— Attorneys from law firm Dechert on how private equity can manage the risks of investing in emerging markets»
A failure by PE funds to identify and properly manage anti-corruption and trade sanctions compliance risks brings real risk of investigation and prosecution of the target asset, the fund and individual managers and directors. This can result in imprisonment, director disqualifications, debarment from government contracts and fines and confiscation of assets for directors and individuals.
When this exemption was received last year, Singapore’s Ministry of Foreign Affairs noted that “Singapore companies and [financial institutions] know these unilateral sanctions still exist, and should continue to consider the impact of all such sanctions on their commercial decisions.” The Ministry’s statement suggests that this carve-out is limited in scope—perhaps reaching only energy-related transactions—but that limitation does not appear to be well-defined. Energy aside, recent experience with Singapore-related export violations suggests that such violations will continue to be enforced regardless of the exemption.
This month on the anticorruption front, several U.S. financial executives plead guilty in a South American bribery scheme; the health industry encounters more scrutiny in China; and a South African mining company reveals a U.S. Securities and Exchange Commission investigation into a payment to its country’s economic empowerment fund…
From attorneys at White & Case:
“The EU has renewed its sanctions against Syria until 1 June 2014, with the exception of the arms embargo. For Belarus, the Council has decided to delist three parties from the asset freeze list. For Libya, the Council has implemented recent EU sanctions amendments with respect to arms embargo exemptions and release of certain frozen funds.”
Read the update, EU renews sanctions against Syria (except the arms embargo), and updates/implements measures against Belarus and Libya - White & Case LLP»
“On May 23, 2012, the U.S. State Department issued final ‘Responsible Investment Reporting Requirements’ for Burma (also known as Myanmar). The long-awaited final rule confirms that U.S. persons will be required to submit: (a) detailed annual reports for new investment in Myanmar exceeding $500,000, parts of which will be made available for public review; and (b) investment notification for any new investment with Myanma Oil and Gas Enterprise (MOGE) pursuant to an agreement or exercise of rights under such an agreement. U.S. businesses and individuals investing directly in Myanmar or indirectly via funds, joint ventures or participation in companies will need to monitor the flow of their capital into Myanmar to identify when reports to the State Department are required, ensure that they have access to the information required as part of the annual reports, and be aware of what information may be made public…
The U.S. Government signaled in July 2012 that it would permit new investment in Myanmar as part of its sanctions reforms but impose reporting requirements in order to encourage investors to act responsibly in entering the market. The Treasury Department’s Office of Foreign Assets Control (OFAC) issued General License 17 under the Burmese Sanctions Regulations on July 11, 2012, which authorized new investment in Myanmar subject to a set of proposed investment reporting requirements to be administered by the State Department rather than OFAC. This novel approach was the subject of a lengthy and vigorous comment process by business and civil society groups which concluded with the final rules.”
Read the full update, United States Issues Final Investment Reporting Requirements for Burma/Myanmar - Pillsbury Winthrop Shaw Pittman LLP»
Earlier this week, European regulators implemented a number of changes to economic sanctions. From attorneys at White & Case:
“For Burma/Myanmar, the Council has decided to lift all economic sanctions, while keeping the existing arms embargo in place for one more year. For Syria, the Council has eased certain EU sanctions measures, including the oil embargo, by allowing Member State authorisation (following consultation of the Syrian opposition) of certain types of transactions with the aim of helping civilians and supporting the opposition.
For North Korea, the EU has introduced amendments to reflect newly adopted UN sanctions measures, including the addition of parties to the UN list of designated persons and entities subject to an asset freeze. Finally, with respect to Libya, the EU Council has decided to delist one person whose assets have been frozen and to allow assistance to the Libyan government for security/disarmament reasons.”
Read the full update, EU lifts sanctions against Burma/Myanmar, eases measures against Syria and Libya, and tightens sanctions against North Korea - White & Case LLP»
The landscape of U.S. economic sanctions is undergoing significant change, write Christopher Swift and Gregory Husisian at law firm Foley & Lardner, bringing both opportunities and challenges to multinationals:
“The past two years have witnessed substantial changes in the scope and effect of U.S. economic sanctions. In most instances, such as Iran and Syria, the result has been more aggressive, comprehensive, and extraterritorial regulation. But in other cases, the trend was toward a calibrated easing of restraints in countries undergoing constructive social and political change. From empowering civil society groups in Burma to supporting the transitional government in Libya, the re-calibration of existing U.S. sanctions regimes presents companies with a distinct set of compliance challenges…
The shift in U.S. policy toward Burma is a case in point. Encouraged by the Burmese government’s domestic reforms and successful parliamentary bye-elections, U.S. Secretary of State Hillary Clinton announced plans to ease restrictions on travel, investment, and other activities in Burma during an April 4, 2012 press conference. Canadian and European regulators suspended their own embargos just three weeks later, opening the Burmese market to Western investment for the first time in more than a decade. With leading business groups calling for change, the State and Treasury Department officials began untangling the complex web of statutes, executive orders, and regulations restricting U.S. trade with Burma…
The result is a carefully calibrated easing of the sanctions aimed at empowering independent businesses and activists in Burma while incentivizing political reform. Yet the scope of the two licenses proved somewhat narrower than the easing steps announced by the European Union (EU) and Canadian government. Rather than temporarily suspending sanctions on a wholesale basis, the U.S. approach retains the sanctions (albeit in suspended form) while also strengthening a list-based sanctions regime designed to isolate Specially Designated Nationals (SDNs) and other repressive elements within the Burmese government.”
