Leaked documents detail shell companies engaged in corruption with some African government officials.
This opinion piece presents the opinions of the authors.
The most recent batch of shell corporations identified from the release of leaked documents known as the Panama Papers should put global energy companies on high alert. This trove of documents detailed the shell companies established by Panamanian law firm Mossack Fonseca for corrupt African government officials to launder bribes related to oil, gas and mining deals.
Attorney, Advanced Compliance Solutions
The new information published July 25 by the International Consortium of Investigative Journalists (ICIJ) revealed shell corporations in 44 of Africa’s 54 countries. This report should set off massive warning bells within energy companies that have dealings in Africa. Every multinational energy concern is aware of the U.S. Foreign Corrupt Practices Act (FCPA), which prohibits corrupt payments to foreign government officials and employees at state-owned enterprises such as national oil companies.
This new information on shell companies listed in the ICIJ database should be scrutinized in detail by energy companies doing business in Africa to determine if they have contracts with any such listed shell corporations. However, that is only the beginning of the analysis needed. Energy companies must review their own documents and internal records.
The first place to begin your investigation is to review all contracts and data obtained in the contract negotiation, execution and management process. What can you find in your own documents, and more importantly, how can data-mining your own information protect you going forward?
In two ways: First, you have a wealth of information literally at your fingertips that does not cost you anything to obtain. Second, and equally important, when the U.S. government comes knocking at your door, you can demonstrate the proactive steps you have taken (a) to ascertain if your company has any contractual relationships with these shell companies, (b) your management of these relations and (c) the actions you took to remediate the situation.
Some of the most basic information in your own databases or files includes: contact information; banking and payment information, including wire transfer instructions, banking representatives and addresses (both physical and virtual); ownership, beneficial ownership and nominees; and ship to/ship from locations for sales and purchases, purchase orders and invoice support documents.
From this data mining you should consider the following questions:
When investigators for the Justice Department or Securities and Exchange Commission come calling, they will want to see documented evidence answering the above questions. Even if your company has not violated the FCPA, if there is no documentation that everything was done properly, the government will assume that illegal conduct has occurred.
The FCPA enforcement world is littered with companies that have not been able to demonstrate that they documented all facets of their relationships with third parties. As recently as this past week, LATAM Airlines S.A. was penalized under the FCPA because it could not demonstrate that a third-party agent relationship was properly documented.
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