This is the seventh in our 2024 Year in Preview series examining important trends in white collar law and investigations in the coming year. We will be posting further installments in the series throughout the next several weeks. Our previous post, "Congressional Investigations: A Review of Investigations Likely to Continue in 2024 and into the 119th Congress," can be found here.
The past year was an active one for developments in anticorruption enforcement, particularly in the U.S., featuring multiple significant policy pronouncements, a brand new anti-bribery enforcement statute, plenty of corporate and individual Foreign Corrupt Practices Act (FCPA) enforcement activity, and cross-border collaboration with multinational law enforcement partners. Below, we review the key moments from 2023 and plot out the trends to watch in 2024.
U.S. POLICY DEVELOPMENTS
The Biden Administration’s Anti-Corruption Strategy
On December 11, 2023, the Biden administration issued a statement on “U.S. Leadership in the Fight Against Global Corruption,” (“2023 Leadership Statement”) reiterating the administration’s position that “countering corruption [i]s a core U.S. national security interest.” This follows the 2021 “U.S. Strategy on Countering Corruption” (“2021 Anti-Corruption Strategy”), the first such articulation of anti-corruption strategy issued by a president. The 2023 Leadership Statement provided progress updates on the five pillars of the 2021 Anti-Corruption Strategy:
- Modernizing, Coordinating, and Resourcing U.S. Efforts to Fight Corruption
- Curbing Illicit Finance
- Holding Corrupt Actors Accountable
- Preserving and Strengthening the Multilateral Anti-Corruption Architecture
- Improving Diplomatic Engagement and Leveraging Foreign Assistance
Alongside the 2023 Leadership Statement, President Biden issued a Presidential Proclamation restricting entry to the U.S. for non-U.S.-residents who enable corruption. While earlier proclamations from prior administrations had covered similar ground, this proclamation purports to fill a gap in the prior orders and symbolically demonstrates anti-corruption among the administration’s priorities. The 2023 Leadership Statement portends further executive action stemming from this proclamation, specifically the “use [of] existing sanction authorities to target private enablers of public corruption – including by freezing their assets.”
Foreign Extortion Prevention Act: New Law Targets Demand-Side of Foreign Corruption
As we have previously analyzed in greater detail here, on December 22, 2023, President Biden signed into law the Foreign Extortion Prevention Act (“FEPA”). FEPA imposes direct criminal liability on foreign officials who demand, seek, receive, or accept bribes from U.S. companies or individuals, or from any person while in the territory of the United States. By targeting the demand side of bribery, FEPA serves as a complement to the FCPA, which targets the supply side through the prosecution of individuals and companies that pay bribes to foreign officials.
While the Department of Justice has in some cases prosecuted foreign government officials who obtained bribes under other legal theories, including particularly the money laundering statute (18 U.S.C. § 1956), FEPA provides the government with another, potentially powerful, tool for these enforcement actions. Nonetheless, the sensitivities and political difficulties with prosecuting foreign government officials still exist, regardless of the statutory offense, so it remains to be seen whether FEPA will lead to a substantial increase in actions against foreign government actors. Acting AAG Nicole Argentieri recently pointed to these sensitivities in public remarks announcing that, as is the case for the FCPA, FEPA cases will be run centrally out of the Department’s Fraud Section rather than out of individual U.S. Attorney’s Offices.
Observed Trends from Corporate Enforcement Policy (CEP) Revisions
As we previously covered, DOJ in January 2023 announced revisions to the Corporate Enforcement Policy seeking to clarify the benefits offered for self-disclosure of misconduct and revising the credits available for cooperation. Through subsequent remarks from Acting AAG Argentieri in November 2023 and March 2024, DOJ has highlighted several key trends from actions implementing the CEP revisions.
First, Acting AAG Argentieri highlighted that corporate resolutions and declinations have directly led to charges against individuals–reinforcing that cooperation by companies in DOJ’s view often means identifying – and thereby facilitating the prosecution of – culpable individuals. Second, the revised CEP is increasingly bearing fruit: In 2023, DOJ received nearly twice as many voluntary disclosures as in 2021. Third, even for those companies that did not self-disclose, the newly-raised 50% cap on cooperation and remediation credit available to such companies has also already borne out in resolutions with Albermarle Corporation (45% reduction) and SAP SE (40% reduction).
