FCPAméricas Blog

If FCPA Enforcement Says It, Believe It

Author: Matteson Ellis

FCPA enforcers take a lot of heat. The U.S. Chamber of Commerce is not exactly their friend. Commentators like Tom Fox rightly call for more information on declinations. But there is one thing with which you cannot argue. When FCPA enforcement says it, you should believe it.

I recently came across my notes from the November 2007 American Conference Institute’s National Conference on the FCPA. The opening speakers were Mark Mendelsohn, then-Deputy Chief of the Fraud Section in the DOJ’s Criminal Division, and Fredric Firestone, then-Associate Director in the SEC’s Division of Enforcement. That was an important year – it was when FCPA enforcement began to surge. That was the year that Mr. Mendelsohn declared, “2007 is by any measure a landmark year in the fight against foreign bribery.”

Reviewing my notes, it became clear that the similarities between enforcement’s statements in 2007 and their statements today are striking (FCPAméricas overviewed current statements from enforcement at the recent 2011 ACI National Conference). Consider the following:

More cases to come. In 2007, Mr. Mendelsohn and Mr. Firestone said that many more cases should be expected. They were right. FCPA enforcement has steadily increased since that time, with a slight dip in 2011 given the attention that enforcement is giving to litigation. Officials continue to warn that enforcement will grow, especially as it relates to smaller and medium sized companies. Given the track record, this should not be doubted.

Blockbuster actions. In 2007, Mr. Mendelsohn highlighted the two “blockbuster” actions that year, the $26 million Vetco II settlement and the $44 million Baker Hughes settlement. Baker Hughes seemed spectacular at that time. But three years later it dropped off of the “Top 10” list of FCPA actions by settlement amount. In fact, the 2007 blockbuster amounts now seem dwarfed by more recent settlements. In 2010, there were five settlements over $100 million. In 2011, nine companies reached settlements of $10 million or more. Enforcement has suggested that blockbusters will continue into 2012.

Use of new investigative techniques, including search warrants and wire taps. In 2007, enforcers promised that they would begin to deploy new investigative techniques in pursuing violations. This turned out to be true. Not only has enforcement begun to actively use these techniques (see the Shot Show cases). The FBI has since created a specially trained unit to investigate FCPA violations.

Targeting new sectors. In 2007, Mr. Mendelsohn said that certain business sectors should be on notice. He said that the oil and gas industry is not the only one subject to FCPA enforcement. He specifically named pharmaceuticals, medical devices, and biotech. Indeed, in the following years we watched sector-wide enforcement in these areas. Today enforcement has named new industries, like financial services. Companies are on notice.

No “fishing expeditions.” In 2007, Mr. Firestone said that, when targeting certain industries and sectors, enforcement does not go on “fishing expeditions.” He said that officials only conduct sweeps when there is enough evidence to show that multiple companies in an industry are engaged in the same improper practices. This past year, enforcement said the exact same thing.

Credit for remedial efforts, cooperation, and compliance programs. Mr. Firestone said that enforcement officials will consider a company’s remediation efforts, cooperation, and efforts to strengthen compliance as factors when deciding penalty levels. Enforcement maintains the same policy today.

Maybe the similarities between 2007 and today are not that surprising. After all, in 2007, Mr. Firestone said that government enforcers strive for consistency. And enforcement continues to say the same today.

The FCPAméricas blog is not intended to provide legal advice to its readers. The blog entries and posts include only the thoughts, ideas, and impressions of its authors and contributors, and should be considered general information only about the Americas, anti-corruption laws including the U.S. Foreign Corrupt Practices Act, issues related to anti-corruption compliance, and any other matters addressed. Nothing in this publication should be interpreted to constitute legal advice or services of any kind. Furthermore, information found on this blog should not be used as the basis for decisions or actions that may affect your business; instead, companies and businesspeople should seek legal counsel from qualified lawyers regarding anti-corruption laws or any other legal issue. The Editor and the contributors to this blog shall not be responsible for any losses incurred by a reader or a company as a result of information provided in this publication. For more information, please contact Info@MattesonEllisLaw.com.

The author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author.

© 2012 Matteson Ellis Law, PLLC

Matteson Ellis

Post authored by Matteson Ellis, FCPAméricas Founder & Editor

Categories: Anti-Corruption Compliance, Chamber of Commerce, Declinations, Enforcement, FCPA, Internal Investigations, Private Equity

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