Foreign Corrupt Practices Act THIS PRESENTATION IS FOR

Foreign Corrupt Practices Act THIS PRESENTATION IS FOR DISCUSSION PURPOSES ONLY.

Overview �Jurisdiction �Corrupt Payments �Foreign Officials �Case study

Jurisdiction �Issuers—A company with any class of stock traded in the US �Domestic Concerns—US persons or companies organized under US laws �Territorial Jurisdiction—Persons and companies acting on behalf of others subject to the FCPA

Corrupt Payments �Obtain or retain business �Offer, promise, or actual payment �Induce the official to misuse his position �Value vs. intent �Corrupt vs. Legitimate

Foreign Officials � Any officers of a government department or agency

BAE Case Study

BAE Systems, plc 8 �Formerly known as British Aerospace �Subsidiaries throughout world (BAE Systems Inc. ) �One of largest defense contractors in the world

Primary Focus 9 � Series of long-term contracts between the U. K. and the Kingdom of Saudi Arabia � BAE served as the prime contractor � Reported that total value of contracts to BAE was in excess of £ 43, 000, 000

Primary Focus 10 � To investigate the corrupt nature of direct and indirect payments to KSA officials from BAE � Jurisdiction over the corrupt acts

Hurdles 11 Typical FCPA Investigation BAE Investigation � Company under investigation cooperates � BAE Systems, plc was not cooperative � Documents are collected from company or � BAE would not produce any documents individuals � SFO investigation had been closed. Within � Foreign law enforcement partners provide assistance in the collection of evidence the U. S. , aspects of the case touched on various levels of the U. S. Government

Findings – Marketing Advisors 12 � Contracts were in legal trusts in offshore locations to avoid detection � Marketing advisors were companies formed to protect the identity of the true advisor � BAE made payments to these advisors via offshore companies � Money from some of the known marketing advisors foreign bank accounts has been deposited into the U. S.

Findings – Travel Agents 13 � BAE funded travel for government officials � The travel agents fulfilled any requests the officials had and then bill the expenses back to BAE � Expenses included cars, boats, houses, shopping sprees, shipping � Communications between BAE and the agents were coded � A large portion of expenses originated in the U. S.

Findings – U. S. Deposits 14 �BAE also directly funded bank accounts within the U. S. were held by officials affiliated with the contract

Findings – Non KSA 15 � Found scheme to use marketing advisers and offshore accounts was not limited to the Al Yamamah contract � Examined contracts awarded in the Czech Republic and Hungary for the lease of Gripen Fighter Jets The Gripens contained U. S. controlled defense materials

Information Filed 16

BAE Systems plc pleads guilty 17 • Pleads guilty to conspiracy

BAE Debarred and Fined 18 � Civil settlement with Do. S for alleged violations of AECA and ITAR � BAE Systems debarred and rescinded on same day � Civil penalty of $79, 000, the largest in Department history

Questions? Peter Y. Spohn Supervisory Special Agent Washington Field Office Squad CR-22 703 -686 -6188 Peter. Spohn@ic. fbi. gov