Pilot Program Regarding Compensation Incentives and Clawbacks
On March 3, 2023, DOJ announced a new Pilot Program Regarding Compensation Incentives and Clawbacks, to run for three years in this pilot form. Under this two-part program, DOJ will require, as part of a criminal resolution, that corporate compliance programs include compensation-related criteria, and it will also offer fine reductions for companies that seek to claw back compensation from culpable employees in appropriate cases. The pilot program has already resulted in additional credit for SAP in a resolution announced in January 2024. DOJ highlighted that even before the resolution, SAP had already modified its compensation incentives to accord with compliance goals, SAP then also committed to further incorporating compliance into compensation and bonus systems, as required under the program. Under the second prong of the program, DOJ credited SAP with $109,141 against its fine amount for compensation the company withheld from employees (though this amount is relatively small compared with the overall $221 million resolution), and also credited the company’s efforts to defend these clawbacks in litigation as part of the company’s overall cooperation efforts, which resulted in a 40% total fine reduction.
Safe Harbor for Self-Disclosures in Connection with Mergers and Acquisitions
As we previously discussed, in October 2023, Deputy Attorney General Lisa Monaco announced a new safe harbor policy that grants presumptive declinations to acquiring companies that self-disclose criminal misconduct in an acquired company within six months of the merger transaction (the “Safe Harbor period”) and otherwise cooperates and remediates the misconduct. In March 2024, this policy was codified in a new provision of the Justice Manual. One recent FCPA declination issued to Lifecore Biomedical, Inc. demonstrated the potential implications of the safe harbor, though the new policy was not expressly cited in the declination. Lifecore acquired Yucatan Foods L.P. in 2018, and, in part because at least one Yucatan officer actively concealed the bribery misconduct during pre-acquisition diligence, Lifecore did not learn of it until a post-acquisition internal investigation. The declination letter noted the speed of Lifecore’s voluntary self-disclosure: within three months of first discovering the possibility of misconduct and “hours” after their investigation confirmed it.
New DOJ Whistleblower Reward Pilot Program
In remarks delivered on March 7, 2024, Deputy AG Lisa Monaco announced that the Department would commence a new whistleblower reward program, initially as a pilot program, and Acting AAG Nicole Argentieri then announced on the following day the Department’s intent to apply the policy specifically in the FCPA context. According to Acting AAG Argentieri, “[W]e anticipate that the program could prove especially useful in developing foreign corruption cases that are outside the jurisdiction of the SEC, including FCPA violations by non-issuers.”
Under the proposed initiative, whistleblowers who provide “original, nonpublic, truthful information” about corporate wrongdoing not otherwise known to the government may be eligible to receive a portion of any restitution, provided an investigation results in a substantial penalty above a to-be-determined threshold amount.
Opinion Procedure Releases
Last year, we noted the rarity of DOJ issuing opinion procedure releases (OPRs) in recent years, with a 2022 release only the second since 2014. Last year, the Department issued two OPRs, in August and October 2023. The uptick represents a small but positive trend in the Department’s willingness to provide actionable guidance outside of an enforcement action or broad prepared remarks. Moreover, each OPR was released within two months of the initial request, and within one month of the submission of supplemental information, reflecting shorter response times than had historically been seen.
The August release concerned a U.S.-based adoption agency seeking clarity on whether it could pay for the travel of officials from a foreign government’s adoption authority to assess the success of recent adoption placements in the U.S. As with prior releases concerning adoption agencies, the Department indicated that payment for reasonable travel expenses for the legitimate visit of these officials would not be a violation due to the absence of corrupt intent for “bona fide” expenses.
The October release was requested by a company that had been awarded a task order as part of a contract with a U.S. agency to provide logistical support services, including meal and travel stipends, to foreign government personnel. DOJ determined that providing the proposed stipends would not represent an FCPA violation because the requestor lacked corrupt intent, as evidenced by the requestor’s belief that the stipends had been authorized by the Foreign Assistance Act, were called for by a U.S. government program, and would be paid through a U.S. government official intermediary.
U.S. Caselaw Developments
In a much-awaited ruling, the U.S Court of Appeals for the Fifth Circuit declined to join the Second Circuit in rejecting the application of conspiracy or aiding and abetting liability to foreign nonissuers not otherwise covered by the Foreign Corrupt Practices Act. United States v. Bleuler, 60 F.4th 982 (5th Cir. 2023). The Bleuler opinion is noteworthy in the sparsely litigated FCPA landscape, for the willingness of a federal court of appeals to decline to adopt the narrow Second Circuit view of FCPA secondary liability. In Bleuler, the Fifth Circuit reversed the district court’s dismissal of an FCPA indictment, finding that it sufficiently alleged direct violations by enumerated actors (as two agents of a domestic concern and one person acting on U.S. soil). The court turned to the government’s alternative argument that the defendants were secondarily liable for conspiring with enumerated actors, and, while finding it unnecessary to reach this theory, the court expressly stated that it “neither accepts nor rejects the theory that an individual who falls outside of the actors enumerated in the FCPA can be held liable as a conspirator under a secondary-liability theory.” 60 F.4th at 996 n.6.
