Law Firms Forecast Strong FCPA Enforcement in 2014

Three law firms — Gibson, Dunn & Crutcher, Hughes Hubbard & Reed and Shearman & Sterling recently issued reports in which they anticipated vigorous enforcement of the Foreign Corrupt Practices Act (FCPA) higher criminal penalties, increased international cooperation and a continued focus on prosecution of individuals in 2014. The firms' review of the government's 2013 FCPA activity found a commitment to crack down on egregious bribery practices to obtain overseas business and the use of more innovative methods in investigating and prosecuting violations. Despite a drop in the number of FCPA cases filed in 2013, these efforts resulted in a record $3.4 billion in monetary sanctions.

Key observations common to the three reports include —

  • More expensive resolutions. The cost of resolving FCPA cases in 2013 averaged $80 million, which is four times the 2012 average.
  • Targeting of additional industries. The government continued enforcement in traditional "high-risk" industries — e.g., oil and oil services and medical devices — but also ventured into industries such as clothing and ATM manufacturing.
  • New litigation and settlement techniques. The government used more aggressive jurisdictional theories last year, leading to indictments and settlements with non-US citizens and issuers. Other trends included an increasingly broad interpretation of a "foreign official" under the statute, a resurgence of the use of corporate monitors in high-profile cases and an expressed interest in using the whistleblower incentive provisions of the Dodd-Frank Act to aid enforcement.
  • Highest number of individual prosecutions since 2010. Twelve individuals were prosecuted last year for FCPA violations, demonstrating the government's continuing commitment to hold individuals liable for corruption.
  • Increased international cooperation and foreign enforcement activity. The efforts of a number of foreign jurisdictions to strengthen their anti-corruption laws and increase enforcement efforts led to a significant increase in global cooperation and cross-border enforcement in 2013
  • Trends to continue into 2014. Aggressive FCPA enforcement efforts are expected for this year, given that a number of companies disclosed investigations last year and the pipeline of cases marked for resolution according to agency officials.

DOJ and the SEC expect companies to implement effective programs to ensure compliance with the FCPA. An integral part of such programs is employee training to enable employees to recognize and avoid corrupt payments.

Topics:  Anti-Bribery, Anti-Corruption, Compliance, Enforcement, Enforcement Actions, FCPA

Published In: General Business Updates, Criminal Law Updates, International Trade Updates

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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