Corruption Enforcement Goes Global

by BakerHostetler
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As BakerHostetler recently reported in its FCPA Mid-Year Update, the phenomenon of parallel prosecutions is gaining popularity as more countries enact and enforce anti-corruption legislation. In the last week alone, both Canada and the United Kingdom have announced landmark prosecutions under their respective anti-corruption statutes, signaling that prosecutions for violations of local anti-corruption laws are here to stay. This means that companies with international operations, who are likely already focused on compliance with the Foreign Corrupt Practices Act (FCPA), must ensure that they are also aware of and in compliance with the local anti-corruption laws in the countries in which they operate. The risk of multiple prosecutions -- and multiple penalties -- is real and requires increased vigilance and education to ensure that sufficient internal controls are in place to comply with anti-corruption legislation on a global scale.

The first of the two prosecutions was announced on August 14, 2013, by the Serious Fraud Office (SFO) when it charged three British nationals with offenses under the U.K. Bribery Act of 2010. The individuals are charged in connection with a £23 million fraud at Sustainable AgroEnergy. The specific conduct underlying the charges has not been disclosed; however, the charges did not involve Section 6 of the U.K. Bribery Act. This is significant because Section 6 criminalizes bribery of foreign public officials, indicating that this prosecution may involve purely commercial bribery. Commercial bribery is not prohibited under the FCPA; the U.K. Bribery Act is more restrictive in this regard and thus expands the scope of prohibited conduct that U.S. companies operating in the United Kingdom must consider. Notably, this is the first prosecution by the SFO under the U.K. Bribery Act since the Act was enacted July 1, 2011. While many have speculated that the lack of prosecutions for more than two years signaled a lack of interest by the SFO, these types of anti-corruption investigations require time and resources, and it is likely that more such prosecutions are currently in the works.

The second prosecution was announced on August 19, 2013, after a Canadian court convicted an agent of Cryptometrics, Nazir Karigar, for plotting to bribe Indian aviation authorities and Air India executives in exchange for an airline security contract. The conviction is the first conviction of an individual under Canada's Corruption of a Foreign Public Officials Act (CFPOA). Karigar was alleged to have brokered a deal between Cryptometrics executive Robert Bell and Indian officials under which Bell would receive inside information to help Cryptometrics secure a contract for a biometric facial recognition passenger identification system. Most of the evidence came from Bell who testified under an immunity deal with Canadian prosecutors. Karigar is reported to have notified the U.S. Department of Justice (DOJ) of the alleged bribes by Cryptometrics. While there is no indication that the DOJ is currently conducting its own investigation of Cryptometrics, the Canadian prosecution may well have been spurred by collaboration between the DOJ and Canadian officials. Despite the CFPOA's narrower jurisdictional reach than the FCPA, in that it requires a significant portion of the offense to occur in Canada, Canadian officials may have had more of an interest in prosecution of Karigar than the DOJ. Parallel prosecutions frequently stem from collaboration between prosecuting agencies in different countries. Though the CFPOA has received less media attention than the U.K. Bribery Act, it is certainly a statute that companies conducting business in Canada will need to learn and with which they need to comply.

Whether in collaboration with the DOJ or on its own, a ramp-up of global anti-corruption legislation and enforcement is underway. With headline cases in both Britain and Canada this week and the recent passage of anti-corruption legislation in both Brazil and Russia, the campaign against corruption is now more global than ever. Companies have always been advised to comply with the FCPA and local anti-bribery laws, but the local anti-bribery laws now have more bite, and the prospect of prosecution by multiple jurisdictions is increasingly real. To complicate matters even further, what is authorized and prohibited under each country's anti-corruption law varies, requiring companies to perform an individualized analysis of their potential exposure in order to determine if current compliance policies and practices are adequate.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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