In this podcast series, I visit with Vin DiCianni, founder and President of Affiliated Monitors, Inc. (AMI) and Eric Feldman, Senior Vice President of AMI. We consider the global view of ethics, compliance and corporate culture of non-US companies, outside the US; in both their home countries and in other countries. AMI does independent integrity monitoring in multiple countries outside the US and for many non-US organizations. This work has given them a unique vantage point to observe developments. In this Part II, I discuss international enforcement trends with Feldman.

Eric Feldman noted that the US has led most of the enforcement efforts because of the long-standing role of the Foreign Corrupt Practices Act (FCPA) as one of the earliest anti-corruption laws. US enforcement has also been the most aggressive across the globe. However over the past five years or so the Department of Justice (DOJ) and Securities and Exchange Commission (SEC)  have worked to train a cadre of prosecutors in enforcement techniques and tactics to fight the international scourge of bribery and corruption.

This cross-training steered by US prosecutors led to several immediate and longer-term impacts. The most obvious and initial impact was the cooperation by prosecutors and regulators, literally across the globe. One need only review each DOJ or SEC Press Release announcing a FCPA prosecution and the non-US agencies who provided assistance are listed near the bottom. The cooperation began during the Obama Administration but has continued under the Trump Administration and Sessions-led DOJ. Feldman noted that he has seen more cooperation in the investigations and international enforcement front and a sharing of the penalties in several cases. This began as the one Pie model where there would be ‘one pie’ of penalties for an organization. The name has evolved into the anti-piling policy.

The aggressiveness of US prosecutions led to the US penalizing many non-US based companies and keeping the vast lion’s share of the financial penalties. Simply look at the current Top Ten in all time FCPA enforcement cases and you will see that only two of the top ten are US based companies. In addition to the cross training listed above, many countries wanted to get in on the financial penalty action. This has led to many large anti-corruption fines and penalties being shared by multiple countries since 2016. This includes Odebrecht/Braskem, with $2.6bn shared between the US, Switzerland and Brazil; Petrobras with $1.78bn shared between the US and Brazil; Telia Company, with $965MM shared by the US and Sweden; Alstom, with $814MM shared between the US and Switzerland; Rolls-Royce, with $809MM shared between the UK, US and Brazil; VimpelCom, with $795MM shared between the US and The Netherlands; and SocGen, with $585MM shared between the US and France.

Feldman pointed to the specific example of Singapore, where over the last couple of years have had the instance of Keppel Offshore being prosecuted by DOJ for corruption under the FCPA. This was very embarrassing to the government of Singapore because while Singapore always had corruption laws on the books it did not have a big method of enforcing them. Then two years ago, Singapore passed legislation requiring DPAs as an alternative mechanism for settling those types of international corruption cases. Now DPAs are a part of the landscape for anti-corruption prosecutions in Singapore. Just across the straits in Malaysia, the country passed tougher anti-corruption laws as well. All of this means from Feldman’s perspective that both investigations and enforcement are up in a much wider variety of countries combatting bribery and corruption.

As to where all of this enforcement may be heading, Feldman noted the DOJ model of enforcement has been fairly consistent. The basic level of enforcement and theory that the US will continue going forward to enforce the FCPA is fairly high. Feldman believes that the cooperation which began in the earlier part of the decade will continue, particularly between DOJ and the SFO, when it comes to the UK Bribery Act. This may be even more so with the new Director of the SFO, who is a former DOJ prosecutor and has an “American understanding and acceptance of enforcement of these laws, as an accepted way of doing business. I think is going to move the SFO to even more aggressive enforcement going down the road.”

The bottom line is that even if the US somehow or for some reason dialed back its prosecutions under the FCPA, there are multiple international enforcement agencies who stand ready to pick up the slack and reap the benefits in terms of fines and penalties. This also means that companies operating in these countries should have robust compliance to not only detect and prevent legal violations but provide a solid defense if something goes askance.

In the next episode we consider the changes going on in the country of Spain.

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