An Inside Look at FCPA Enforcement
On November 3, 2016, Assistant Attorney General Leslie R. Caldwell of the US Department of Justice’s (DOJ) Criminal Division delivered prepared remarks at The George Washington University Law School which treated the audience to a high-level federal prosecutor’s interpretation of the Foreign Corrupt Practices Act (FCPA). The prepared remarks were followed by a panel discussion with Caldwell, Karen Popp of Sidley Austin LLP, and students of the law school.
Caldwell’s summary of her two and half years assisting at the helm of the DOJ’s Criminal Division has a broad scope, yet also provides a window into the department’s goals, thought processes, and guidelines pertaining to FCPA enforcement.
The immediate audience included lawyers and future lawyers, but the subject matter has wide application to companies that do global business. Of course, the subject matter of the FCPA, which prohibits bribes to foreign officials and requires businesses to keep accurate accounts, has a strong international flavor. Beyond that, much of what Caldwell said about the importance of fighting international corruption, transparency in charging decisions, and meaningful corporate compliance programs provides useful ethical and legal guidelines for corporate leadership.
Heightened Enforcement Efforts
Caldwell began by listing the results of the DOJ’s heightened enforcement efforts under her watch, such as:
- $772 million in criminal penalties against Alstom for a scheme to bribe officials in more than 10 foreign countries
- $230 million in criminal penalties ($800 million total including fines to the Dutch government and US civil penalties) against VimpelCom for conspiring to make $114 million in payments to an Uzbekistan official
- $213 million in criminal penalties against a hedge fund, Och-Ziff Capital Management for scheming to bribe officials all across Africa
- $107 million in criminal penalties to resolve a bribery investigation into Embraer, which resulted in criminal charges against more than a dozen individuals in Brazil and Saudi Arabia for misconduct
- Work with the Kleptocracy Initiative to recover nearly $3 billion in ill-gotten gains from bribery that was laundered into “real estate, planes, cars, Impressionist art, the rights to the movie ‘Wolf of Wall Street’ [sic] and even a glove worn by Michael Jackson”
Caldwell next addressed the issue of transparency by acknowledging that “[c]orporate counsel and practitioners have long raised concerns about what is a perceived lack of transparency, and even arbitrariness, in how the department decides when to bring charges or seek some lesser resolution in cases involving corporations.” She continued by describing her efforts to bring about greater transparency by introducing a one-year pilot program and guidance to explain that companies that voluntarily self-disclose FCPA violations, fully cooperate with investigations, remediate, and disgorge any ill-gotten profits, will receive credit — including, in some cases, outright declination (meaning, no charges are filed or existing charges are dropped).
Transparency has been enhanced, according to Caldwell, by publishing:
- Declination letters to qualified companies “to show that this result is attainable for companies that come in and cooperate”
- Corporate resolutions (e.g., pleas and settlements) that detail all the factors that contributed to the DOJ’s decisions, so that this information can help understand what’s needed to comply with the FCPA
Still, she acknowledged that the DOJ is continuing to look for a better balance between public access and legitimate privacy concerns of companies that were not prosecuted.
Effective Corporate Compliance
Lastly, Caldwell provided her insights on corporate compliance. She noted that while it’s “increasingly rare” that a company has a “feeble compliance program,” it’s much more common to see “compliance programs that seem strong on paper but are weak in practice.” Although these programs have become more and more sophisticated over the last 20 years, says Caldwell, communication of the program remains a problem: if only executives hear the program emphasized, it does little good for most of a company’s workforce.
Caldwell ended her remarks by noting that while an effective training program is a mitigating factor (that is, it helps corporate defense) under the DOJ’s Principles of Federal Prosecution of Business Organizations and the US Sentencing Guidelines, the DOJ only last year hired a compliance consultant to lend expertise to the department in evaluating the effectiveness of compliance programs. Hiring the consultant enabled the DOJ to “conduct more exacting interviews of compliance personnel” and to apply “a real-world understanding of the corporate compliance function in different industries, big and small,” according to the remarks.
Further Reading & Listening
For more information about the FCPA, including how to communicate your corporate compliance program through effective training, check out our webinar. You can also learn more about FCPA enforcement actions arising from lack of due diligence in the course of a corporate acquisition by reading our story, The Company You Buy: Professional Ethics Means Sharing Transgressions. For an analysis of how the new anti-bribery systems standard intersects with FCPA enforcement, see New Anti-Bribery Management Systems Standard.
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