As we have written extensively about here and here, the Second Circuit in 2018’s United States v. Hoskins decision held that conspiracy liability cannot be used to prosecute under the FCPA any actors other than those specifically enumerated in the statute (i.e., domestic concerns, any person acting on U.S. soil, and U.S. issuers). 902 F.3d 69, 72-73 (2d Cir. 2018).
Had the Fifth Circuit directly addressed the secondary-liability issue, it would have been the first appellate court to disagree with the Second Circuit, but not the first court overall. In 2019’s United States v. Firtash, 392 F. Supp. 3d 872 (N.D. Ill. 2019), a district court in the Northern District of Illinois even more expressly rejected the position that foreign nationals can only be charged with FCPA violations if they are among the statute’s enumerated actors. The issue thus appears ripe for a circuit split but will have to await the emergence of another case vehicle.
FCPA ENFORCEMENT TRENDS
A review of DOJ’s Fraud Section Year in Review reports reveals that the number of corporate actions resolved has been relatively stable over the past three years, but is still down significantly from the elevated numbers seen from 2016-2020. Total dollars in sanctions imposed in 2023 were down significantly from 2022, though that mark was heavily skewed by the $701 million Glencore resolution, which by itself represented more than all resolutions in 2023 ($657 million). Nonetheless, total sanctions in 2023 were down more than 90% from 2020. Notably, individual prosecutions—both in charges and in convictions—declined significantly in 2023, continuing a downward trend from the past three years.
Below, we dig into some of the major FCPA enforcement actions over the past year to identify noteworthy themes and trends for practitioners to look out for in 2024.
Key Individual Prosecutions
Despite the downward trend in prosecution numbers, DOJ continues to place paramount significance on the prosecution of individuals, uniformly highlighting such actions in public remarks throughout the year and noting their significance when discussing declinations and corporate resolutions. As Acting AAG Argentieri recently stated, “Our first priority has been — and will continue to be — individual accountability. Companies can only act through individuals.”
First, following a long trend, the wide-ranging Petrobras investigation continues to yield enforcement actions, with a U.S.-based oil and gas trader, Glenn Oztemel, indicted for his alleged role in the scheme to pay bribes to Brazilian officials to win contracts with the state-owned entity Petrobras.
Second, in February 2024, after an eight-week trial in the Eastern District of New York, Javier Aguilar, a former executive and oil trader with Vitol Inc., was convicted of FCPA and money laundering charges in connection with a purported scheme to bribe officials in Ecuador and Mexico to obtain contracts from Petroecuador and Petróleos Mexicanos (aka “Pemex”). Vitol previously resolved a corporate action arising from the same allegations, agreeing to pay $163 million in 2020 as part of a DPA. Aguilar’s case was notable in particular for the court’s mid-trial ruling that employees of a unit of Pemex, Pemex Procurement International (PPI), were not “public servants” under Mexican law, and thus the particular Mexican bribery law could not serve as a predicate specified unlawful activity (SUA) for the money laundering charges. Aguilar then argued that, if payments to PPI officials did not violate Mexico’s bribery law, then they were legal under the FCPA’s affirmative “local law” defense, which excuses conduct where the "payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the" foreign country. 15 U.S.C. 78dd-2(c)(1). In another mid-trial ruling, however, the court rejected Aguilar’s premise that conduct which did not violate Mexico’s bribery law would necessarily be legal under local law, and therefore declined to instruct the jury on this defense.
Corporate Resolution Trends
DOJ stringently parses the timeliness of voluntary self-disclosures and cooperation
Several contrasting corporate resolutions demonstrated the scrutiny with which DOJ considers the timeliness of voluntary self-disclosure and cooperation.
Consider the resolution with Albemarle, which received under the new Corporate Enforcement Policy (CEP) a 45% reduction for extensive cooperation and timely remediation—i.e., before DOJ involvement. Albemarle withheld bonuses from culpable individuals and started revamping its compliance program immediately. Acting AAG Argentieri highlighted this as a positive example of the speed of company’s remediation and cooperation, as contrasted with a more “reactive” entity in Tyser Insurance Brokers, which received only a 25% reduction.
