Enforcement of the FCPA continues to be a top priority of the U.S. government, and enforcement authorities are engaging in multi-faceted approaches to not only detect corruption, but to hold all participating parties accountable for their corrupt activities…
Aggressive FCPA enforcement in recent years has presented corporate officials with difficult choices regarding compliance and cooperation…
During monitored and recorded telephone calls, and in meetings, Mr. Cilins agreed to pay substantial sums of money to a witness to the bribery scheme in return for original documents which had been requested by the FBI and that were to be produced for the grand jury. Mr. Cilins planned to destroy the records.
— Attorney Thomas Gorman of Dorsey & Whitney on a recent guilty plea the DOJ obtained from an individual as part of an FCPA and money laundering investigation.
Foreign Corrupt Practices Act enforcement activity in 2013 was robust, with DOJ and the SEC bringing 31 new FCPA enforcement actions, exceeding the 2012 total of 25. Total penalties amounted to more than $720 million, the second highest year on record.
In 2013, DOJ brought:
- nine enforcement actions against corporate defendants, compared with 11 each year during 2012 and 2011.
- 14 enforcement actions against individual defendants, compared to only two in 2012, and 12 in 2011. The 14 DOJ enforcement actions in 2013 stemmed from five corporate investigations.
Read Venable’s 12-page FCPA Snapshot 2013 »
By ensuring that your company implements and maintains up-to-date anticorruption and export compliance programs, you are insuring yourself against the possibility of a minor inadvertent error leading your company down a slippery, costly, and potentially embarrassing slope.
From attorney Aaron Tidman of Mintz Levin, a report on comments made by Kara Brockmeyer, Chief of the Foreign Corrupt Practices Act Unit at the SEC, at this year’s “SEC Speaks” conference. Some highlights:
- The SEC has already brought the same number of FCPA enforcement actions in 2014 than it brought in all of 2013. The clear message from Ms. Brockmeyer was that although FCPA enforcement decreased in 2013, companies should not forget that the FCPA is still a priority for the SEC.
- The biggest issues in FCPA enforcement right now are third-party intermediaries and travel and entertainment expenses. Ms. Brockmeyer noted that she is “amazed” to see companies enter into arrangements with third parties to get business without knowing anything else about that third party. Ms. Brockmeyer’s message was clear: third-party due diligence is critical.
- Ms. Brockmeyer said that the fact that Ralph Lauren only discovered bribery problems in one subsidiary in one country also made a difference in the NPA decision. The company probably would not have qualified for an NPA if the problems were more widespread or systematic.
- The SEC is continuing to observe companies put more thought and analysis into their compliance programs and internal controls. Ms. Brockmeyer noted that companies are using the FCPA Guidance from November 2012 to strengthen their compliance programs, including integrating the hypotheticals from the Guidance into their training programs, which is exactly what the SEC intended.
- Ms. Brockmeyer said that many companies are self-reporting FCPA issues, including small problems that the company immediately remediates, and the SEC takes no action.
- Ms. Brockmeyer commented that more and more countries are enforcing their own domestic bribery laws, as well as their international bribery laws. The SEC has also seen an increase in parallel investigations, in sharing of documents across international borders, and in cooperation between national governments in interviewing foreign witnesses.
Read the full update: The SEC Speaks About FCPA»
Given heightened enforcement of the U.S. Foreign Corrupt Practices Act, particularly in the energy industry, international energy firms need to pay particular attention to their anti-bribery risks when contemplating potential transactions in Mexico’s newly privatized energy markets.
— Attorneys Obiamaka Madubuko and Michael Stanek of McDermott Will & Emery in New Energy Opportunities in Mexico Raise FCPA, Anti-Bribery Risks
The variety of charges recently brought by the US Department of Justice’s Foreign Corrupt Practices Act Unit against former Bechtel executive Asem Elgawhary signals that the DOJ is not only pursuing improper payments to foreign officials, but also company executives who solicit and accept improper payments.
— Attorneys David Courchaine and Kathleen Hamann of White & Case on recent fraud and money laundering charges filed by the DOJ against a former Bechtel executive.
Generally, examples of offers made with “corrupt intent” involve influencing the procurement process, side-stepping or granting exceptions to regulations (including tax treatment), giving someone access to nonpublic bid information or influencing the outcome of a lawsuit or enforcement action.
— Keshav Nair of The Network on how to recognize the “corrupt intent” behind bribery.
The number of FCPA enforcement actions brought in recent years has declined. […] Nevertheless, those who might be tempted to believe that anti-corruption enforcement is not a priority should review recent actions.
