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1 The Foreign Corrupt Practices Act (FCPA) ________________________ John Parkerson, General Attorney Law Department.

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Presentation on theme: "1 The Foreign Corrupt Practices Act (FCPA) ________________________ John Parkerson, General Attorney Law Department."— Presentation transcript:

1 1 The Foreign Corrupt Practices Act (FCPA) ________________________ John Parkerson, General Attorney Law Department

2 2 Foreign Corrupt Practices Act ___________________________ Antibribery Provisions Prohibits offers or giving anything of value to foreign government officials to obtain or retain business or secure an improper advantage Recordkeeping Provisions Requires that company records be kept in reasonable detail to accurately reflect transactions

3 3 Antibribery Provisions ____________________________ Delta, its officers, directors, employees, and others working for Delta, no matter where located, are prohibited from: making an offer, payment, promise or authorization of payment of money or anything of value to a foreign official, political party or candidate or to a third person while knowing part of the money or thing of value will be transmitted to a foreign official to influence the foreign official in order to obtain or retain business or to secure any improper advantage

4 4 Who is covered? ___________________________ Delta Delta Officers & Directors Delta Employees Delta Agents (including GSAs and consultants) For acts in furtherance of a corrupt payment occurring anywhere in the world

5 5 What Acts are Prohibited? ___________________________ Offers, payments or authorization of payments of: –Money or –Anything of value including: free flights or upgrades, gifts, unusual discounts, etc. Any act in furtherance of improper payments, including: –telephone calls, faxes, e-mail messages, etc. to arrange for payments to be made Note: Payments need not be received to be in violation of the FCPA.

6 6 Further Prohibited Acts _____________________________ Third Parties (Agents) Delta is responsible for corrupt offers, payments, or authorization of payments made by third parties such as a GSA, consultant or alliance partner if Delta or its employee knew or should have known that the third party intended to make an improper payment.

7 7 What Officials are Covered? ___________________________ Foreign Government Officials –Officers/employees of foreign governments –Employees of government-controlled companies, such as national airlines or public airports –Employees of public international organizations, such as the International Civil Aviation Organization –Any person acting in an official capacity for or on behalf of any such a government or agency Foreign Political Parties Candidates for Foreign Political Office

8 8 What Constitutes an Improper Motive? ___________________________ Offer, promise or payment for the purpose of: -Influencing any act in the foreign official’s “official capacity” -Inducing the official to act in violation of a duty, or to “look the other way” -Inducing the official to use his or her influence to affect an act or decision of the foreign government To obtain or retain business or gain an improper advantage.

9 9 Examples of Improper Motive _____________________________ –To gain an award of business from the foreign government or private sector –To reduce tax assessments in the foreign country –To obtain a favorable lease agreement –To obtain anything of competitive value that would not have been available otherwise

10 10 FCPA Recordkeeping Provisions _____________________________ The recordkeeping provisions serve to deter businesses that wish to “hide” improper payments and prevent corporate assets from being used for corrupt purposes.

11 11 Recordkeeping Provisions __________________________ Delta and its subsidiaries must: Maintain financial records and accounts in reasonable detail to accurately represent transactions and the status of its assets and liabilities Develop and maintain a reasonable system of internal accounting controls Refrain from making false or misleading entries or off-the- book transactions

12 12 Exception to the FCPA Facilitating payments for routine governmental action _____________________________ Permits or licenses that Delta is entitled to receive under local laws Processing certain governmental papers such as visas and work orders Mail pick-up and delivery Providing phone service, power and water supply Loading or unloading cargo Protecting perishable products from deterioration

13 13 Affirmative Defenses __________________________________ Payment is lawful under the written laws of the country Payment is a reasonable and bona fide expenditure, such as travel and lodging expenses, directly related to –Promotion, demonstration or explanation of products or services –Execution or performance of a contract with a foreign government or agency

14 14 Penalties _____________________________ Criminal Penalties (per violation) Company: up to $ 2 million in fines Officer, director, employee, or agent of Company: –up to $100,000 fine or twice the benefit sought and –up to 5 years in prison Civil Penalties (per violation) Company OR officer, director, employee, or agent: $10,000 Individuals’ fines CANNOT be paid by the Company

15 15 Anti-Bribery Legislation in Other Countries _____________________________ OECD members include the majority of industrialized countries of the world, including the U.S. The OECD Convention requires member countries to pass laws criminalizing bribery of foreign officials To date, most member countries have enacted anti-bribery laws similar to the FCPA OECD CONVENTION (Organization for Economic Cooperation and Development)

16 16 Elements of Delta’s FCPA Compliance Program _____________________________ Due Diligence Contract Provisions Monitoring -- Red Flags Periodic Certification Bookkeeping Rules Established Lines for Reporting Violations Training

17 17 Compliance Program – Due Diligence _______________________________________ When hiring consultants or other agents: –Identify qualifications sought for the position –Identify candidates for the position –Collect information regarding the candidates –Review information collected to evaluate and compare candidates –Review local law –Prepare written report documenting due diligence –Request approval of appointment

18 18 Compliance Program - Contract Provisions _____________________________ FCPA compliance provisions are mandatory for certain agreements related to Delta’s international business Delta’s legal department must approve all agreements with –GSAs –Airline affiliates –Consultants with international functions

19 19 Compliance Program - Red Flags ___________________________ When doing business in a foreign country, certain circumstances should alert you that there is an increased risk of an FCPA violation.

20 20 Red Flags – Examples ______________________________ Rumors regarding unethical conduct by an employee, GSA, consultant or government official In a transaction, any unusual payment patterns or financial arrangements, including –Requests for payment in a third country –Requests for payment in cash Consultant refuses to disclose associates or subcontractors who share the commissions or fees Political contributions are requested

21 21 Red Flags (Cont’d) _____________________________ Doing business in a country with history of corruption Requests for unusually large commissions or other payments, or payments that appear excessive for the service rendered Agent or representative who is related to, or has close personal relationship with a government official Agent or representative is recommended by a government official If you discover a red flag, contact the Law Department immediately for further review.

22 22 Compliance Program - Bookkeeping Rules _____________________________ No circumvention of controls for: –Internal accounting, expenditures, or purchasing –Sale, barter, transfer or disposition of assets. No intentional failure to make a correct entry in the accounting system for any disbursement. No orders, barter agreements, or purchase payments without purchase requisition, contract or other written authorization.

23 23 Bookkeeping Rules (Cont’d) _____________________________ No spending cash or issuing a check or draft without approved documentation supporting the reason for the refund or disbursement, including for petty cash funds. Report any request to participate in an illegal payment or “off-the-book” disbursement to the Law Department.

24 24 Additional Elements of Delta’s Compliance Program ___________________________ Open lines of communication –Employees encouraged to ask questions –Employees encouraged to report “red flags” including requests for corrupt payments –Availability of Ethics and Compliance HelpLine Training –Periodic refresher courses –Training for new employees

25 25 Where to Get Help _____________________________ To get answers to questions or report suspected violations or red flags, contact: –Law Department (Sally Hogsette, General Attorney: 404-715-2467) –Delta Ethics & Compliance HelpLine: Outside U.S. - call collect: 770-409-5006 All reports of suspicious activity, red flags and possible violations are confidential.

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