This week, Jay and I have a wide-ranging discussion on some of the week’s top compliance related stories. We discuss:

  1. Tom reports on Compliance Week 2017. See his articles in Compliance Week, here and here.
  2. If the DOJ releases new information in the form of the Evaluation of Corporate Compliance Programs, does anyone read it. See article in GIR (sub req’d).
  3. Jay discusses the SCCE event he attended last week in San Francisco. See Jay’s recap in his article I Left My #SCCE Heart in San Francisco or I Love It When A Plan Comes Together!
  4. Was the individual enforcement against the MoneyGram CCO significant or much ado about nothing? See article by Dick Cassin in the FCPA Blog and by Sara Kropt in her Grand Jury Blog.
  5. DOJ will embed prosecutors overseas. See article by Sam Rubenfeld in WSJ Risk and Compliance Journal. See full text of speech by Deputy AG Trevor McFadden by clicking here.
  6. Warriors and Cavs meet in the first time, three consecutive title match run. Tom and Jay consider from the compliance perspective.
  7. Tom announces the release of his new book 2016 – The Year in Corporate FCPA Enforcement. For more information and to purchase, click here.

 

Jay Rosen can be reached:

Mobile (310) 729-6746

Toll Free (866)-201-0903

JRosen@affiliatedmonitors.com

Tom Fox can be reached:

Phone: 832-744-0264

Email: tfox@tfoxlaw.com

I am excited to announce at Compliance Week 2017 the publication of my latest book 2016-The Year in Corporate FCPA Enforcement: Cardinal and Provident, published by Compliance Week. In it I take a look the most prolific year in FCPA enforcement and what it means for the compliance practitioner.

We have never seen and may well never see again a year of FCPA corporate enforcements as we did in 2016. The Department of Justice (DOJ) and Securities and Exchange Commission (SEC) combined twenty-seven corporate enforcement actions and nearly $2.48bn in total fines and penalties, the highest since the statute’s enactment in 1977. The vast majority of that amount, some 90 percent, was generated by a few very large and significant FCPA enforcement actions involving the following entities: VimpelCom, Och-Ziff, Embraer, JPMorgan, Odebrecht/Braskem, and Teva. While these cases all involved substantial, company-wide bribery schemes, which led to their massive penalties, the majority of 2016’s FCPA enforcement actions involved relatively small-to-medium-sized penalties which involved less systemic, routine bribery schemes. Yet these smaller cases usually provided some of the most interesting fact patterns, which can be studied by chief compliance officers (CCOs) and compliance professionals to help prevent and detect bribery in their organizations.

What do these enforcement actions signify? More importantly what are the lessons to be drawn from these cases for compliance going forward? What about the FCPA Pilot Program, what does it portend for the future. Finally I consider the public comments of the regulators around FCPA enforcement and compliance. You can parse the facts and figures but if you want to understand what 2016 means going forward for the compliance profession, this is the book for you. If you are a compliance professional, this is the single must have  book around the the most prolific year in FCPA enforcement history.

You can purchase of copy of the book, from Compliance Week by clicking here.

If you are attending Compliance Week 2017, drop by the Compliance Week booth for an autographed copy!

This episode is the first of a two-part series of podcasts dedicated to the first 100 days of the Trump administration as it related to compliance. Today we have Jonathan Armstrong and Jay Rosen. Next week Matt Kelly and Mike Volkov.

  1. Jonathan Armstrong leads a discussion of the Trump administrations devolution of Privacy Shield, GDPR and what they mean for American companies doing business in the UK and EU. He discusses the key differences in the DOJ’s Evaluation of Corporate Compliance Programs in an FCPA analysis and under the Bribery Act, differences in the EU approach to conflict minerals and under the Trump Administration and concludes by giving us his thoughts on what Brexit means for compliance.

For the Cordery Compliance client alerts see the following:

EU conflicts minerals compliance legislation 

DOJ Evaluation of Corporate Compliance: how does it compare to UK Bribery Act 2010?

BREXIT Glossary

  1. Jay Rosen considers what companies the intersection of business and politics under the Trump administration, the business response he has observed to Trump administrations steps and miss-steps, the comments made by DOJ representatives at Q1 conferences and the vibe of compliance conference attendees.

