Compliance Bits and Pieces

Here are some interesting stories from the past week:

Compliance Surprises in Cuba’s Closed Economy by Alexandra Wrage on the WrageBlog

Companies enjoying any success in Cuba have partnered with savvy locals who guide them through the dense, opaque bureaucracy. Such companies must convince the government that they are there for the long haul. They cultivate relationships and, invariably, they sponsor charity cigar auctions or kids’ “go-kart” rallies. But, by all reports from many sources, they don’t pay bribes.

Five Common Mistakes in Internal Investigations by Tim Mohr and Nidhi Rao for Directorship

Warren Buffett put it best when he said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” This statement could not be more relevant today. It takes only one person to tarnish an organization’s reputation. Not only is the current turbulent economy affecting the corporate bottom line, but if past history is any indicator, businesses can anticipate it to lead to an increase in incidents of fraud. As a result of the SEC, regulators, stakeholders and the public paying closer attention to the way an organization functions, organizations and corporate directors need to be diligent when conducting internal investigations.

Wall Street Meets the Wire by Gail Shifman on the White Collar Crime Prof Blog

In this case [against billionaire hedge-fund manager Raj Rajaratnam], however, the legal issue regarding the use of wiretaps that immediately jump to the surface is the question about whether The Federal Wiretap Act specifically authorizes the interception of electronic recordings for alleged security fraud violations (Title 15 U.S.C. §§ 78j(b) & 78ff and Title 17 C.F.R. §§ 240.10b-5 & 240.10b5-2) as charged in the criminal complaint. These statutes are not specifically enumerated in Title III, 18 U.S.C. § 2516, which provides the authorization for electronic interception. Wire and mail fraud (18 U.S.C. §§ 1341 & 1343) anti-trust violations, money laundering and numerous other offenses are listed, but not securities fraud. Chances are good that the government could have charged these defendants with wire fraud but were they scared away by the fact that the Skilling, Weyrauch, and Black cases are on review before the Supreme Court? One would think (hope?) that the government has preliminarily determined that section 2516 provides them with the authorization they need lest they find themselves licking self-inflicted wounds.

Facilitation Payments Still Leave Companies Vexed By Melissa Klein Aguilar for Compliance Week

A survey conducted by TRACE International shows some companies are prohibiting facilitation payments—colloquially known also known as “grease payments”—which are given to induce foreign officials to perform routine functions they’re already obligated to perform, such as issuing licenses or permits and installing telephone lines. In theory, such payments simply nudge foreign officials to do their jobs more promptly.

In practice, however, the line between a permissible facilitation payment and an illegal bribe can be very blurry. And to complicate matters, while the United States, Canada, Australia, New Zealand, and South Korea allow their citizens to make facilitation payments, they are illegal under local law in every country in which they are actually paid.

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