International Regulatory Enforcement

The Trend Continues: As Outward Bound Investments from Japanese Multinationals Continue to Grow, So Do ABAC Compliance and Other Enforcement Risks
In 2016, we advised Japanese multinationals that their growing significance in the global economy, primarily as a key source of outward bound investment and merger & acquisition (“M&A”) activity, translated into growing anti-bribery, anti-corruption (“ABAC”) compliance and other enforcement risks. In that article, found here, we detailed booming economic activity alongside significant then-recent enforcement activity against Japanese multinationals by the U.S. government, primarily under the Foreign Corrupt Practices Act (“FCPA”) but also the U.S. Anti-Kickback Statute (“AKS”), for activities in major targets of Japanese outward bound investment—the U.S., China, and emerging Asia markets such as Vietnam. In particular, the May 2016 $646 million mega-resolution with Olympus Corp. for FCPA and AKS violations (to this day still the largest medical device company and AKS resolution of all time) constituted a foreboding example of economic expansion without sufficient compliance controls. Consequently, we advised Japanese multinationals to take a proactive approach to ABAC compliance.
CFIUS Extends its Reach to Order the Termination of Ekso Bionics' Role in Joint Venture in China
On May 20, 2020, Ekso Bionics Holdings, Inc. (“Ekso Bionics”), a U.S. manufacturer of robotic mechanical suits (“exoskeletons”), announced that it had received an ultimatum from the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) to terminate its role in a 2019 joint venture with Chinese partners.
Commerce Department Adds Thirty Three Companies to the Entity List as Trade Tensions with China Escalate
On Friday, May 22, 2020, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) announced via press releases that it would be adding a total of 33 new companies to the Entity List based on national security concerns involving activities in China. These public announcements came a full two weeks before BIS formalized the addition of the companies by publishing a notice in the Federal Register on Friday, June 5, 2020.
“Lessons Learned” by DOJ Provide Further Guidance on Developing a Dynamic Compliance Program
The U.S. Department of Justice (“DOJ”) latest guidance demonstrates that DOJ is listening to its own advice—making adjustments to its own guidance documents based on what its prosecutors have learned from investigations, compliance presentations, and monitorships during the past year. DOJ’s (now periodic) updates to the Evaluation of Corporate Compliance Programs guidelines sets forth some important modifications.
Human Rights Diligence Catching Up To Anti-Corruption
An April 29 announcement from Didier Reynders, the Commissioner for Justice of the EU may be the final step in elevating human rights due diligence to a business imperative, akin to anti-corruption diligence.
U.S. Policymakers Look to Limit Reliance on Manufacturing in China
On April 3, 2020, in response to a critical shortage of personal protective equipment (PPE) in the United States amidst the evolving public health crisis brought on by the COVID-19 pandemic, the U.S. Food and Drug Administration (FDA) issued an Emergency Use Authorization allowing the importation of certain N95-style respirators manufactured in China.
More Clarity, More Complexity: New CFIUS Rules Put Spotlight on Mandatory Filings
The Department of the Treasury has issued proposed rules that, upon becoming final, will revise the conditions under which parties to a foreign investment in any U.S. business that produces “critical technologies” are required to provide notice to the Committee on Foreign Investment in the United States (“CFIUS”).
Mandatory BE-10 Benchmark Survey of U.S. Investment Abroad Due May 29, 2020
In a development that may catch many by surprise, a little-known, but mandatory, U.S. Government filing called the BE-10 Benchmark Survey of U.S. Direct Investment Abroad is due May 29, 2020. With few exceptions, any U.S. business that, at the end of its Fiscal Year 2019, owned 10% or more of the voting securities of any foreign business (directly or indirectly) is required to file a report, whether or not it is contacted by the U.S. Government agency responsible for administering the reporting program. (U.S. businesses filing 50 or more foreign affiliate reports have until June 30, 2020 to file their BE-10 survey.)
Anti-Corruption and Contractual Relations: Beyond Words, Legal Consequences
Recently, the Court of Cassation had the opportunity to rule on the effectiveness of anti-corruption clauses in contracts and their consequences with regards to the termination of a business relationship between a French subsidiary of a U.S. company and a French company. This decision is rich in concrete lessons regarding the effects of such clauses, too often inserted without their scope being really measured in terms of the rights and obligations they generate for the contracting parties.
COVID-19 and Corruption-Related Risks: High on the International Agenda
As countries around the world grapple with providing quick relief from the COVID-19 pandemic to individuals and companies, many governments have taken a two-pronged response: providing significant public funds while simultaneously implementing regulatory changes aimed at quickly addressing the ongoing crisis. The availability of public funding, combined with changes in the regulatory environment, presents new opportunities for fraud and corruption, and a number of international organizations and enforcement agencies have begun to sound the alarm regarding this rising risk. Their concerns highlight the fact that this new risk environment may be one of the most troubling and unintended (but not unique) consequences of the response of governments around the world to the COVID-19 pandemic. To paraphrase George Santayana (later borrowed by Winston Churchill), “those who do not learn from history, are doomed to repeat it.”
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