For Jay’s posts see the following:

 Still in the Enforcement Business and Evaluation of Corporate Compliance Programs

“It Was the Best of Times, It was the Worst of Times,” or “Ignorance is Strength”

 For Matt Kelly’s posts see the following:

Compliance in the Trump Era: More Markers Placed

Trump Administration Whacks Telco Firm for $892 Million

Drone Industry Pan Trump’s Regulatory

Trump Risk Disclosures Start Rolling In

First SEC Whistleblower Award of Trump Era

Sessions Dodges, Weaves, Promises on FCPA

For Mike Volkov’s posts see the following:

Yates, AG Sessions and Individual Criminal Prosecutions

New E-Book — Moving the Goalposts: The Justice Department Redefines Effective Compliance

FCPA Remediation Focus on Supervisory Personnel

FPCA Pilot Program Motors On

For Tom Fox’s posts see the following:

The Trump Administration-Kaos is Bad for Business

The Trump Administration-Failures in Leadership and Management

The Trump Administration-Preparing for a Catastrophe

The Trump Administration-the Business Response

DOJ Enforcement of the FCPA and the International Fight against Corruption in the Trump Administration

The members of the Everything Compliance panel include:

  • Jay Rosen– Jay is Vice President, Business Development Corporate Monitoring at Affiliated Monitors. Rosen can be reached at JRosen@affiliatedmonitors.com
  • Mike Volkov – One of the top FCPA commentators and practitioners around and the Chief Executive Officer of The Volkov Law Group, LLC. Volkov can be reached at mvolkov@volkovlawgroup.com.
  • Matt Kelly – Founder and CEO of Radical Compliance, is the former Editor of Compliance Week. Kelly can be reached at mkelly@radicalcompliance.com
  • Jonathan Armstrong – Rounding out the panel is our UK colleague, who is an experienced lawyer with Cordery in London. Armstrong can be reached at armstrong@corderycompliance.com

Show Notes for Episode 51, for the week ending May 5, the Cinco de Mayo Edition

Over some breakfast tacos and Mexican coffee, Jay and I have a wide-ranging discussion on some of the week’s top compliance related stories. We discuss:

  1. Uganda considers a demand side response to corruption. See Tom’s article in Compliance Week. What are the rationales for anti-corruption legislation? See Tom’s post on the rationales underlying the FCPA on the FCPA Compliance Report.
  2. Why due diligence investigations still need the human element. See Scott Shaffer’s article in FCPA Blog.
  3. Kara Brockmeyer joins Debevoise & Plimpton LLP. See Tom’s article in the FCPA Blog.
  4. What has been the fate of whistleblowers at Wells Fargo. See James Stewart considers in his Common Sense column in the New York Times.
  5. Federal jury convicts former Guinea mining minister of laundering bribes. See article in the FCPA Blog.
  6. Astros lead the AL with the second best record in baseball. What does Tony Parker’s injury mean for the Spurs/Rockets playoff series?
  7. The Financial Reporting Council (FRC) investigates KPMG on its audits of Rolls Royce for the firm’s failure to detect bribes paid by the company. See article in the FCPA Blog.
  8. Listeners to this podcast can received a discount to Compliance Week 2017. Go to registrationand enter discount code CW17TOMFOX.

In two speeches last week Department of Justice (DOJ) Acting Principal Assistant Attorney General Trevor McFadden addressed multiple topics and issues around the Foreign Corrupt Practices Act (FCPA). The first set of remarks were made in Washington DC at the Anti-Corruption, Export Controls & Sanctions (ACES) 10th Compliance Summit (the “DC speech”). The second were made at the American Conference Institute (ACI) 19th Conference on the FCPA in New York City (the “NYC speech”).

While I have previously considered the evolution in the Department of Justice (DOJ) rationale for FCPA enforcement and the corporate response to FCPA compliance requirement, today I want to consider McFadden’s remarks and what they may portend for both FCPA enforcement and more broadly, international anti-corruption enforcement going forward. He began the final section of his remarks by reiterating the DOJ’s commitment to the concepts articulated in the Yates Memo. The DOJ wants to hold individuals accountable for corporate misconduct, as it is individuals not corporations who engage in actions. He also reiterated support for the concepts behind the FCPA Pilot Program stating, “the department regularly takes into consideration voluntary self-disclosures, cooperation and remedial efforts when making charging decisions involving business organizations.”

He next turned to the speed and length of FCPA investigations. McFadden said the DOJ is committed to moving forward “expeditiously” to investigate and bring investigations to a conclusion. However, to do so, companies must be prepared to meet this need for speed with prompt and thorough investigations. It also means there must be extensive cooperation, including companies working with the DOJ, to “prioritize internal investigations and to respond to Fraud Section requests promptly to ensure there are no unnecessary delays.”

