News for the Hospitality Executive |
Hotel Lawyer with the New "Guide" for International Hotel Transactions -- Doing Business Abroad or With Foreigners |
For the most
recent update on this topic, click here By Jim Butler and the Global Hospitality Group® Hotel Lawyers | Authors of www.HotelLawBlog.com November 15, 2012 Hotel
Lawyer with the new "Resource Guide to the U.S. Foreign Corrupt
Practices
Act" In
the last few years, a lot
of hotel transactions have been completed in foreign countries or
involving
foreign investors. The significance of international hotel transactions
has
soared and many businesses have found that some of the most attractive
opportunities involve crossing international borders. On
November 14, 2012, the US
Department of Justice (DOJ) and the Securities & Exchange
Commission (SEC)
issued a 130-page document which is the most comprehensive effort by
these
agencies to provide long-awaited guidance to respond to complaints from
companies that have complained about the ambiguity of the Foreign
Corrupt
Practices Act (FCPA). The
article below is by hotel
lawyer Bob Braun, a senior member of JMBM's Global Hospitality
Group®, who has
been spending more of his time lately representing owners, developers
and
investors in international investments and transactions involving
hotels,
resorts, mixed-use developments and other hospitality-related projects.
In this
article, he reminds us why the FCPA should always be at the top of our
minds
when we pursue international transactions, as he gives us the
background on the
FCPA and the significance of the new Guide from the DOJ and SEC. Hotel transactions in foreign countries or involving
foreigners The
hospitality industry is a
global business, but few in the industry, other than the larger
players,
consider whether seemingly innocuous contacts can violate federal law -
but
that is exactly the case. Investigation showed
significant bribery and foreign corrupt practices During
the 1970s, the Securities and Exchange
Commission conducted a multitude of investigations resulting in more
than 400
U.S. companies admitting that they made questionable or illegal
payments to
foreign government officials, politicians, and political parties. These
payments ranged from outright bribery of high foreign officials to
secure some
type of favorable action by a foreign government to so-called
"facilitating
payments" that were made to ensure that government functionaries simply
did their jobs. Probably the most famous of these was the
"Bananagate" scandal, in which Chiquita Brands bribed the President
of Honduras to lower taxes. Congress
enacts anti-bribery law As
a result Congress enacted
the Foreign Corrupt Practices Act of 1977, with the goal of halting the
bribery
of foreign officials and restoring public confidence in the integrity
of the
American business system. The anti-bribery provisions of the FCPA apply
to all
U.S. persons and certain foreign issuers of securities, as well as to
foreign
firms and persons who cause, directly or through agents, an act in
furtherance
of such a corrupt payment to take place within the territory of the
United
States. One
of the unintended results
of the FCPA is to create uncertainty as to when a friendly gesture -- a
gift to
a business contact -- becomes a bribe. And since government and
business is
intertwined in so many countries, it has become increasingly difficult
for business
to comply with the FCPA. Response
to uncertainty In
response to this
uncertainty, on November 14, 2012, the Department of Justice and the
Securities
and Exchange Commission released a document that, they hope, will serve
as a
desk reference for companies big and small as they work to prevent
bribery in
global business dealings. Robert Khuzami, director of enforcement at
the SEC,
told reporters during a press conference that "Public company officers
can
put this on their desk . . . and understand what it is we're doing in
this
space, and run their companies accordingly," Entitled
"A Resource
Guide to the U.S. Foreign Corrupt Practice Act" the document weighs in
at
130 pages, including hypothetical examples and 418 endnotes. The
Justice
Department has also circulated a fact sheet, which summarizes the full
guide,
highlighting discussions of gifts, travel, and entertainment; who
constitutes a
"foreign official"; successor liability; and matters the agencies
have declined to pursue. Another notable section of the guidance deals
specifically with the common "hallmarks" of effective compliance
programs. Practical impact of the
Guide? The
practical impact of the Guide is unclear. Some have
suggested that it doesn't do enough to fill in the gray spaces in the
law, and
industry groups, like the US Chamber of Commerce, continue to push for
a broad
revision to the FCPA. In the interim, the guide may provide some useful
advice
to those who are unfamiliar with the scope of the FCPA. Oh,
by the way, is it a bribe
when you buy a government official a cup of coffee while you are doing
a deal
in that country? The Guide answers that question, and a few others.
Fortunately, under most circumstances, a cup of coffee is just a cup of
coffee.
It is not a bribe. Download
your free copy of the Guide Download
your free copy of
the Guide at www.HotelLawyer.com
(click
the tab for RESOURCE CENTER and then the link to "Industry
Presentations) or by clicking "Resource Guide
to the U.S.
Foreign Corrupt Practices Act". Robert
Braun is a
senior member of the Global Hospitality Group® at JMBM. Mr. Braun
advises
hospitality clients with respect to management agreements, franchise
agreements
and spa agreements. He also advises on business formation, financing,
mergers
and acquisitions, venture capital financing and joint ventures,
telecommunications, software, Internet, e-commerce, data processing and
outsourcing agreements for the hospitality industry. Contact him at 310.785.5331
or [email protected]. This is Jim Butler,
author of www.HotelLawBlog.com
and hotel lawyer,
signing off. We've done more than $60 billion of hotel transactions and
have
developed innovative solutions to unlock value from hotels. Who's your
hotel
lawyer?
__________________________ Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at [email protected] or +1 (310) 201-3526. Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why. Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. |
Contact: [email protected] 310.201.3526 |
.