract to construct and staff a military aircraft depot in Cairo.
17

Risks Involving Distributors/Resellers
Corporations have been prosecuted for improper payments made by distributors under the
theory that the corporation was “aware of a high probability that the distributor intended
to fund [the improper payments] out of the difference between the price the distributor
paid [the corporation] to acquire [its products] and the price for which the distributor was
able to resell them.” – SEC v. InVision Technologies, Inc., Compl. 17 (filed Feb. 14, 2005)
• InVision Technologies, Inc. – InVisison Technologies, Inc.’s third party distributors
allegedly made payments to foreign officials to induce them to buy InVision’s baggage
screening machines. InVision agreed to pay $1.8 million in total penalties as part of its
settlement in 2004.
• AGA Medical Corp. – In June 2008, AGA Medical Corp. agreed to pay a $2 million
penalty based on $460,000 in alleged payments to physicians at state-owned hospitals
through AGA’s Chinese distributor.
• Avery Dennison Corp. – In July 2009, the SEC complaint against Avery Dennison
Corp. alleged that the company’s Chinese subsidiary engaged in a kickback scheme
with a distributor. Rather than pay the money directly to the project manager for a
state-owned enterprise, a sales manager sold the product to a distributor, which, in turn,
paid the kickback to the project manager out of its profit margin.
18

Risks Involving Distributors/Resellers (cont.)
• Fiat S.p.A. – The DOJ and the SEC alleged that after multiple Fiat entities entered
into several direct contracts with the Government of Iraq in which their agents made
improper payments on their behalf, the subsidiaries i decided d to distance themselves
from future payments by turning their agents into distributors. The subsidiaries
allegedly did so with full knowledge that their distributors would resell the goods to
the Iraqi government and make the improper payments in connection with these
sales. The subsidiaries then offered their agents-turned-distributors 20% discounts --
10% for the improper payments and 10% for the distributor’s profits when it resold
the products to the Iraqi government.
• Ingersoll-Rand dCo. Ltd. - In another Oil-for-Food case similar il to Fiat, the DOJ and
the SEC alleged that the Ingersoll-Rand subsidiaries granted a 65% discount to their
distributors -- 10% more than their standard 55% distributor discount -- in order to
cover the distributors’ obligations to make improper p payments to the Iraqi
government.
• AB Volvo – In a third Oil-for-Food case, it was alleged that AB Volvo’s subsidiaries
sold their products at a price that ensured the distributors would have enough
“spread” to make the improper payments even though hthere was no discount afforded
d
the distributors explicitly for the improper payments.
19

Risks Involving Freight Forwarders/Logistics
Corporations
Companies
are being prosecuted for improper payments allegedly made
through freight forwarding and logistics companies.
• On July 2, 2007, the DOJ sent letters to eleven oil and oil-service
companies asking them to detail their relationship with Panalpina
Welttransport Holding AG.
• The firms were asked to list the countries where Panalpina
provided them with services in the past five years and specify
what they paid for those services.
• Each firm was asked to meet separately with federal prosecutors
in Washington, D.C.
• In April 2010, Panalpina announced that it had reserved
approximately $110 million for an expected FCPA settlement “in
the near future. ” Also, several of the oil and oil-service
companies have announced that they have set aside millions of
dollars for anticipated FCPA settlements with the DOJ and SEC.
20

Risks Involving Consultants
Several corporations have been prosecuted for improper payments or benefits
allegedly made by consultants to government officials in order to secure sales.
• BAE Systems - According to the charging documents, from the mid-1980s through 2002,
BAE regularly retained “marketing advisors” to assist the company in securing sales to
foreign governments. BAE allegedly made substantial payments to these third parties with
very little scrutiny as to their purpose and end use, while taking steps to conceal the payments
by routing them “through various offshore shell entities beneficially owned by BAE[].”
• Siemens AG - Siemens’ transportation systems division allegedly paid approximately y$ $22
million to “business consultants” who used some portion of the funds to make payments to
foreign officials in China in connection with seven projects for the construction of metro
trains and signaling devices.
• Control Components Inc. - CCI allegedly made improper payments, sometimes directly and
sometimes through its representative or “consultants” retained who performed no legitimate
services for CCI.
21

