Recap: What Anti-Corruption Authorities Want In-House Lawyers and Compliance Officers to Know About Enforcement

Did you miss the 30th International Conference on the Foreign Corrupt Practices Act earlier this month? Not to worry: attorneys at Akin Gump have distilled some of the key discussions into a series of helpful updates on anti-corruption and bribery compliance. Highlights:

•  Expect more settled administrative procedure cases:

“[Kara Brockmeyer, Chief of the SEC’s FCPA Unit in the Division of Enforcement] noted that people … can expect more SEC settled administrative procedure cases because under Dodd-Frank, the SEC can now obtain civil penalties in administrative cases, giving the examples of the Total S.A. and Stryker Corporation cases, which were both resolved by administrative settlements in 2013.”

•  Self-disclose sooner rather than later:

“[Charles Duross, Deputy Chief in the DOJ’s Fraud Section and head of the FCPA Unit] expressed that the DOJ continues to encourage companies to self-disclose FCPA problems sooner rather than later. […]  Companies that wait to report until the internal investigation is ‘done’ run the risk of going to meet with the government to make their report and enforcement officials having questions that were not asked during the investigation or that may lead to the company having to go back and retread ground that has already been covered, through witness interviews, document collection or otherwise.”

•  70% of recent FCPA cases have involved third parties:

“Addressing the question of the most significant ongoing issues that the SEC is seeing in cases that they investigate, Ms. Brockmeyer highlighted companies’ use of third-party intermediaries.  In the past two years, up to 70 percent of the cases in the SEC’s FCPA Unit have involved joint ventures, vendors, suppliers or other third parties.”

•  A robust internal investigation can enhance credibility:

“Matthew Queler, Assistant Chief of DOJ’s FCPA Unit, and Tracy Price, Assistant Director of SEC’s FCPA Unit … gave rare insight into what enforcement attorneys look for from cooperating companies. In general, they conveyed their view that a robust internal investigation can enhance a company’s credibility with authorities, and their comments concerned varying stages of the process, spanning from the first ‘red flag’ indicating a potential criminal issue to the process of cooperating with authorities and remediating violations.”

•   Close cooperation with authorities can ease future roadblocks:

“Ms. Price encouraged companies to partner with authorities early on so that authorities can assist in the scoping process where feasible. She suggested that authorities’ participation in scoping may help the company focus the investigation on issues of most interest to authorities. Also, Ms. Price noted that early conversations with authorities on potential roadblocks in an investigation, like foreign blocking statutes and data privacy laws, provide authorities an opportunity to help the company overcome potential issues, where possible.”

•  Document preservation is critical:

“Mr. Queler stressed the importance of ‘up the chain’ preservation [of documents and other materials], warning that an investigation that only preserves the materials of lower-level employees may be inadequate. If a company fails to preserve the materials of the employee’s supervisors and management, the company runs the risk of making authorities skeptical about the thoroughness of the company’s investigation.”

•  Differences between UK and US deferred prosecution agreements create significant risks:

“Daniel Braun, Deputy Chief of the U.S. Department of Justice, Criminal Division, Fraud Section; Patrick Rappo, formally of the U.K. Serious Fraud Office; … and Peter Burrell, a U.K. defense attorney … drew attention to the stark contrasts between the use of DPAs in the U.S. to resolve FCPA cases and the contours of the new DPA program in the U.K. […] Most notably, the panelists explained that under the program, if a company enters into a DPA with the SFO, the SFO will expect the company to waive the attorney-client privilege and any other protections by producing documents such as witness statements and internal legal reports.  By contrast, in the United States, DOJ prosecutors cannot request or reward the waiver of such privileges.  Moreover, companies that operate in the U.S. are wary of producing attorney-client privileged materials or information to government investigators because, in general, waiver of the privilege with respect to one recipient waives it as to all third parties.”

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