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International media outlets are full of headlines heralding a new era of enforcement actions by the various government agencies of the United States and the U.S. Department of Justice.

It’s impossible not to notice the skyrocketing fines being levied and settlement awards being collected by the U.S. federal government – not only on its home turf, but around the globe – for violations of various U.S. laws by U.S. and foreign companies. The eye-popping USD 8.9 billion settlement agreed to in 2014 by BNP Paribas, a French financial institution, to resolve allegations of violations of U.S. sanctions against Iran and other countries, sends a clear message. The U.S. has hard-hitting export products: U.S. federal statutes that have an extraterritorial reach.

One particular U.S. statute is receiving growing attention: the Foreign Corrupt Practices Act (FCPA). The FCPA was brought to life in 1977 in response to the widespread use of illegal payments to foreign officials by U.S. companies in furtherance of their business. It was a tool the U.S. Congress viewed as instrumental to creating a level playing field and to restoring the efficient functioning of markets. The FCPA has a dual purpose. First, it aims to curtail corruption through its so-called “anti-bribery provisions,” which prohibit the corrupt offering, payment, or authorization of payment of money (or anything of value) to a foreign government official for the purpose of influencing that official in order to secure an improper advantage. Second, the FCPA ensures that the records of issuers accurately reflect the underlying transactions through its so-called “accounting provisions.” The violation of any of these provisions may trigger civil and/or criminal liability. Criminal liability may involve a prison sentence on individuals.

Although designed to deter U.S. companies from engaging in corrupt practices, the number of FCPA enforcement actions against foreign entities has shown a steady increase in recent years. In fact the majority of the largest fines or settlement awards have been collected from foreign companies. A recent example is from 2014 when Alstom – a French power and transportation company – agreed to pay USD 772 million to settle charges related to an extensive global scheme involving tens of millions of dollars of bribes payments. Another trend worth noting is the rise in the number of prosecutions against individuals.

So what entitles the U.S. Government to go after foreign entities or individuals for a violation of a U.S. statute? We find the answer by looking at who is covered by the FCPA. The anti-bribery provisions apply to issuers; domestic concerns (and the directors, officers, employees, agents and shareholders of both); and certain persons and entities while in the territory of the United States. Issuers can be foreign companies as well, if they have any securities listed on a U.S. exchange (such as American Depository Receipts) or if any of their securities are traded over-the-counter in the U.S. and at the same time the company is required to file reports with the U.S. Securities and Exchange Commission (SEC). Domestic concerns are U.S. citizens, nationals, or residents, or business entities organized under the laws of the U.S. or its states (or that have their principal place of business in the U.S.). Foreign persons or entities may be subject to territorial jurisdiction if they engage in any act in furtherance of a FCPA violation while in the territory of the U.S.

Sending an e-mail through a U.S. server (such as using a gmail account), making a telephone call through the U.S., or wiring funds through U.S. banks (that is, using the means of interstate commerce) may establish jurisdiction over a violation. In 2013, in a case involving FCPA violations, a federal court found personal jurisdiction over foreign defendants on the basis of minimal contacts with the United States. The defendants worked for a foreign company that had ADRs traded on a U.S. stock exchange, the defendants sent e-mails that ran through servers physically situated in the U.S., and the defendants attempted to disguise a bribery scheme by filing false reports with the SEC. These three elements were enough to hale these foreign individuals into a U.S. court.

It is worth mentioning that investigators are often aided by whistleblowers coming to the fore in the hope of collecting rewards from the proceeds of fines or settlement awards. Under certain circumstances, whistleblowers may receive a financial reward of between 10% and 30% of any fines or settlement awards. The media hype surrounding investigations and publicizing whistleblowers’ incentives ensure a steady stream of new cases.

So brace yourselves…And we have not even written a word about the UK Bribery Act!

By Andras Nemescsoi, Partner, and David Kohegyi, Senior Associate, DLA Piper

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The state of Bosnia and Herzegovina consists of two separate entities – the Federation of Bosnia and Herzegovina and Republika Srpska – and a special autonomous district under the direct sovereignty of the state, the Brcko District.