Risks Involving Consultants (cont.)
• Haiti Teleco Prosecution - DOJ filed a number of cases in 2009
arising from its investigation of several Florida-based
telecommunications companies and their allegedly corrupt
arrangements with officials of Telecommunications D’Haiti, Haiti’s
state-owned telecommunications company. In all, eight people
have now been charged, including three third-party consultants used
as intermediaries to make the alleged payments.
• Veraz Networks, Inc. - On June 29, 2010, the SEC filed a settled civil action
charging Veraz Networks, Inc., a California-based telecommunications firm, with
violating the FCPA’s books-and-records d and internal controls provisions i in
connection with sales in China and Vietnam. In China, a third-party consultant of
Veraz allegedly provided approximately $4,500 in gifts to officials of a statecontrolled
telecommunications company in what one Veraz employee purportedly
referred to as a “gift scheme.” The consultant t also allegedly offered to pay a
$35,000 bribe to officials at this same state company but Veraz discovered the
improper offer before the transaction was completed and cancelled the
sale. Without admitting or denying the allegations, Veraz agreed to pay a $300,000
civil iilpenalty.
22

Use of Agents – Specific “Red Flags”
• Reputations for improper payments or lax anti-money laundering controls
• Pitches near contract award dates
• Explanations of special relationships with government officials
• Insistence of payment in advance of contract award
• Off-shore accounts
• Requests that a commission be paid to or through a third party,
in a different name, or in a different currency or country
• Unusually large commissions
• Unexpected access to usually unavailable information
• Lack of relevant experience in the business
• Lack of staff to do technical work
• Residence outside the relevant country
• Refusals to sign agreements indicating compliance with the FCPA
• Refusal to agree to audit rights
• Owned by or familial relationships to government officials
• Recommended by government officials
23

Tara Flanagan
Director, Global Public Sector Compliance
Cisco Systems, Inc.
24

Process should be designed to offer an efficient,
meaningful review of identified business partners
on a defined and periodic basis so that your
organization can make intelligent/informed
decisions about the business partners and take
other actions to mitigate against potential risks
associated with doing business with the partners.
Process should be documented
(policy/guidelines/other communications),
transparent, and communicated to partners as well
as to your employees who engage with the
partners.
25

Who are they
What are they to do/doing for your organization
Where are they located
What kind of contracts currently exist
Do existing contracts include appropriate anti-bribery
terms
Can you assess/categorize by risk
Transparency International CP Index:
http://www.transparency.org/policy_research/surveys_indi
ces/cpi/2009
The emergence of other risk-based scoring systems by
third party due diligence service providers
26

Resellers
Distributors
Sales agents
Consultants
Attorneys
Joint Venture
Partners
Investment Partners
Prospective
acquisitions
Customs
Brokers/Agents
Marketing Agents
Vendors/suppliers/oth
er third parties who
interact with
government-affiliated
organizations
27

Do you have internal support/buy in by the
business
Plan for the long term.
Who will “own” this process
Who are key internal stakeholders
What kind of budget/staffing resources are
available
Can you leverage existing
systems/tools/processes
28

Evaluate/Establish a Workable
Process Flow
Chart out your process flow (beginning to end)
• Typical Key Steps For a Partner Under Review:
Completion of a Questionnaire, Certifications
Anti-bribery training, providing any follow up
information, agreement to anti-bribery contract terms
• Typical Key Internal Company Steps:
Collection of data/information/due diligence report
Review/decisions by key stakeholders
Final Disposition/documentation:
Retention/contracting process or termination of the
partner
29

What is your process for addressing any
identified red flags
Do you have a clear escalation/decision-
making path
Where and how do you retain/store your
due diligence findings
How do you document your final
resolution/dispositions
Do you have a document retention policy
for your due diligence-related
reports/work
30

Multiple languages for
questionnaire and training
Using web-based tools
Recognize that you may need to
have different levels of review for
different partners
Process should be consistent
Develop a communication plan
about the process to increase
understanding and awareness for
both internal personnel as well as
your business partners
Design your process to be as
simple as possible
Be prepared to constantly reevaluate
your process in light of
changing business activities and
laws
Stay on top of industry best
practices-trend toward
development of a wider range of
commercially available
tools/processes
Ongoing training for your due
diligence team
31

A history of corruption in a country
Any family relationship between business
partner principals/employees and
government officials
Any unusual means of payment
The size of the commission paid to the agent
in relation to the services performed
Apparent lack of qualifications on the part of
the agent to perform services
33

Refusal by business partner to sign affidavits
or make representations that they will not
violate FCPA
Any misrepresentations in connection with
proposed transaction or in due diligence
process
Requests for false or incomplete
documentation
Lack of transparency in financial records
Disclosure of extensive gift-giving i i or
entertainment practices
34

“Please Pay Me In Cash”
“Pay Me Through h My Swiss [Or Offshore] Bank Account”
“My Close Relative Is A Government Official, and You
Don’t Have A Chance To Win the Contract Unless You
Hire Me”
“I Have No Facilities or Staff, But I’ll Get the Job Done”
“I Have Never Worked In Your Industry Before, But I
Know The Right People”
“While My Commission Rate is Twice The Market Rate,
I’m Well Worth It Because of My Connections”
35

