Matt Stephenson, myself and others have engaged in a dialogue about where Foreign Corrupt Practices Act (FCPA) enforcement may be headed under the incoming administration. I have tried to focus on why compliance with anti-corruption laws, such as the FCPA, will not lessen. The discussions at ACI’s 33rd International Conference on the FOREIGN CORRUPT PRACTICES ACT (ACI-FCPA Conference) demonstrate why compliance will remain an important part of the business process of any US company doing business internationally.
The Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have worked quite diligently to increase professionalism around anti-corruption enforcement in jurisdictions outside the US. At the ACI-FCPA conference Kara Brockmeyer, Chief, FCPA Unit, Division of Enforcement at the SEC, and Daniel Kahn, Chief, FCPA Unit, Fraud Section, Criminal Division at the DOJ, articulated an additional reason, which was the increase in international cooperation and enforcement.
Over the past few years, the DOJ and SEC have worked to create a network of international cooperation in the global war against bribery and corruption. In addition to forming liaisons, they have put on three conferences dedicated to the training of foreign prosecutors on investigations, best practices around anti-corruption compliance program and cooperation between countries in sharing of documents and other evidence. Both speakers remarked about the increased sophistication of foreign prosecutors in both investigations of bribery and corruption and in understanding compliance programs around anti-corruption laws.
While I had previously considered such training as a way for US authorities to garner relationships to assist US based FCPA investigations, both speakers talked about more joint and coordinated international investigations. This point towards to not only to parallel investigations but also coordinated resolutions. While the OECD is a large part of how the US makes such connections it is these formal trainings that have allowed US regulators to also make inroads into increasing prosecutions of such conduct.
Yet, in addition to this increased cooperation with US authorities, many other countries’ anti-corruption regulators are now actively prosecuting bribery and corruption as well. Obviously Operation Car Wash in Brazil is a prime example but the speakers pointed not just to increased assistance with the US but also enforcement, in the words of Brockmeyer, “going global”. She pointed towards two 2016 enforcement actions as prime examples.
As set forth in the SEC Press Release in the VimpelCom enforcement action there was cooperation from the following regulatory and enforcement authorities outside the US: “Public Prosecution Service of the Netherlands (Openbaar Ministrie), National Authority for Investigation and Prosecution of Economic and Environmental Crime in Norway (ØKOKRIM), Swedish Prosecution Authority, Office of the Attorney General in Switzerland, and Corruption Prevention and Combating Bureau in Latvia. Other valuable assistance was provided by the British Virgin Islands Financial Services Commission, Caymans Islands Monetary Authority, Bermuda Monetary Authority, and Central Bank of Ireland, Estonia Financial Supervisory Authority (Finantsinspektioon), Comisión Nacional del Mercado de Valores (Spain), Latvian Financial and Capital Market Commission, UAE Securities and Commodities Authority, Banking Commission of the Marshall Islands, and Gibraltar Financial Services Commission.” The final resolution required VimpelCom to pay $167.5 million to the SEC, $230.1 million to the DOJ, and $397.5 million to Dutch regulators.
As set forth in the SEC Press Release in the Embraer enforcement action, the following regulatory bodies and enforcement agencies were involved: “the Brazilian Federal Prosecution Service, the Brazilian Federal Police, Brazil’s Comissão de Valores Mobiliários, the South African Financial Services Board, the Swiss Financial Market Supervisory Authority (FINMA), the Banco Central del Uruguay, the Spanish Comisión Nacional del Mercado de Valores, and the French Autorité des Marchés Financiers. In this matter the total fines and penalties paid by Embraer were pay a $107 million penalty to the Justice Department as part of a deferred prosecution agreement, and more than $98 million in disgorgement and interest to the SEC. Embraer received a $20 million credit on the amount of disgorgement based upon its payment to Brazilian authorities in a parallel civil proceeding in Brazil.”
Another interesting concept the speakers put forth was the one pie concept. They explained that increasingly, enforcement authorities were moving towards one total cost to anti-corruption violators which would be equitably split up by authorities where the corruption occurred or by the countries which had jurisdiction. Kahn said that companies who self-disclosed to multiple regulators and extensively remediated, along the lines laid out in the FCPA Pilot Program, were more likely to garner credit with US regulators for fines paid to overseas authorities. A contra example was Alstom, which tried to settle piecemeal with a variety of countries and entities such as the World Bank. Under this approach, Alstom did not received credit from US authorities for any of their other payments. For this, and other reasons, Alstom now stands at Number 2 on the Top Ten list of FCPA settlements, paying a whopping $772MM.
All of this means that the SEC and DOJ, together with the OECD, created an active and robust international anti-corruption enforcement regime, which is moving literally across the globe. Any US company doing business outside the US must have a compliance program in order to prevent, detect and remedy any corruption issues. Furthermore, if they want to receive the maximum credit from multiple regulatory bodies they will need such a best practices compliance program.
Indeed in some jurisdictions such a compliance program can be defense to a criminal charge against corporations if there are employees engaging in bribery and corruption. Yet even in the UK, where such a defense is available, a company must actually do compliance, not just have a paper program in place and call it a day’s work done.
All of this means doing compliance is even more important than ever and will be going forward. Even with a Trump administration.
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© Thomas R. Fox, 2016