Read the full update, Eased Sanctions Present New Opportunities and Risks - Foley & Lardner LLP»
The latest round of sanctions imposed by the U.S. government on Iran could spell trouble for companies in the automotive supply business, write Christopher Swift and Gregory Husisian of law firm Foley & Lardner:
“Effective March 8, 2013, U.S. parent companies will become liable for Iran-related sanctions violations committed by their foreign subsidiaries–including subsidiaries incorporated as separate legal entities outside U.S. jurisdiction…
Faced with these realities, multinational companies in the automotive sector should carefully examine their current business practice and sanctions compliance programs. Fresh risk assessments are also prudent, especially in light of the new sanctions’ effort on foreign subsidiaries, supplies, and affiliates. Even companies that were previously outside U.S. jurisdiction should evaluate their risks.”
Read the full update, Tough New Iran Sanctions Could Impact Automotive Suppliers - Foley & Lardner LLP»
The European Union has updated its sanctions against Syria, North Korea and Zimbabwe, write attorneys at law firm White & Case:
“For Syria, the Council has renewed its sanctions for a further three months, while introducing certain amendments to the existing arms embargo in the interest of protecting civilians.
For North Korea, the EU has introduced several new sanctions measures – involving trade bans for ballistic missile components, precious metals and diamonds and public bonds, as well as restrictions relating to banknotes and banks – and the list of parties whose assets are frozen has been expanded.
To recognise the significance of certain advances in Zimbabwe, the EU has decided to delist certain persons and entities whose assets are frozen, while at the same time extending the sanctions for another year.”
Read the full update, EU updates sanctions measures against Syria, North Korea and Zimbabwe - White & Case LLP»
The Iran Freedom and Counter-Proliferation Act of 2012 (part of the National Defense Authorization Act for Fiscal Year 2013) expands yet again United States powers to pressure the Ahmadinejad regime into abandoning its nuclear efforts. From Matthew Riemer and Scott Maberry of law firm Sheppard Mullin:
“Section 1244 of the IFCPA authorizes U.S. sanctions on entities participating in activities related to the Iranian energy, shipping, and shipbuilding sectors. Specifically, § 1244 authorizes the use of five or more of the twelve sanctions available under the Iran Sanctions Act of 1996 (ISA) against any person that the President determines knowingly sells, supplies, or transfers to or from Iran ‘significant goods or services’ related to the energy, shipping, and shipbuilding sectors of Iran. Additionally, § 1244 places particular emphasis on the activity of the National Iranian Oil Company, the National Iranian Tanker Company, and the Islamic Republic of Iran Shipping Lines.”
Read the full update, New Law Expands Scope of Iran Sanctions In New Ways - Sheppard Mullin Richter & Hampton LLP»
“Energy, shipping, and shipbuilding. Generally, these are the sectors of the Iranian economy that have recently come within the ambit of the existing U.S. sanctions regime against Iran. We write ‘generally’ because in addition to those sectors, certain entities, transactions, and financial services will soon be subject to sanctions, as articulated in the Iran Freedom and Counter-Proliferation Act of 2012…
The sanctions have a global impact and cover non-American entities. For example, India is already anticipating complications with the development of the Chabahar port in Iran, adding to what has been a historically difficult implementation of U.S. sanctions.”
Read the full update, New Iran Sanctions: Breaking Down the Breaking Points - Reed Smith»
Public companies that file annual reports on or after February 6, 2013, must include information on Iran-related activities in accordance with the Iran Threat Reduction and Syria Human Rights Act of 2012 (TRA). From law firm Proskauer:
"Section 219 of the TRA amends Section 13 of the Securities Exchange Act of 1934 to add subsection (r), which requires an issuer that files periodic reports with the Securities and Exchange Commission to disclose in its periodic reports if, during the reporting period, it or any of its affiliates has knowingly engaged in certain specified activities involving contacts with, or support for, Iran or identified persons involved in terrorism or the creation of weapons of mass destruction…
Thus, reporting companies will have to comply with the disclosure requirements with respect to their periodic reports that are due on or after February 6, 2013, including annual reports on Form 10-K or 20-F for calendar year end companies. Issuers may not avoid disclosure by filing reports prior to the effective date, and all activities specified in subsection 13(r) of the Exchange Act that occurred during the reporting period covered by the report must be disclosed, even if the events occurred prior to the enactment of the TRA.”
Read the full update, New Reporting Company Disclosure Requirements for Activities Relating to Iran - Proskauer Rose LLP»
The list of United States sanctions against Iran, intended to pressure the country into abandoning its nuclear program, continues to grow. From law firm King & Spalding:
“[T] he United States and its allies have increasingly turned to economic sanctions as a tool to further isolate the Iranian regime by seeking to deprive it of the benefits of international commerce. To this end, over the past three years a series of new laws have continued to expand already restrictive U.S. sanctions programs by, among other things, expanding the extraterritorial reach of U.S. law. In particular, these new sanctions have a direct impact on the energy and petrochemical industries, and on U.S. businesses with foreign subsidiaries.”
Read the full update, U.S. Continues to Expand Sanctions Against Iran by Christine Savage, Jane Cohen and Shannon Doyle - King & Spalding»
From Corporate Law Report:
Latest Iran Sanctions: Need-to-Know from JD Supra
"The net of international sanctions on Iran and entities that do business with the Iranian regime continues to tighten.
For your reference, here’s a roundup of latest commentary and analysis on sanctions imposed by the United States and Europe…
Read the full post»