BEST PRACTICES FOR ANTI-
CORRUPTION DUE DILIGENCE
ON THIRD PARTIES
Prepared for:
Strafford CLE Webinar/Teleconference
FCPA Compliance: Third-Party Due Diligence
August 5, 2010
©2009 K&L GATES LLP
All Rights Reserved
Ed Fishman
K&L GATES LLP
1601 K Street, NW
Washington, DC 20006-1600
(202) 778-9456
ed.fishman@klgates.com
36

Overview of Presentation Topics
• Review “Best Practices” for Third Party Diligence
and Cost Effective Strategies for Conducting
Diligence in a Global Business
• Discuss Practical Challenges of Implementing Third
Party FCPA Diligence Program
• Identify Unique Issues Raised By Third Party FCPA
Diligence In M&A Context
37

Third Party FCPA Due Diligence Fundamentals
Four Core Elements:
• Background Evaluation/Risk Assessment
• Questionnaire Response/Interview/Documentation
• Reps and Warranties/Certification/Training
• Investigation of Potential Problems and Remediation
38

FCPA Third Party Due Diligence Goals
• Determine the Competence, Expertise, Reputation and
Integrity of the Third Party Agent
• Determine Third Party’s Relations With Government Officials i through Business, Family, Employment or Political Activity
• Caution: Carefully Scrutinize “Success Fees” and
Gift/Entertainment Practices
• Sources of Inquiry: Commercial Services, Risk Management
Firms, U.S. Embassy/Commerce Service ICP Reports,
Private Investigators, and Local Legal Opinions
39

Third Party FCPA Diligence “Best Practices”
• Step 1: Identify Universe of Third Party Agents
• Internal Inventory Process (“Know Your Agents”)
• Separate into Relevant Categories
• Sales and Marketing Reps/Commercial Agents
• Distributors, tors Resellers and Third Party Purchasers
• Consultants (Tax, Customs Brokers, Freight Forwarders)
• Suppliers/Vendors/Other Service Providers
• Identify Those Likely to Interact with “Government
Officials” as defined under Anti-Corruption Laws
40

Third Party Diligence “Best Practices”
• Step 2: Design Diligence Program Based on Risk
• Select Reasonable Method of Assessing Risk
• Category of Third Party Agent
• Likelihood of Interactions with “Government Officials”
• Local Corruption Risk and Other “Red Flags”
• Use Objective Risk Evaluation Scoring Methodology
• Create Standard Written Policy for Different
Categories of Third Parties
• Separate Policy for Commercial Agents, Consultants and
Other Types of Intermediaries
• Different Levels of Review/Approval within Same Policy
41

Third Party Diligence “Best Practices”
• Step 3: Implement and Enforce Policy
• Establish reasonably achievable controls and clear
guidelines/enforcement mechanisms
• Ensure support from business leaders
• Anticipate i t varying levels l of compliance and develop
responsive strategies in advance
• Maintain some degree of objectivity in the process
(e.g., independent “agent review committee”)
42

Common Practical Challenges
• Internal Resource and Priority Considerations
• Start with Highest Risk Categories if Necessary
• Identify Third Party Commercial Agents and Government
Business Consultants in Highest-Risk Countries
• Work Backwards Through Inventory of Agents
• Seek Automated Solutions Without Compromising
Effectiveness of Diligence Process
• Ensure Management Understands Third Party Risks
43

Common Practical Challenges
• Varying Levels of Responsiveness from Agents
• Internal and External Education Process
• Why should I have to worry about US law
• Global Convergence Should Help
• Expect To Deal With Difficult Intermediaries
• Refusal to Submit Information/Complete Questionnaire
• Refusal to Participate in Interview
• Refusal to Sign Certification/Agree to Reps and Warranties
• Resistance Not Always a “Red Flag”
• Some Agents Will Sign Anything (But Risks Remain)
• Some Agents Are More Careful About Foreign Laws
• Challenge is Finding Right Balance
44

Common Practical Challenges
• Potential Solutions to Agent Resistance
• Business relationship manager involvement
• Continue to educate throughout the process
• Search for alternative solutions
• Confidentiality Concerns: Non-Disclosure Agreement
• Outside Counsel/Independent Third Party Review
• Negotiated Certification/Reps and Warranties
• Legitimate Threat of Termination
• Heightened Monitoring/Oversight Conditions
• Avoid temptation to back down if Red Flags persist
45

Unique Issues Raised in M&A Diligence
• Issue: Buyer needs to ensure itself that Target’s agent
relationships do not pose unacceptable risk
• Challenge: Target may be unwilling or unable to provide full
access for diligence review
• Non-U.S. Target may be unfamiliar with typical anti-corruption
diligence procedures
• Target may be unable to provide direct access to third parties
because of confidentiality concerns or local law restrictions
• Anti-corruption diligence access may be subject to larger
negotiation over due diligence process
46

