As the old saying goes, even a broken clock is correct two times a day. My prediction several weeks ago is turning out to be on target. FCPA enforcement is continuing and will increase throughout the year – DOJ/SEC resources are available and long-term investigations are bearing fruit.
In the last week, DOJ announced criminal indictments/pleas with three individuals – two from Alstom and one from a mining company. The Alstom investigation is continuing and more indictments and a major corporate settlement will eventually be announced. Alstom started out as a big case and is growing into even a bigger case, eclipsed only by Wal-Mart. It is a case to continue to watch, especially because it involves coordinated international enforcement.
Three years ago Alstom was in the news because of enforcement actions occurring in several countries. Alstom faced significant prosecutions in the UK, Italy, Switzerland and other countries. Alstom officials plead guilty in some cases and provided more evidence of potential corruption violations.
In the US, Alstom started down the road of cooperating but faced several roadblocks which eventually resulted in new counsel being retained. It is not clear that new counsel has been able to achieve any greater success in fending off a government enforcement action in the US.
Aside from Alstom, the SEC also announced the civil settlement with a Siemens board member for $275k. Like DOJ, the SEC is increasing individual enforcement actions against individual officers and directors. The SEC will continue these efforts and individuals who may avoid criminal prosecution may fall within the enforcement scope of the SEC under a lower standard of proof.
Finally, DOJ and the SEC announced a settlement with Parker Drilling for a total of approximately $15 million for its involvement in the Panalpina case involving bribery of Nigerian customs officials. The settlement comes after a lengthy investigation and remediation process during which Parker Drilling implemented a state-of-the-art compliance program (led by Dan Chapman, a talented and recognized compliance leader). Parker Drilling’s complaince overhaul and remediation has been exemplary.
The rapid increase in FCPA enforcement during the second quarter is expected to precede additional major settlement announcements, including the Weatherford case and others. To those doomsayers of a “slow down,” the recent uptick demonstrates that there has been no substantive change in enforcement policy but merely resource allocation and case processing requirements which have had an impact on a steady-stream of enforcement announcements.
What is more significant however is the focus of both DOJ and the SEC on individual prosecutions. It is rare that the government focuses on obstruction of justice charges during a long-term investigation. The conduct at issue is probably egregious and tactically important to the overall investigation – otherwise, prosecutors are likely to move on to other important targets. The Alstom indictment and plea reflect a strategic prosecution probably designed to secure cooperation from the indicted defendant to seek cooperation against the company and higher level officials or to send a message to other suspected non-cooperating or potentially obstructing subjects.
Whatever the motivation, one thing is clear – DOJ and the SEC are back and they are sending a resounding message.