The U.S. Government’s 2019 FCPA enforcement efforts led to new milestones; further cooperation with international authorities; and continued use of independent corporate monitors. The following are key takeaways of these highlights as well as lessons learned:

U.S. Enforcement Efforts

• The U.S. Securities and Exchange Commission (“SEC”)’s standalone enforcement actions increased to 18 in Fiscal Year (“FY”) 2019, resulting in 5 more actions than the agency brought in FY 2017 and FY 2018.
  
• The U.S. Department of Justice (“DOJ”) continued its focus on charging individuals with FCPA-related violations; increasing the number of indictments of individuals to 34.
  
• The number of DOJ declinations was reduced to 2 in 2019.
  
• Corrupt behavior can lead to other legal exposure, such as antitrust and sanctions issues. This occurred with TechnipFMC plc (“TechnipFMC”), Microsoft Magyarország Számítástechnikai Szolgáltató és Kereskedelmi Kft., Fresenius Medical Care AG & Co. KGaA (“Fresenius”), and a marketing provider.
  
• A majority of the 2019 FCPA corporate resolutions, four out of the seven corporate resolutions, involved third party intermediaries.
• Companies like Telefonaktiebolaget LM Ericsson (“Ericsson”), Mobile TeleSystems PJSC (“MTS”), and Walmart Inc. (“Walmart”) entered into corporate resolutions with the U.S. government, while their foreign subsidiaries pled guilty to FCPA violations.
  
• Foreign authorities were involved in investigating or resolving the same corruption issues related to the U.S. enforcement actions against companies like TechnipFMC and Samsung Heavy Industries Company Ltd. (“Samsung Heavy Industries”), including in France and Brazil. TechnipFMC and Samsung Heavy Industries both entered into foreign resolutions, including leniency agreements with the Brazilian government.
• Often, an internal investigation of corrupt behavior in one country will expand to other parts of the world.
  • TechnipFMC responded to a U.S. government inquiry concerning a Brazilian joint venture for which it is a minority partner. According to TechnipFMC’s DPA, TechnipFMC conspired with the joint venture, using it to bid and win large offshore oil and gas projects in Brazil. The U.S. government inquiry also led to questions concerning other projects involving TechnipFMC subsidiaries in Brazil, Ghana, and Equatorial Guinea.
  • A marketing provider also expanded its review of its practices, which initially focused on conduct in Peru and later included China.

Global Cooperation

• The SEC and DOJ regularly work with foreign law enforcement agencies to enforce international bribery laws and to coordinate corporate resolutions, even conducting anti-bribery trainings to aid global efforts.
• In FY 2019, the SEC shared materials contained in its investigative files with regulators and law enforcement agencies, including foreign authorities, in over 400 investigations.
• The DOJ and SEC conducted, in FY 2019, a two-day foreign bribery training in Brazil for more than 100 Brazilian law enforcement personnel.

Independent Corporate Monitorships

• Based on the October 2018 DOJ guidance, four independent corporate monitorships were imposed in 2019, as part of the companies’ FCPA resolutions.
  
• Regarding monitorship agreements for MTS, Fresenius, and Ericsson, the majority of the terms are substantially the same and reflect the standard language used for such agreements.
• The primary differences between these agreements include the term of the monitorship (ranging from two to three years) and the deadlines for the:
• • Work plans (ranging from 30 to 60 calendar days);
  • Initiation of the initial review (ranging from 60 to 120 calendar days from the date of the monitor’s engagement);
  • Follow-up review (ranging 120 to 180 to calendar days after the issuance of the initial report) periods;
• • Company’s adoption and implementation of the initial report and its recommendations (ranging from within 120 to 180 days of receiving the report); and
  • Follow-up report and its recommendations (ranging from 120 to 180 days of receiving the follow-up report).
• Unlike the monitor agreements for Walmart and Fresenius, the Ericsson and MTS agreements require a second follow-up review and report before the final report.
• Notably, the monitor’s scope and responsibility defined in Walmart’s monitorship agreement differs from the standard monitorship agreement terms.
  • For Walmart, the monitor is tasked with assessing the company’s compliance for identified “Key Risk Areas.” The agreement also limits the monitor’s assessment to the company’s “Home Office” and four countries in which the company operates based on the monitor’s review of a 2018 risk assessment, identified as “Monitor Countries.”

LESSONS LEARNED: PRACTICE REMINDERS FOR 2020

• Due diligence and monitoring of third party intermediaries is still crucial.
• • As noted above, a majority of the conduct leading to the 2019 corporate resolutions included third party intermediaries, including one joint venture in which the company is a minority partner.
• • Global anti-corruption audits are one way to monitor third parties, but regular checks of the effectiveness of internal controls and procedures can also help minimize corruption risks.
• Conduct can lead to different U.S. legal exposure (such as antitrust and sanctions risks) as well as potential legal issues in other countries, and such information is regularly disclosed in public corporate filings.
  
• Be prepared that if corrupt conduct occurs, the U.S. government will cooperate with foreign authorities, raising questions about simultaneous disclosures and how best to negotiate leniency agreements abroad.
• Prioritization of early voluntary disclosure of misconduct and full cooperation with domestic and foreign governmental agencies, including conducting proactive internal investigations, providing key relevant information, and making employees available for interviews, continue to be critical factors for negotiating non-prosecution agreements and deferred prosecution agreements.
• Independent corporate monitorships remain a beneficial government tool to ensure that companies implement and improve their compliance programs and mitigate corruption risks.

FOOTNOTES
*It is important to note that the SEC summarizes information in its annual reports occurring by fiscal year, a 12-month financial budget and reporting period. The federal government’s fiscal year runs from October 1 of one year to September 30 of the following year.

** The corporate resolution amounts per fiscal year, according to the DOJ annual reports.