FCPA: A Look Into The Future of Enforcement

Are the tactics of Foreign Corrupt Practices Act enforcement changing? That’s the question white collar and anti-corruption lawyer Mike Volkov ponders in Wiretaps — A New Tool for FCPA Enforcement?:

“While the whistleblower rules are important and justify vigilant compliance efforts, there is a more significant, and possibly damaging, trend for FCPA enforcement. Corporations now have to consider the risk that the government will conduct wiretaps of target telephones…

“For businesses, this raises serious risks.  While legally authorized to listen to target telephones, law enforcement has access, with certain minimization limitations, to conversations which may touch on other topics involving legal compliance, such as antitrust, securities/accounting mistakes, or other potential legal issues which can undo a publicly-traded company… Companies have never considered the implications of legally authorized wiretaps in the boardroom, but in today’s environment, it is something they need to consider.”

Wiretaps aren’t the only new arrow in the government’s enforcement quiver, however. Recent charges levied against Thomas O’Rourke, Noble Corporation’s former controller and director of internal audit, indicate a shift in assigning responsibility for FCPA compliance. From law firm Sheppard Mullin:

“The SEC’s decision to separately pursue individuals in this case is not surprising: Government officials regularly emphasize the effective deterrent effect of imposing individual penalties for FCPA violations. We think it is notable, however, that the SEC took action against Noble’s former internal audit director. This charge suggests the SEC is setting a very high (and challenging) standard: If there is corporate wrongdoing, the SEC (1) expects internal audit personnel to uncover that wrongdoing and (2) may charge internal auditors for failure to do so.” (SEC’s Charges Against Noble Execs — A Noble Pursuit?)

But corporations, too, need to reconsider the way they respond to charges of Foreign Corrupt Practices Act violations. FCPA lawyer Tom Fox, writing on the recent resolution of bribery charges against BizJet:

“One of the clear points [Assistant Attorney General Lenny] Breuer emphasized was that if companies will come to the DOJ, make a voluntary disclosure and fully cooperate, it will pay dividends. I believe that this is clearly the case in the BizJet matter. Here you had a multi-year bribery scheme in place, not only approved at the highest levels of the company but with active involvement from senior managers, yet the final monetary penalty was almost 30% below even the lowest in the Sentencing Guideline range. Clearly BizJet benefited through its cooperation with the DOJ and that message should be made clear to any other company which might find itself in such a ‘fine mess.’” (The BizJet DPA: Cooperation is the Key)

One thing, however, is quite clear: in spite of recent high-profile setbacks in the “Shot Show” and Lindsay Manufacturing cases (chronicled in Jackson Walker’s DOJ and SEC Continue to Aggressively Enforce FCPA Despite Recent Setbacks and Dismissal of FCPA Cases Represents Cautionary Tale for DOJ by Ifrah Law), federal officials aren’t slowing down in their aggressive pursuit of corrupt corporations and executives.

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