TRACE attends anti-corruption conferences in part to listen to presentations by representatives from the various government enforcement agencies so that we can report back on emerging trends and other hints they may drop. With official guidance pretty sparse, those tea leaves become more important. Julie Coleman of TRACE provides this summary of a busy week:
“Representatives from TRACE fanned out across the globe this week to attend anti-bribery conferences on three continents. Alexandra was in Shanghai at the excellent American Conference Institute’s 3rd China Summit on Anti-Corruption, where she presented on effective anti-bribery training and led a workshop on tiered due diligence. Carolyn presented on anti-corruption issues at the International Conference on Anti-Corruption, Good Governance and Human Rights in Paris. Anne and Julie stayed closer to home, where Anne attended the 4th FCPA & Anti-Corruption Conference and presented on the unique challenges of doing business in the “BRIC” countries (Brazil, Russia, India and China), and Julie attended Ethical Corporation’s 3rd Annual Global Anti-Corruption Summit and presented on the benefits of benchmarking to create an effective compliance program.
Hank Walther, the Assistant Chief at the U.S. Department of Justice Fraud Section, appeared on three different panels in one day at Ethical Corporation’s conference, and provided his predictions about what the future of FCPA enforcement holds. He noted that the following three trends will continue:
1. The “Siemens Phenomena” is here to stay. That is, the DOJ will continue to pursue large cases where the alleged misconduct spans multiple continents. He noted that the Siemens case, with its billion-dollar-plus settlement, was not an outlier. Hank pointed to other recent eye-catching settlements: BAE ($400 million), Daimler ($93 million criminal penalty) and KBR ($402 million).
2. However, the DOJ’s interest in pursuing marquee names does not mean private companies are off the hook. Per Hank, the DOJ still likes the smaller cases. Although the public company prosecutions grab the headlines, Hank was quick to note that more private companies have been prosecuted under the FCPA than public companies.
3. Individuals remain squarely in the DOJ’s cross hairs. Hank pointed out that, even as recently as four or five years ago, the DOJ rarely charged individuals with FCPA violations. What has changed? First, an apparent public policy shift at the DOJ has occurred. The DOJ has come to realize that “it can’t build an enforcement regime on criminal fines alone.” That is, if bribery convictions only impact corporate coffers, then paying bribes just becomes a cost of doing business. If, instead, the specter of jail time is factored into the cost-benefit analysis, then the calculus changes dramatically. Second, the DOJ has become more adept at gathering evidence in FCPA cases. Resolutions of FCPA cases used to come about like this: (a) a corporation uncovers an inappropriate payment, (b) it then conducts an internal investigation and gathers its own evidence, and (c) it finally comes into the DOJ with hat in hand where a polite, if somewhat tense, negotiation ensues and a penalty is mutually agreed upon. Now, corporate executives can expect a “knock and talk:” awakened by a hard knocking on the front door of their home, opening the door and hearing “I’m a special agent from the FBI. May I ask you some questions?” According to Hank, the answer is always “yes.”"
Nathaniel Edmonds (Assistant Chief, Fraud Section) spoke in Shanghai about, among other things, the Las Vegas Sting. He fascinated the audience with his description of the many hours of footage and provided a new piece of information: the propensity of the alleged bribe-payers involved to discuss not only the deal at hand, but past deals.
So, there you have it. The DOJ is targeting individuals as well as companies of all sizes, – and those investigations may well provide enough material for the next round of investigations.
