FCPA enforcement in 2013 will result in some significant enforcement actions. Trust me. You can take this prediction to the bank.
Chuck Duross, head of the FCPA Unit in the Justice Department, confirmed this position. In his recent statement, Chuck indicated that 2013 will include some big settlements which are in the pipeline. That makes sense.
FCPA prosecutors were busy last year with trials and the Guidance. I know what is involved in preparing a document like the Guidance in the Justice Department, going through the inert-agency coordination process, and making sure every constituency has had a chance to comment. If you knew the process, you would be amazed that DOJ is ever able to release any policy pronouncements.
While there has been criticism leveled against the Guidance, it was an unprecedented statement of policy principles by a prosecution agency. It set a very high standard for any future policy statements by a prosecuting agency.
Given the absence of any trials and further Guidance projects, DOJ now has the ability to focus on moving enforcement investigations. The process involves close supervision and review of outside counsel investigations, and can include DOJ/SEC interviews and review of “hot” documents. It takes time to move these investigations and make sure every reasonable lead is followed.
At the same time, DOJ/SEC have launched a number of major investigations in the last year. In addition, more companies have been disclosing potential FCPA violations and initiating voluntary disclosures to the government. The workload is substantial right now at DOJ and the SEC.
With this framework in mind, here are some of the investigations which I expect to be settled this year.
Weatherford: This case has been going on forever and needs to be resolved. Last year, the rumor was that the parties were $50 million apart on the amount of the fine to be paid for FCPA violations. The case is complicated by the number and extent of export control violations. DOJ has to coordinate resolution of the case with the Fraud Division and the National Security Division which is responsible for prosecuting export control violations.
A further complication is the possibility of criminal prosecution of individual officers and employees at Weatherford. Such prosecutions can create further delay because of requests by individual defense counsel for meetings to present arguments against prosecution of their clients.
Avon: This is another case which needs to be wrapped up. It has been going on for years and is known because of the astronomical legal fees paid to outside counsel. There have been several signals that the case is close to resolution – the leak of the interview of the former CEO and indications that outside counsel’s investigation has been completed and the parties are discussing resolution of the case.
Avon includes a significant possibility that individuals may be prosecuted. This may be part of the reason for the continuing delay.
Alstom: This case was initiated several years ago and involved a number of high-profile arrests in Europe. The DOJ/SEC investigation was very active. The Alstom case is expected to lead to a significant enforcement action, which would easily crack the Top 10 of enforcement actions. The Alstom case, if resolved, in 2013, will occur late in the year or early next year.
Hewlett Packard: This case hit the headlines in 2010, over two years ago, and involves a global enforcement team, including German prosecutors. Global enforcement always means further delay while companies cooperate with multiple agencies. DOJ/SEC coordination efforts are fairly smooth but can be slow because of internal procedures needed for coordination through the Office of International Affairs. I expect (and hope) that this case will be resolved and taken off the list of pending investigations.