2009 may be behind us, but the reverberations caused by the Department of Justice’s (DOJ) and Securities and Exchange Commission’s (SEC) enforcement of the Foreign Corrupt Practices Act (FCPA) continue. The DOJ reports that it has 140 ongoing investigations at present. On January 19, 2010 the DOJ arrested 22 individuals in its first undercover FCPA sting operation. While 2010 is starting off with a bang, 2009 was a harbinger of what is to come.
The Squire Sanders anticorruption compliance and FCPA team has put together in-depth summaries of the enforcement actions resolved in 2009. The following noteworthy trends emerged from these enforcement actions:
- 2009 was the “year of the individual.” Enforcement actions involving 17 individual defendants were resolved this past year including four individuals who were convicted at trial.
- US enforcement authorities continue –often without judicial restraint – to broadly interpret the FCPA’s elements and jurisdictional reach.
- US enforcement authorities employed novel theories – such as the SEC’s use of control person liability and the DOJ’s targeting of third-parties – and brought additional criminal charges, such as Travel Act, wire fraud and money laundering violations in FCPA enforcement actions. Similarly, the DOJ repeatedly sought the forfeiture of assets involved in FCPA schemes.
- Industry-wide investigations, such as those ongoing in the telecommunications and oil and gas industries, figured prominently in 2009. The DOJ has announced it is looking at the pharmaceutical industry in 2010, among others.
- In the two non-prosecution agreements entered into by the DOJ in 2009, the corporate entities involved were able to negotiate the right to self-monitor and report their FCPA compliance and remediation efforts without the imposition (and expense) of independent monitors.
- Monetary penalties, while down in aggregate from 2008, were still well above their historical averages. In addition, significant prison terms were handed down to individuals who violated the FCPA.
The best way for a company to avoid an FCPA-induced headache is to implement and enforce a robust and proactive compliance plan. Lawyers in Squire Sanders’ global anticorruption and white collar practices regularly counsel clients on FCPA compliance, training and enforcement issues. If you have any questions about FCPA issues, please contact one of the individuals listed in this Alert.