Table of Contents • Fighting Bribery on a Global Scale: The First Steps • Fighting Bribery on a Global Scale: A Slow Start • Fighting Bribery on a Global Scale: The Tide Turns • Fighting Bribery on a Global Scale: The OECD Convention • Fighting Bribery on a Global Scale: Strengthening of the FCPA • Fighting Bribery on a Global Scale: A Powerful Law • High Profile FCPA Cases High Profile FCPA Cases: Baker Hughes High Profile FCPA Cases: Statoil High Profile FCPA Cases: Lucent High Profile FCPA Cases: Halliburton High Profile FCPA Cases: Schnitzer High Profile FCPA Cases: BAE Systems High Profile FCPA Cases: Siemens • Global Corruption: A Question • Global Corruption: What We’ve Learned about Bribery • Global Corruption: The Global Fight Continues • Global Corruption: Refining the FCPA

I. Fighting Bribery on a Global Scale The First Steps In the mid-1970’s, the U.S. Securities & Exchange Commission (SEC) launched a series of investigations in an effort to identify the extent to which U.S. corporations were involved in passing bribes to foreign officials. The investigations revealed that over 400 corporations – 117 of which were Fortune 500 companies – had made an estimated $300 million in questionable or illegal payments to foreign government officials, politicians and political parties. In response to these revelations, Congress enacted the Foreign Corrupt Practices Act (FCPA) in 1977 in an effort to stem the prevalence of bribe making and address what the Senate called “a serious breach …. in the integrity of the system of capital formation.”

II. Fighting Bribery on a Global Scale A Slow Start Despite the initial enthusiasm for anti-bribery legislation, widespread enforcement of the new law was largely absent through the first three decades of its existence: • Throughout the 1980’s, the government brought only a handful of proceedings against U.S. corporations. Some legislators and lobbyists, in fact, pushed for the repeal of the FCPA during this period, arguing that it created an unfair advantage for foreign competitors who faced no similar restrictions on passing bribes. • Between 1990 and 1995, the SEC, one of the two federal agencies charged with enforcement of the FCPA, failed to bring a single formal proceeding against a U.S. corporation for violation of the FCPA. Between 1995 and 2000, the SEC, on average, brought less than one case per fiscal year. Again, this lack of enforcement was largely attributed to concerns about the ability of U.S. corporations to compete with firms that were permitted to use bribes in the course of doing business.

III. Fighting Bribery on a Global Scale The Tide Turns In the last several years, the U.S. government has become markedly more aggressive in its enforcement of the FCPA. This shift owes to several factors, not the least of which were efforts in the late 1980’s by the United States government to encourage the international community to formalize a set of measures designed to criminalize bribery throughout the world. In effect, these proposed laws would level the playing field for U.S. corporations.

IV. Fighting Bribery on a Global Scale • In 1997, almost a decade after the US began lobbying for a global and unified set of anti-bribery laws, member countries of the Organisation for Economic Co-operation and Development (OECD) convened to develop a comprehensive framework to criminalize the bribery of foreign public officials in international business transactions. • Countries that signed the Convention were required to draw up legislation that outlawed the act of bribing a foreign public official. • As of June, 2007, 37 countries, including Argentina, Mexico, Brazil, Korea, Germany and South Africa, had ratified the agreement and undertaken steps to introduce criminal sanctions against such bribery.

V. Fighting Bribery on a Global Scale Strengthening of the FCPA The FCPA also benefited from two seemingly unrelated developments – a series of high-profile corporate scandals and the national security concerns borne of the terrorist attacks of 9/11: • Passage of Sarbanes-Oxley augmented certain requirements of the FCPA, including: • Certification of accuracy of company’s books and records • Certification of adequacy of internal controls • Focus on payments to foreign officials became even more important as a result of the USA PATRIOT Act and other efforts to combat terrorist financing

VI. Fighting Bribery on a Global Scale A Powerful Law The past several years have seen a dramatic surge in the number of enforcement actions brought by the Department of Justice (DOJ) and the SEC. In 2006, both agencies brought a total of 15 enforcement actions. In 2007, that number more than doubled and 2008 had a comparable amount of actions. Statements by government officials, the trend is expected to continue into 2009 and beyond.

VII. High-Profile FCPA Cases Some High-Profile Cases

VII. High-Profile FCPA Cases • In February of 2000, government officials in Kazakhstan informed Baker Hughes that it had won a $205 million contract to service a large oil and gas field in the northwestern part of the country. The officials added that, in order to officially secure this contract, Baker Hughes would be required to retain the services of a small consulting firm in the Isle of Man. Baker Hughes agreed, was awarded the contract, and, over the course of the next several years, paid the consulting firm approximately $4.1 million. Baker Hughes was also accused of passing bribes directly and indirectly to a government agent in Kazakhstan. The company was order to pay $44 million in civil and criminal penalties and disgorgement.

VII. High-Profile FCPA Cases

VIII. Global Corruption Question: Is the uptick in foreign bribery cases attributable to: • A general surge in corrupt behavior across the globe? • The heightened regulatory scrutiny under which multinationals now operate? • Internal investigations and self-reporting undertaken by the international business community, premised on the belief that bribery is not good for business? • A sudden global outbreak of honesty?

IX. Global Corruption What We’ve Learned about Bribery The sudden uptick in FCPA enforcement actions – and the corresponding increase in case information – has given shape to several important patterns and characteristics regarding the types of people who pay bribes, how they move the money, where they like to operate and which industries they typically work in. For example: • Since 1977, almost 65% of all FCPA enforcement actions were triggered by improper payments made by intermediaries. These intermediaries included freight forwarders, accounting and law firms, lobbyists, consultants, brokers and distributors. • FCPA violations jumped sharply in certain geographies, including Kazakhstan, Nigeria, Brazil, China, Russia, India, South Korea and Mexico. • Certain industries were far more prone to incidents of bribery than others, including oil and gas, defense, pharmaceuticals and telecommunications.

X. Global Corruption The Global Fight Continues Despite more aggressive enforcement on the part of the U.S. government and the very real prospect of fines, disgorgement, reputational damages, and criminal prosecution, bribery continues to be a problem in the U.S. and abroad. According to a recent survey of 358 U.S. and U.K companies: • 20% of companies with $1 billion or more in revenues undertook a bribery or corruption investigation during the survey period. • 11% of the responding companies with international operations hired outside counsel during the survey year to investigate bribery claims, and 20% dealt with potential bribery concerns as part of due diligence in a corporate acquisition. • 13% of the responding companies admit they still allow small direct payments to foreign governments in certain specific situations. • 25% of energy companies and 20% of financial services firms admitted making direct payments to foreign hosts in some cases.

XI. Global Corruption Refining the FCPA On June 13, 2008, the DOJ issued Opinion Procedure Release 08-02, (“Release 08-02”) in which it set forth the due diligence measures that Halliburton Company (“Halliburton”) would be required to follow in order to avoid potential FCPA liability for the activities of its acquisition target, Expro International Group, PLC (“Expro”). They are as follows: • If Halliburton’s unconditional bid is accepted by Expro, immediately after closing, Halliburton has to meet with DOJ and disclose information in its possession that "suggests that any FCPA, corruption, or related internal controls or accounting issues exist or existed at the Target…“ • Ten days later Halliburton is required to provide DOJ with “a comprehensive, risk-based FCPA and anti-corruption due diligence work plan which will address, among other things, the use of agents and other third parties; commercial dealings with state-owned customers; any joint venture, teaming or consortium arrangements; customs and immigration matters; tax matters; and any government licenses and permits. Such work plan will organize the due diligence effort into high risk, medium risk, and lowest risk elements.

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