In two recent public appearances, Department of Justice (DOJ) representatives spoke to issues of concern to every compliance practitioner regarding one role of the DOJ going forward and how that role will continue to feed the need for robust compliance programs going forward. The first remarks were by Acting Assistant Attorney General Kenneth A. Blanco at the Atlantic Council Inter-American Dialogue Event on Lessons From Brazil: Crisis, Corruption and Global Cooperation (Blanco speech) and the second remarks were by Sandra Moser, Acting Chief, U.S. Department of Justice, Criminal Division, Fraud Section, at the Anti-Corruption Compliance in High-Risk Markets conference (Moser remarks).
Blanco highlighted the close cooperation between the US and Brazil in anti-corruption investigations and enforcements. The last 12 months has been a signature year for such corruption, with “the Criminal Division’s Fraud Section and the Brazilian Lava Jato task force have cooperated and coordinated resolutions in four FCPA cases: Embraer, Rolls Royce, Braskem, and Odebrecht.” The investigative cooperation is based upon a “strong relationship built on trust” between the prosecutors of the two counties. Blanco noted, “This trust allows prosecutors and agents to have direct communications regarding evidence. Given the close relationship between the Department and the Brazilian prosecutors, we don’t need to rely solely on formal processes such as mutual legal assistance treaties, which often take significant time and resources to draft, translate, formally transmit, and respond to.”
Blanco went on to detail some of the specific aspects of this cooperation. He said, “At the beginning of an investigation, a prosecutor or agent from a country’s financial intelligence unit can call his or her foreign counterpart and ask for financial information that, for example, may identify bank accounts. Once the investigation has progressed to the point where prosecutors are ready to proceed to trial, the evidence may be requested through the mutual legal assistance channel so that it can be admissible at trial. This prosecutor-to-prosecutor or law-enforcement-to-law-enforcement cooperation has allowed both countries to more effectively pursue their cases.”
Beyond simply the trust and cooperation is the coordination of penalties. He stated, “It is important to mention how the penalties were levied in these coordinated resolutions. By working together, Brazil and the Department not only assisted one another in gathering evidence and building the case, but made sure to credit the fines and penalties paid to each country, rather than imposing duplicative fines and penalties. This ensures fairness to the companies, and provides the right incentives for companies to cooperate fully with the relevant jurisdictions implicated in the case.”
As reported by Jimmy Hoover in an article in Law360 (sub req’d) entitled, “DOJ To Increase International Coordination In FCPA Fines” , Moser went further regarding the penalty aspects in international enforcement efforts. She said, “the DOJ would work with its counterparts abroad to avoid “piling on” additional penalties for companies in Foreign Corrupt Practices Act cases, borrowing a phrase that Attorney General Jeff Sessions has used in the regulatory context to signal enforcement relief to corporations. Moser noted cases like the massive corruption investigation into Odebrecht SA and Braskem SA, where the department credited criminal penalties that the Brazilian conglomerates paid to Switzerland and Brazil authorities in calculating how much they owed the U.S.”
Moser emphasized “These cases are not an aberration.” She also noted, “the increased international coordination in assessing FCPA fines stems from the realization that the money for paying back multiple governments for corrupt practices comes from the same corporate accounts.” Even with the ongoing cooperation she added ““We are trying to do better,” Moser regarding about such coordination.”
Moser’s remarks followed on those from Daniel Kahn, Chief, FCPA Unit, Fraud Section, Criminal Division at the DOJ and Kara Brockmeyer, the former Chief, FCPA Unit, Division of Enforcement at the Securities and Exchange Commission (SEC) made at ACI’s 33rd International Conference on the Foreign Corrupt Practices Act in November 2016 (2016 ACI-FCPA Conference). At the 2016 ACI-FCPA Conference, they discussed the “one pie” concept. They explained that increasingly, enforcement authorities were moving towards one total cost to anti-corruption violators which would be equitably split up by authorities where the corruption occurred or by the countries which had jurisdiction. Kahn said that companies who self-disclosed to multiple regulators and extensively remediated, along the lines laid out in the FCPA Pilot Program, were more likely to garner credit with US regulators for fines paid to overseas authorities. A contra example was Alstom, which tried to settle piecemeal with a variety of countries and entities such as the World Bank. Under this approach, Alstom did not received credit from US authorities for any of their other payments.
The role of the DOJ and SEC in this one pie concept is critical. For it is only the US which has the track record in anti-corruption enforcement and cache to lead this international fight, most particularly in the enforcement phase. In the financial penalty phase the lion’s share of fines in the Rolls-Royce case went to the UK government and in the Odebrecht case to Brazil. It is critical interest to US companies that there be certainty in resolutions and the US government can help lead this initiative. Yet US companies will need to understand the requirements as set out by Brockmeyer last fall, which coincide with the requirements of the Pilot Program for self-disclosure, cooperation and remediation. Any US company doing business outside the US must have a compliance program to prevent, detect and remedy any corruption issues. Furthermore, if they want to receive the maximum credit from multiple regulatory bodies they will need such a best practices compliance program.
Blanco ended his speech with words which inspire every compliance professional and clearly speak to the current DOJ’s approach to anti-corruption enforcement. He stated, “People are demanding action, they are no longer silent. We at the Department of Justice will continue, like we have for years, pushing forward hard against corruption, wherever it is, and we welcome our fellow counterparts around the world who are fighting this important fight against corruption. We are committed to working with our partners like Brazil – shoulder to shoulder – steadfast come what might. Together we will ensure that there is no place for corrupt individuals to hide, and no place for them to hide their money, assets or any kind of wealth. No refuge or rest for the wicked. That is the plan, this is our strategy, this is our goal. I hope you will all join us in this important and noble endeavor.”
I plan to continue with this endeavor and I hope you will join me.
[View source.]