Each of these parts is governed by an essentially different legal regime, although certain legal matters are regulated by laws enacted on the state level and as such are applicable in all parts of the country. Furthermore, in many cases the relevant legislation of the entities regulating a particular matter has been harmonized, although differences may occur in terms of application and interpretation by different entities’ courts.

The legal framework of the white collar crimes is based on legislation covering business companies, the criminal code, and relevant tax legislation. In general, all of this legislation, enacted on the individual entity level, has been harmonized throughout the country. 

The responsibility of the directors and management of a company is regulated by the Company Law. The provisions of the Company Law provide a broad definition of a managing director’s competences, stipulating that he/she should: (i) organize and manage the company’s business activities; (ii) represent the company vis-à-vis third parties; and (iii) be responsible for ensuring that the company’s business activity complies with applicable laws and regulations. As these provisions only provide for a general framework, the managing director’s competences as well as the limitations of his/her power are usually regulated in more detail by the internal acts of the company. In addition, the managing director’s main obligations may also be specified in the employment agreement. 

The managing director, as well as other managers of the company, has to act in the best interests of the shareholders and the company. Hence, both have a duty to manage the company’s business in accordance with the highest standards of the profession and are obliged to act in good faith and with the care of a diligent and prudent businessman.

In addition, management is liable for the legality of the company and therefore has an obligation to warn the shareholders meeting and the supervisory board about potential illegalities in passing decisions. The management can refuse to execute illegal decisions of the shareholders meeting or the supervisory board. Members of management are held liable for all damages they cause the company by not performing or by not duly performing their obligations. 

Even though there are no official statistics available, it may be assumed that the most common white collar crimes that directors can be liable for under the Criminal Code are, inter alia, the following: (1) conducting business in bad faith and without due care; (2) causing bankruptcy by negligent business; (3) causing damage to creditors; (4) misusing authorization in business dealings and privatization procedure; (5) committing fraud in business dealings; (6) entering into harmful agreements; (7) evading payments of taxes or social contributions; (8) committing acts of bribery; and (9) money laundering. 

The established penalties for these criminal offenses can vary between pecuniary fines to imprisonment of 10 years.

The Criminal Code stipulates that a company is liable for the crimes committed by a person acting on behalf of, for account of, or in the interest of the company, if: (i) the criminal offense was based on decisions, orders, or permissions of the management or the supervisory board of the company; or (ii) the management or the supervisory board of the company has influenced or enabled the offender to commit the criminal offense; or (iii) the company has gained a material advantage of the assets acquired in the course of the criminal offense or uses such assets; or (iv) the management or the supervisory board of the company has failed to duly supervise employees’ compliance with the applicable laws and regulations. 

The Criminal Code prescribes that the company may face a less severe sentence if the management or the supervisory board willingly notifies the responsible authority of the offense and the offender, once the criminal offense is discovered. Additionally, the Criminal Code prescribes that the company may be released from punishment if its management or the supervisory board return the illegally acquired assets or remedy the damaging consequences.

The Criminal Code stipulates that a legal entity may be fined by the following: (i) a pecuniary fine; (ii) confiscation of property; (iii) dissolution of the company.

Pecuniary fines may amount from BAM 5,000 (approximately EUR 2500) up to BAM 5 million (approximately EUR 2.5 million). 

Last year the state prosecution filed an indictment against 29 individuals and legal entities, charging them with money laundering and tax evasion in multi-million amounts. It is alleged that these individuals committed money laundering in the amount of approximately BAM 21.7 million (approximately EUR 11 million), and tax evasion of about BAM 3.6 million (approximately EUR 1.84 million).

By Jasmin Saric, an Independent Attorney at Law working in cooperation with Wolf Theiss, and Lajla Hastor, Associate, Wolf Theiss

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Studnicki Pleszka Cwiakalski Gorski has advised the Delphi Group on Polish aspects of the global sale of its Thermal business to MAHLE Behr.

