FCPA Enforcement: 2020 and beyond

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Jorge Bofill
Bofill Escobar Silva Abogados, Santiago
jbofill@bofillescobar.cl

Moderator

Ann Sultan  Miller & Chevalier; Conference Coordinator, IBA Anti-Corruption Committee, Washington, DC

Speakers

Dan Kahn  United States Department of Justice (DOJ), Washington, DC

Charles Cain  US Securities and Exchange Commission (SEC), Washington, DC

Marc Bohn   VF Corporation, Denver, Colorado

Jessica Tillipman  George Washington University, Washington, DC

On Tuesday 9 March, the IBA Anti-Corruption Committee held a webinar entitled ‘FCPA Enforcement: 2020 and beyond’ at 1500 GMT.

Mr Kahn and Mr Cain spoke only on behalf of themselves and not on behalf of their respective agencies.

The discussion focused on enforcement trends, 2021 enforcement priorities, and notable cases and developments from 2020.

Trends

While discussing enforcement trends, Ms Sultan observed that 2020 saw a decline in Foreign Corrupt and Practices Act (FCPA) enforcement actions, with 43 per cent fewer actions than in 2019. Despite this downturn in the number of actions, 2020 was also a year of record-breaking settlement amounts by DOJ and SEC.

Mr Kahn said that, despite the cited statistics, the DOJ still charged and convicted more individuals in 2020 than in 2017, or any years prior to that, and that enforcement actions in 2020 were still part of a general upward trend. Mr Cain agreed, stating that cases also vary in size and complexity, and that case volume in 2020 was within norms.

Mr Kahn and Mr Cain both said that their divisions, although affected by the Covid-19 pandemic, were quickly afoot, crediting prosecutors and corporate defence counsel.

2021 enforcement priorities

In respect of FCPA 2021 priorities, Mr Cain referred to three priorities for the SEC:

• focus on individual liability;

• pending litigation;

• and the detection of corruption in non-traditional industries.

Mr Kahn emphasised that the DOJ’s priorities continue to be coordination for foreign enforcement authorities, the prosecution of individuals and pending trials that were pushed to 2021 because of the Covid-19 pandemic.

Whistleblowers

The significant increase of SEC whistleblower reports in 2020 was also discussed. Ms Tillipman speculated that the 130 per cent increase since the beginning of the whistleblower program may be the result of pandemic-related fraud, bigger pay-outs, but mainly laid off or remote working employees who feel more comfortable reporting from home. Mr Cain credited pay-out amounts but also people ‘trying to get things right’ internally. Mr Bohn pointed out that 81 per cent of corporate insiders said that they raised their concerns internally before reporting to the SEC, which proves the need to quickly address internal whistle blowing. Mr Cain said that, although he did not have the statistics, he had not witnessed a marked rise in the quality of whistleblower reports.

National Defense Authorization Act for 2021 and corporate disclosures

When asked whether he expected actions going back ten years in light of the National Defense Authorization Act (NDAA) for 2021’s allowance for federal courts to order disgorgement and other remedies based in equity for a ten-year period back from the latest violation, Mr Cain expressed that he did not think it likely that there would be many such cases because of difficulties with other aspects of bringing old cases, including document retention. Ms Tillipman expressed that she did not think the NDAA would significantly impact corporate disclosure calculations, which are already influenced by the DOJ’s approach to declinations as outlined in its Corporate Enforcement Policy.

Mr Kahn dismissed rumours related to a lower corporate disclosure rate and noted the difficulty in defining self-reporting for purposes of calculating such rates reliably.

2020 notable cases

Mr Bohn mentioned the Airbus and Goldman Sachs cases due to their size and scope. He also remarked that often companies find it difficult to relate to such large settlements because they are viewed as so extreme. Mr Bohn also noted that he had seen in uptick in non-FCPA charges in addition to standard FCPA charges (eg, money laundering).

Ms Tillipman and Ms Sultan both remarked that it was helpful to see details in resolutions, including quotations from emails. Ms Tillipman specifically noted the Beam Suntory case in this regard. She also suggested that the next DOJ and SEC FCPA Resource Guide include nicknames as a notable red flag for corruption.

When asked about the JF Investimentos case, and specifically why the US settlement had been so large when there were also actions in Brazil, Mr Kahn said that although he could not comment on specific actions, the DOJ continued to analyse whether there were US individuals or assets involved such that there would be equity in the US bringing an action, as well as whether the company took efforts to coordinate an international resolution.

Disclosure certification requirements: ‘Attachment E’ to DPAs and plea agreements

Ms Sultan noted that in the fall of 2020, the DOJ introduced a new disclosure certification (‘Attachment E’) to deferred prosecution agreements (DPAs) and plea agreements. The certification requirements reinforce the disclosure requirements that have been a feature of DOJ FCPA dispositions for several years. The exact language of certifications has varied, but generally require covered companies to disclose to the DOJ ‘any evidence or any allegations of conduct that may constitute a violation of the FCPA anti-bribery provisions had the conduct occurred within the jurisdiction of the United States’ – language that can cover a potentially broad swathe of information that goes well beyond actual evidence of illegal conduct. The certifications as now included in Attachment E require sign-off by the company's CEO and CFO and reiterate the importance of such disclosures to the DOJ's consideration of whether a company has complied with the DPA or plea agreement requirements. Mr Kahn said the reason behind the formal ‘Attachment E’ language is that the DOJ wants to be transparent and have everyone know what to expect when they come in before the DOJ, and not permit the disclosures to be pushed down to lower levels of a company. Ms Tillipman did not think that this disclosure language would have a significant impact in compliance processes for companies.

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