According to a recent webinar sponsored by the law firm Hogan Lovells, anti-corruption experts expect to see an increased number of investigations this year under both the U.S. Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act.
Of the two anti-corruption laws, the UK law is more comprehensive, addressing bribery in both the public and private sectors, whereas the FCPA's anti-bribery provisions are generally limited to payments made to foreign officials. Yet anti-corruption experts expect to see more action in the U.S. than in the UK for 2014 given the relative immaturity of the UK Serious Fraud Office (SFO) and its lack of a significant enforcement record under the Bribery Act. At the same time, David Green — the new head of the SFO — is working to overhaul enforcement measures and has noted the SFO is currently working on a dozen or so major Bribery Act investigations. Panelists, therefore, acknowledge the potential for activity under the Bribery Act, particularly given the time it took for the FCPA to gain momentum after its enactment.
Despite a dip in FCPA enforcement in 2013, panelists noted that Securities and Exchange Commission (SEC) chair Mary Jo White has committed to more targeted FCPA investigations, with particular attention to the activities of large corporations in China. Both the Department of Justice (DOJ) and the SEC have devoted greater resources and attention to FCPA investigations and prosecutions, and have made it clear they interpret the laws and regulations as authorizing FCPA enforcement against non-U.S. businesses and executives.
Panelists also warned that SEC prosecutions often lead the agency to pursue similar prosecutions against other organizations. For instance, recent allegations of favoritism in a U.S. bank's hiring of children of Chinese government officials have prompted the SEC to more closely scrutinize the entire industry. This should encourage organizations to examine whether they participated in similar activity and/or review their compliance policies to ensure such issues are addressed.
Another area of concern for the SEC is China's more active enforcement of its state-secrets law and the potential effect it may have on FCPA investigations. Mainland China's law is purportedly written to prevent the release of state secrets, but it is so broad in scope that anything suggesting the bribery of a Chinese public official could qualify as a state secret. Thus, organizations are left subject to conflicting laws and often find it difficult to perform effective anti-corruption and bribery investigations in China while avoiding violations of Chinese law. Most FCPA prosecutions, however, circumvent such conflicts by settling with the SEC and DOJ before the start of active prosecution.
Every organization that carries out business with foreign officials must train its employees on what anti-corruption laws require, and how to spot and avoid violations.