McFadden believes this new, speedier resolution process will “be good for cooperating companies. No executive wants to deal with a lingering government investigation or the associated costs and distraction from the company’s mission.” Both the Fraud Section leadership and McFadden are focused on wrapping up old investigations, with no unnecessary delays. McFadden concluded this section by stating “My intent is for our FCPA investigations to be measured in months, not years.”

McFadden then moved on to how the DOJ will consider decisions to bring enforcement actions. Intoning that prosecutors will always follow the facts, there are times when this means the DOJ will “stop and close an investigation.” There may also be times “When we do not have evidence of the requisite criminal intent, there is no justification for a Criminal Division resolution, and we will defer to our regulatory colleagues to handle the matter” and the Securities and Exchange Commission (SEC) may pursue civil charges under the FCPA. Finally, there will be times when a criminal prosecution is warranted. McFadden made clear the DOJ will continue to use the full panoply of tools available to them.

McFadden then turned to international investigations and enforcement in the global fight against bribery and corruption. Similar to the efforts of US companies in leading the business response to compliance standards, the DOJ (and SEC) has lead the globe’s legal enforcement effort against corruption. Yet there is a growing international consensus against corruption reflected in both the passage of new and stronger of anti-bribery laws. Countries such as “UK, Brazil, the Netherlands and others who are taking new strides to fight corporate corruption at home and around the world” by increasingly prioritized anti-corruption prosecutions. All largely in concert with the DOJ and SEC.

The DOJ will share evidence of violations of foreign law with “international law enforcement partners where we do not have jurisdiction over the wrongdoers” as well as offering other assistance. He noted, “This is all part of our effort to ensure that companies and individuals subject to the jurisdiction of the FCPA are not disadvantaged as compared to other companies.” Both investigations and enforcement actions are increasingly international in scope and the DOJ seeks “to reach global resolutions that apportion penalties between the relevant jurisdictions so that companies that want to accept responsibility for misconduct are not unfairly penalized by multiple agencies.” McFadden specifically cautioned that the DOJ’s “willingness to apportion or credit penalties based on resolutions with other regulators assumes that the company cooperated with our investigation and did not engage in forum shopping to avoid department involvement in the matter.”

McFadden’s penultimate remarks dealt with transparency and information made available by the DOJ through declinations and other initiatives such as the Pilot Program. He noted the differences in declinations where there was insufficient evidence of corporate misconduct “where we would have brought criminal cases but for the companies’ voluntary self-disclosure, full cooperation, and comprehensive remediation.” He then went to specifically reiterate the importance of transparency in enforcement policies and practices, noting the Pilot Program had brought a large measure of transparency. The Pilot Program will continue pending a full assessment of it going forward.

What does it all mean for the compliance practitioner? DOJ speakers have articulated many of these concepts previously, however, McFadden emphasized a new drive towards more expeditious resolution, one way or the other, on FCPA investigations. That can certainly be good news for companies. However, this speedier process will put much more pressure on corporate compliance programs and compliance practitioners to address issues that rise up to potential FCPA violations promptly to get the investigations completed quickly and correctly. It will then put more pressure on the assessment and timing of a decision to self-disclose. Companies will also be required to provide more and probably higher quality evidence of culpability of employees and pointing the DOJ in directions they may not have considered.

These remarks also made clear the DOJ is committed to the international fight against bribery and corruption. It will work with its investigative and prosecutorial counterparts across the globe to not only share information but aggressively prosecute corruption scofflaws. This continues the intiatives begun by McFadden’s predecessors at the DOJ and others such as Kara Brockmeyer, recently retired from the SEC; to bring more and greater resources to bear across the globe to fight bribery and corruption. This too will also put more pressure on corporate compliance programs to get compliance right going forward. Just as the only hope for a company to receive a declination and not be prosecuted under the FCPA is to have an effective compliance program, fully operationalized, in place.

For those who thought that Trump would do away with the FCPA or his minions would work to weaken it, McFadden’s two speeches should be of comfort that the DOJ understands not only the value of the FCPA to the US as a country but also the US business community. Striving for a level playing field in the business world will always work to the advantage of US companies. Indeed more anti-corruption enforcement across the globe should also benefit American companies by even greater leveling of the playing field. McFadden’s remarks make clear that the FCPA is a positive for businesses and its continued enforcement will remain a top priority in the current DOJ.

 

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2017