Mahle announced antitrust authorities’ approval for the global deal on July 1. Through the now-completed acquisition, 13 Delphi Thermal production plants in Poland, Slovakia, Hungary, the United States, Mexico, Brazil, China, and India, as well as three major research and development centers in the United States and Luxembourg, have now been added to the group’s approximately 150 production locations. As a result of the takeover, the roughly 7,500 employees of Delphi Thermal are expected to bring the total number of MAHLE employees worldwide to over 75,000 by the end of 2015.

According to the firm, the total value of the transaction worldwide amounted to USD 727 million. The SPCGG team advising the Delphi Group consisted of Partners Piotr Kaminski and Tomasz Spyra. 

Schoenherr advised Hamburg-based Union Investment Real Estate GmbH on investments that the German group made into Green Worx, the first LEED Platinum-certified office complex in Austria. Green Worx’s developers were advised by Hule Bachmayr-Heyda Nordberg.

Green Worx, which is located in Vienna’s second district, was jointly developed by the S+B Group and Raiffeisen-Holding Niederosterreich-Wien. Union Investment initially acquired four buildings (UNITS 1-4) with approximately 16,000 square meters of office space and underground parking in a transaction signed in March 2014 for a deal volume of EUR 50 Million.

In November 2014, another group member of Union Investment – Union Investment Institutional Property GmbH – signed a purchase agreement for three further Green Worx objects: two ibis hotels (one with 158 rooms and one with 250 rooms) and Unit 5 (a building with approximately 3,400 square meters of office space).

Schoenherr advised Union Investment on the drafting and negotiation of the transaction documentation, the signing, and the closing for these transactions, which closed in February 2015 and April 2015, respectively.

The Schoenherr team advising Union Investment on its Green Worx investments was led by Partner Michael Lagler and Counsel Arabella Eichinger, supported by Partner Wolfgang Tichy and Associates Claudia Barnhouse, Teresa Goriany, and Dieter Wohlmuth.

Borenius has advised AS SEB banka as the arranger on Latvenergo AS’s June issuance of notes. Under the programme the company issued seven-year green bonds in the total nominal value of EUR 75 million.

On June 3, Latvenergo — the largest power supply company in the Baltic States — announced the approval of the final terms, under which it was decided to issue EUR 50 million worth of bonds, which was increased to EUR 75 million during the bond placement period, while exercising the rights set out in the final terms and taking into consideration the investor demand.

The aggregate demand for the bonds at the end of the placement period totalled EUR 87.05 million. Taking into account the interest of investors, the total issuing worth of Latvenergo AS bonds in the course of the placement process was increased to EUR 75 million, with the final yield to maturity secured at 1.9220% at the end of the placement period. According to the energy company’s press release, “this means that the first green bond issue by Latvenergo AS can be considered a success.” During the placement of the bonds, purchase offers were received from 25 investors, representing all three Baltic countries as well as Germany, Austria and Finland. The investors include banks, asset management funds and insurance companies.

Latvenergo AS is the first state-owned company in Eastern Europe to issue green bonds. The main requirement for green bonds is the use of the funds raised in the issuance process only for projects relevant to “green thinking” and related to renewable energy sources, improved energy efficiency and sustainable environment. The funds raised will be channelled towards green-minded projects financed or part-financed by Latvenergo Group that concern production as well as distribution and transmission network assets in line with the GreenBond Framework, which has been approved by Latvenergo AS. 

The Borenius team working on the matter included Specialist Partner Edgars Lodzins, Partner Gatis Flinters, and Associate Agris Nurza. The firm confirmed that Latvenergo used their own internal lawyers on the issuance.

Baker & McKenzie acted as legal advisor and contributed to the Ukraine section of the Report on the Preparedness for Emissions Trading in the EBRD Region (PETER project). The PETER project was led by Thomson Reuters Point Carbon and included two phases: (1) a conceptual analysis and overview of emissions trading systems globally and in the EBRD region, and (2) parallel country-specific assignments.

