Prosecution Declined: One Company s Investigation, Disclosure & Remediation of FCPA Issues Russ Berland Partner, Dentons US LLP LAYNE CHRISTENSEN COMPANY OVERVIEW Global Established in 1882 Headquarters: The Woodlands, TX Key Divisions Water Infrastructure Mineral Exploration Energy Revenues $797M (as of Jan 31, 2015) Month Day, Year 2 1
LAYNE LOCATIONS IN AFRICA Month Day, Year 3 UNCOVERED ISSUES Layne sought to implement a best-in-class FCPA compliance platform 2010 preparation for risk assessment - uncovered possible improprieties in Africa Concerns arose from payments by the company to customs clearing agents, tax consultants and others in Africa Month Day, Year 4 2
INTERNAL INVESTIGATION, REMEDIATION AND REPORTING Board/Audit Committee engaged early authorized and ran investigation Legal team took trips to Africa and Australia, secured dozens of hard drives and mobile devices and reviewed millions of documents Findings reported to DOJ and SEC, form 10-Q also reported findings Hired Chief Compliance Officer and set up Compliance Office Hired compliance/internal controls consultant to assist with effort and provide information to the government Month Day, Year 5 GOVERNMENT INVESTIGATION Layne GC, Head of Layne Audit Committee and outside counsel met with DOJ and SEC representatives in Washington, D.C. a total of 12 times. Many phone calls Met DOJ s requests and attempted to anticipate their future needs DOJ attorneys reviewed and provided feedback on Layne s proposed risk assessment methodology and proposed investigation methods Testimony secured from individuals alleged to have engaged in improper activities, including bringing witnesses from overseas Layne was commended for its cooperation, thoroughness and remediation of its compliance program and internal controls Month Day, Year 6 3
STUFF HAPPENS IN AN INVESTIGATION Pack your Bags! Yahoo Chat Anyone? Just Because He Looks Like your Grandfather Patient Patience Going Slowly Through Customs The Turning Point - The Burkina Email The Higher Up - The DRC-Salt Lake City Connection Don't Make Me Use the "M" Word The DOJ - "We've heard your arguments and we disagree with you." Month Day, Year 7 RESULTS Settled with the SEC for disgorgement, interest and lowest available civil penalty DOJ declined to prosecute No monitor Month Day, Year 8 4
LESSONS LEARNED Perform a compliance assessment to know where your risks are Engage the Board/Audit Committee If Appropriate, self-report quickly and investigate quickly and thoroughly Candor Transparency Anticipate the agencies needs and help them Compliance program and internal controls are critical Put your best team in place and control costs Month Day, Year 9 THE FOUR C S - KEY PRINCIPLES Cooperation (U.S.S.G. Section 8C2.5(g)) Prompt disclosure and cooperation (prior to government investigation) Up to 5 points in the U.S.S.G. Additional "cooperation discount" in negotiating penalty Candor Real candor Rapport/relationship with government attorneys Reputation is more than half the battle Month Day, Year 10 5
THE FOUR C S - KEY PRINCIPLES Collateral Consequences (U.S. Attorney's Manual Section 9-28.1000) Federal/state contractor status Arthur Andersen situation Compliance (U.S.S.G. Sections 8B2.1; 8C2.5(f)) Credit for pre-existing program that is "generally effective" in detecting and stopping criminal conduct (irrespective of whether it worked in a given instance) Management is knowledgeable about program and provides reasonable oversight High level personnel of company are assigned overall responsibility for program Those running program report frequently to top management and are given adequate resources and authority and direct access to board Company takes reasonable steps to communicate program's elements to employees Periodic monitoring and testing of the program 11 Dentons Offices Worldwide St. Petersburg Vancouver Edmonton Calgary Montreal Ottawa Chicago Albany San Francisco Boston Toronto Kansas City New York St. Louis Silicon Valley Short Hills Los Angeles Tysons Washington, DC Orange County Denver San Diego Phoenix Atlanta Dallas Houston New Orleans Miami Milton Keynes London Praia Paris Barcelona Madrid Algiers Casablanca Nouakchott Bissau Brussels Berlin Warsaw Prague Frankfurt Bratislava Budapest Zürich Bucharest Tripoli Istanbul Cairo Beirut Minsk Moscow Kyiv Astana Rostov on Don Almaty Krasnodar Tashkent Tbilisi Ashgabat Amman Riyadh Baku Doha Abu Dhabi Dubai Muscat Beijing Seoul Shanghai Hong Kong Key Offices and associate offices x Associate firms and special alliances* Lagos Accra Kampala Kigali Nairobi São Tomé Luanda Lusaka Port Louis Singapore Johannesburg Maputo Cape Town Month Day, Year 12 6
Dentons Africa Offices Algiers Casablanca Tripoli Cairo Nouakchott Praia Bissau Lagos Accra Kampala Luanda St. Petersburg Edmonton Vancouver Moscow Berlin Warsaw Minsk Brussels Prague Frankfurt Bratislava Kyiv Astana Budapest Rostov on Don Almaty Krasnodar Zürich Bucharest Tashkent Barcelona Tbilisi Istanbul Ashgabat Madrid Baku Milton Keynes London Calgary Montreal San Francisco Lusaka Paris Ottawa Albany Chicago Boston Toronto New York St. Louis Short Hills Tysons Washington, DC Kansas City Los Angeles Denver Orange County Phoenix Atlanta San Diego Dallas Houston New Orleans Miami Silicon Valley Nairobi Kigali São Tomé Port Louis Maputo Beijing Johannesburg Seoul Beirut Algiers Casablanca Tripoli Shanghai Amman Cairo Cape Town Doha Riyadh Abu Dhabi Dubai Muscat Hong Kong Nouakchott Praia Bissau Lagos Kampala Accra São Tomé Key Kigali Nairobi Singapore Luanda Offices and associate offices x Associate firms and special alliances* Lusaka Port Louis Johannesburg Maputo Cape Town Month Day, Year 13 Questions? Russ Berland Partner, Dentons US LLP Kansas City, MO russ.berland@dentons.com 816.460.2516 Month Day, Year 14 7
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