— Attorney Thomas Gorman of Dorsey & Whitney in For FCPA Compliance, Tone At The Top Key, Lack of Policies A Difficulty
First, the scope of “harmful acts” under the Law is defined more broadly than the scope of acts prohibited under the Acts. Second, and importantly for US companies, the Law prohibits facilitation payments, which are permitted under the FCPA. Third, unlike the FCPA but similar to the Bribery Act, the Law is not limited to corruption involving foreign officials; the Law also extends to related third parties. Last, unlike the Bribery Act but similar to the FCPA, the Law does not reach acts of commercial bribery in the private sphere.
— Attorney Anne Ligman Turner of Baker Donelson on the differences between Brazil’s new anti-corruption law and the US FCPA and UK Bribery Act.
Government enforcement efforts in 2013 produced major settlements of matters relating to the global financial crisis, high-profile insider trading convictions, near-record amounts of FCPA settlements, and new pledges of robust and aggressive SEC enforcement activity. We expect these trends to continue in 2014.
— Attorneys at Skadden Arps, in Government Enforcement: Aggressive Efforts Continue Around the Globe.
Three law firms — Gibson, Dunn & Crutcher, Hughes Hubbard & Reed and Shearman & Sterling — recently issued reports in which they anticipated vigorous enforcement of the Foreign Corrupt Practices Act, higher criminal penalties, increased international cooperation, and a continued focus on prosecution of individuals in 2014.
Robust programs, anti-bribery training, enforcement actions, and more… Here’s what we’re reading now in compliance:
- The Compliance Crystal Ball—Top 10 Compliance Trends For 2014 - Sambo Dul and T. Markus Funk of Perkins Coie
- DOJ And SEC Award Significant Credit For Remediation During Investigation - Michael Volkov
- 6 Tips for an Effective Code of Conduct – WeComply
- Whistleblowing and Retaliation: Both on the Rise - Shanti Atkins of NAVEX Global
- Walk a Straight Line — Even if All Roads Are Crooked - Peter Seidman of WeComply
- Why Anti-Bribery Training and Policies are Two Essentials to Fuel FCPA Compliance - Keshav Nair of The Network
- The Culinary Aspects of Homer’s Odyssey And Compliance Training - Thomas Fox
- What Compliance Program? - Susan Kohn Ross of Mitchell Silberberg & Knupp
- DOJ, SEC Announce Anti-Bribery Enforcement Actions Against U.S. Metals Firm – BuckleySandler
- Business Gifts – WeComply
- Making Corporate Compliance the Fabric of the Organization - Cindy Knezevich of The Network
- The Relationship Between Sarbanes-Oxley And FCPA Compliance - Michael Volkov
- Alcoa Subsidiary Pleads Guilty to FCPA Charge, Will Pay $348 Million - Michael Rosensaft of Katten
- Navigating the Myriad Anti-Corruption and Bribery Laws - Shanti Atkins of NAVEX Global
- Why Your Code Must Be Your Ultimate Policy - The Network
- Books And Records Flexes Its Muscles - Michael Volkov
- The Foreign Corrupt Practices Act—A Look Back at 2012 and 2013 - Stephen Spivack and Erin Sullivan of Bradley Arant Boult Cummings
- SEC Reports Significant Drop in FCPA Enforcement for 2013 – WeComply
- Third party risk – still the ethics and compliance ‘Achilles heel’ - Shanti Atkins of NAVEX Global
- We Mean What We Say – FCPA Enforcement Begins The Year With A Bang - Michael Volkov
- The Key Elements of An Effective Trade Compliance Program - Doreen Edelman of Baker Donelson
- Canada Is Aboard the Anti-Corruption Express – WeComply
- Mandatory Training for Third Parties – Effective or Protective? - Randy Stephens of NAVEX Global
- Brazilian Anti-Corruption Law: 7 Implications and Challenges for Companies Doing Business in Brazil - Steven Bauer and Rita Motta of Latham & Watkins
- The SEC: The Future Path of Enforcement - Thomas Gorman of Dorsey & Whitney (see also Part III, Part II, and Part I in this same series)
- January 2014 FCPA Digest - Shearman & Sterling
- Behind Royal Allegations: Leveraging the Fraud Triangle to Positively Impact Your Anti-Corruption Training - Cindy Knezevich of The Network
- China Tightens Controls over Commercial Bribery in the Health Care Industry - Katherine Wang of Ropes & Gray
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Although bribery is an integral part of daily life in many countries and can seem a prerequisite to obtaining or advancing any project, the perils awaiting foreigners who adapt to corrupt cultural norms are substantial.
— Peter Seidman of WeComply in Walk a Straight Line — Even if All Roads Are Crooked