The PETER project aims to help the government of Ukraine establish domestic emissions trading schemes, understand the costs and benefits of domestic cap-and-trade regimes, analyze cap-and-trade options, and the criteria needed to link any domestic emissions trading scheme with other emissions trading schemes such as the EU Emission Trading System. The project will identify potential options for implementation of domestic cap-and-trade schemes and linking them with external schemes.

Baker & McKenzie’s Kyiv team working on the project was led by Partner Ihor Olekhov with support from Associates Victoria Ischenko, Hanna Shtepa, and Ganna Smyrnova.

Sayenko Kharenko has advised the Soufflet Group on potential investment in the state-owned Illichivsk seaport. The project provides for the construction of a grain transshipment terminal with annual processing capacity of 1-1.2 million tons.

The memorandum of understanding, prepared by Sayenko Kharenko, was signed by the Soufflet Group and the Illichivsk seaport on June 19, 2015 in Kyiv. Andrii Pyvovarskyi, the Minister of Infrastructure of Ukraine, and Oleksiy Pavlenko, the Minister of Agriculture of Ukraine, took part in the official signing ceremony. At this stage, the amount of investment is expected to reach USD 70 million.

Sayenko Kharenko’s team for the transaction included Andrew Zablotskyi, Nazar Chernyavsky, and Michael Kharenko.

Two members of Baker & McKenzie’s International Arbitration practice group have been appointed to the ICC International Court of Arbitration in Paris.

The head of the firm’s CIS Dispute Resolution practice group, Vladimir Khvalei, was recently reappointed as a vice president of the ICC Court, along with New York-based Partner and co-head of Baker & McKenzie’s International Arbitration Group, Grant Hanessian, who was appointed one of two American members of the ICC Court. Both will also continue their practices with the firm.

Tom Cassels, Baker & McKenzie’s Chair of Global Dispute Resolution, commented: “Our firm has been a leader in international arbitration since Columbia Law School Professor Henry DeVries, a leading international arbitrator, co-founded our New York office in 1959. It is wonderful to see our international arbitration practice continue to receive such recognition.”

Khvalei, who was initially appointed to the ICC International Court in 2009,  started a new three year term as vice president on July 1, 2015. 

According to Baker & McKenzie, “he will continue to play a major role in the functioning of the Court through participation in its weekly committee sessions and monthly plenary sessions, where most of the decisions to be made by the court under ICC rules are taken; as well as through his membership of the Court’s bureau, which formulates recommendations on policy that are then submitted for discussion to the court as a whole.”

Commenting on his appointment, Khvalei said, “I am delighted to have an opportunity to continue my work at the Court. Over the last six years I have been involved in high-profile and challenging matters and I’m really excited to start a fresh term.”

Hanessian was appointed as the US Alternate Member on the Court for the same three year period as Khvalei.  “I’m honored by the appointment, which comes at a important time for the ICC Court in North America and the Western Hemisphere following the successful launch of the Court’s secretariat office in New York.”

Former DLA Piper Partner Krystyna Szczepanowska-Kozlowska has left that firm to join and lead Allen & Overy’s Intellectual Property practice in Warsaw.

Szczepanowska-Kozlowska specializes in both IP and technology law, and has experience in contentious and non-contentious matters including patent, trademark, copyright, competition, and personal data protection law; she has also represented clients before the common courts and arbitral tribunals.

Corporate Partner Jacek Michalski, said: “A&O Warsaw is a sound platform for developing a comprehensive IP offering for Polish and foreign clients in one of the fastest growing economies in Europe. We are aware that international corporations attach huge importance to their legal advisors having strong IP teams locally in the regions where they operate, and Central and Eastern Europe is one of these key areas.”

Szczepanowska-Kozlowska said: “I am delighted to join the renowned team at A&O. I sincerely hope that my presence will support the further development of both the IP practice itself and the firm as a whole.”

Arkadiusz P?dzich, Managing Partner for A&O Warsaw and CEE, added: “Allen & Overy’s global strategy assumes the strengthening of our IP practice, and therefore we are thrilled to welcome Professor Szczepanowska-Kozlowska on board.”