Unique Issues Raised in M&A Diligence
• Potential Solutions
• Negotiate Pre-Closing Access to Target Relationship
Managers and Plan for Post-Closing Diligence on
Third Party Agents
• Conduct Full Background Check on Third Party
Agents Through External Sources
• Risk Management Firm Report
• Commercial/Government Sources
• Local Counsel Opinion
• Arrange for Preliminary Pre-Closing Interview with
Third Party Without Revealing Full Purpose
47

Prompt Response to Potential Violations
• What to do when you encounter Red Flags in M&A
diligence context
• Increase Level of Due Diligence Investigation
• Require Investigation by M&A Target
• Conduct Joint Investigation
• Evaluate Potential Successor Liability Risks
• Weigh Business Risks of Transaction
48

Prompt Response to Potential Violations
• What to do when you discover potential FCPA
violation as part of M&A transaction
• Require Disclosure
• Government
• Public Filings
• Require Resolution As Condition to Closing
• Delay to Transaction
• Material Changes
• Accept Risk and Close
• Protection through Escrow
• Obligation to Continue Investigation
49

QUESTIONS
• Contact:
Ed Fishman
K&L Gates LLP
1601 K Street N.W.
Washington, D.C. 20006
(202)778-9456 (direct)
ed.fishman@klgates.com
50

Appendix: Sample Third Party Certificate
• “Applicable Anti-Corruption Laws” means collectively, (i) the U.S. Foreign Corrupt
Practices Act (“FCPA”), (ii) laws enacted pursuant to the Organization of Economic
Cooperation and Development (OECD) Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions (“OECD Convention”), and (iii)
any other applicable laws or regulations of relevant jurisdictions prohibiting bribery and
corruption of public officials.
• “Government” includes, without limitation: (a) any government, including all levels and
subdivisions of government from national to local; (b) any government agency,
department, committee or other instrumentality; (c) any government-owned or
government-controlled entity; (c) any political party; and (d) any public international
organization (including, for example, the United Nations, the World Bank, and the
International Monetary Fund).
• “Government Official” means an employee, official, legislator, member, agent or
representative of any Government, or any candidate for any such position.
• “Third Party Agent” includes [Third Party Agent], and any predecessors and all
subsidiaries or affiliates of these entities. “Third Party Agent Personnel” includes all
employees, officers, directors, shareholders, representatives and agents of Third Party
Agent.
51

Appendix: Sample Third Party Certificate
• Third Party Agent is familiar with and understands the requirements and
prohibitions of the Applicable Anti-Corruption Laws;
• In connection with its role as agent for Company, Third Party Agent has
complied and will at all times stay in compliance with the requirements and
prohibitions of the Applicable Anti-Corruption Laws for as long as it remains
an agent for Company;
• Third Party Agent understands and certifies that it cannot and will not, under
any circumstances, make, offer, promise, or authorize a payment or gift of
money or anything of value (including, but not limited to, any loan, reward,
advantage or benefit of any kind) to (i) a Government Official, (ii) a family
member of a Government Official, or (iii) to any other person or entity with the
knowledge or belief that such thing of value might subsequently be given to a
Government Official or a family member thereof for purposes of obtaining or
retaining business, or obtaining a business advantage, for Company or any
other party;
52

Appendix: Sample Third Party Certificate
• Third Party Agent understands and certifies that it cannot and will not assign
any right to compensation or reimbursement from Company to any third party;
• Third Party Agent understands and certifies that it must keep complete and
accurate books and records related to its services and activities on behalf of
Company;
• Third Party Agent certifies that it will, upon request, make its books and
records available to Company or its designees for inspection to verify
compliance with Applicable Anti-Corruption Laws;
• Third Party Agent certifies that it will notify Company immediately of any
request received by Third Party Agent to make, authorize or facilitate a
payment of money or anything of value in violation of Applicable Anti-
Corruption Laws;
• No Third Party Agent Personnel are Government Officials or family
members of a Government Official. If any Third Party Agent Personnel
becomes a Government Official during the term of the Agreement, Third
Party Agent will promptly inform Company;
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Appendix: Sample Third Party Certificate
• Third Party Agent certifies that neither Third Party Agent
nor any Third Party Agent Personnel has ever been
implicated, accused, investigated, charged, arrested, or
prosecuted for bribery or making corrupt payments to any
Government Official;
• Third Party Agent certifies that neither Third Party Agent
nor any Third Party Agent Personnel has ever been fined,
penalized, or convicted for any violation of any Applicable
Anti-Corruption Laws; and
• Third Party Agent certifies that neither Third Party Agent
nor any Third Party Agent Personnel has ever been or is
currently under investigation for alleged corruption, bribery
or fraud.
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