And yet, despite being elevated in public remarks as a “timely” cooperator who had self-disclosed, Albemarle still did not receive the maximum credit possible, which it could have received under the Voluntary Self-Disclosure (VSD) component of the CEP. VSD, combined with cooperation and remediation, can make a company eligible for a reduction of up to 75%. But DOJ declined to award full VSD credit to Albemarle because, in DOJ’s view, its disclosure was not “reasonably prompt.”
While the Albemarle resolution may leave open questions about DOJ’s view of “reasonably prompt” disclosure, at least one company clearly met that mark. In its declination letter to Lifecore, as discussed above, DOJ credited the company’s “report[ing] to the Criminal Division, Fraud Section’s FCPA Unit within three months of first discovering the possibility of misconduct and hours after an internal investigation confirmed that misconduct had occurred.”
Finally, at the extreme opposite end of the spectrum of timeliness of disclosure, DOJ announced a further resolution with Telefonaktiebolaget LM Ericsson (“Ericsson”) in light of breaches of its 2019 Deferred Prosecution Agreement (DPA). Ericsson pleaded guilty and paid a criminal penalty of more than $206 million after admitting the breaches (this was in addition to the more than $520 million that it had paid in connection with the 2019 DPA). The breaching conduct included failure to fully disclose to the government facts and evidence related to bribe schemes in Djibouti and China, as well as conduct in Iraq representing further potential FCPA violations beyond that contemplated in the 2019 DPA.
As described in materials submitted to the court, the Djibouti evidence withheld from the government included a particular incriminating email from 2011 that had not been disclosed to the government, but which had been part of an email thread whose other iterations had been produced, and the incriminating email would have been responsive to agreed-upon search terms had those terms been run in the email’s language (Italian), which was a language known to Ericsson to be used by the key employee subjects of the investigation. The China evidence withheld included a key internal 2018 email making serious allegations that the company then investigated independently for three years before disclosing to the government—long after entering the DPA. The company also maintained certain records concerning third-party agreements and payments—including those relating to the China conduct—in hard copy files and USB drives at its headquarters in Sweden but failed to disclose the existence of these records until 2021.
Finally, the company’s prior counsel had disclosed the beginning of an investigation into conduct in Iraq days before entering the 2019 DPA but did not include material findings then-known to the company, which did not then update the government on its findings until prompted by a 2022 news report inquiry.
Acting AAG Argentieri later commented on the breach by noting that the disclosure lapses “prejudice[ed] the government’s ability to charge certain individuals,” such that Ericsson’s additional penalties included the rescission of all cooperation credit originally granted. The cautionary tale of the Ericsson saga demonstrates in stark terms that once a company does decide to disclose misconduct and cooperate, it must do so completely, or risk additional sanctions and losing any benefit of its cooperation.
Assisting with individual prosecutions facilitates declinations and cooperation credit
Consistent with DOJ’s repeated emphasis on the importance of individual prosecutions, several actions this year illustrated how facilitating individual prosecutions played into corporate declinations and cooperation credit.
First, Acting AAG Argentieri highlighted the role of individual prosecutions in the Corsa Coal Corporation resolution. As part of its extensive cooperation, the company provided evidence about individual wrongdoers, including two former vice presidents who were charged criminally for their involvement in the scheme. Argentieri noted that “This is a perfect example of our policies in action: offering appropriate incentives for a company to do the right thing and tell us about a scheme we were not aware of, resulting in criminal charges against culpable executives.”
U.K. Insurance brokers H.W. Wood Ltd. and Tysers Insurance Brokers Ltd. further illustrated this principle. A 2022 FCPA voluntary self-disclosure from another company, Jardine Lloyd Thompson Group Holdings Ltd., led to the prosecution of four individuals connected to that company as well as information about other corporate actors H.W. Wood and Tysers (formerly Integro) involved in similar misconduct. Jardine Lloyd Thompson then received a full declination, compared to the less favorable outcome for Tysers, which entered a DPA and received a relatively lesser 25% credit off its fine due to remedial measures taken by the company. In the announcement of the resolutions with H.W. Wood and Tysers, DOJ highlighted that these investigations had now led to charges against eight individuals.
Recidivism factors substantially into DOJ enforcement decisions
As a stated factor in the Corporate Enforcement Policy, recidivism plays a prominent role in resolutions, but DOJ’s discussion of recidivism in recent actions reveals that not all prior enforcement actions are treated alike. Specifically, the Department has contrasted the recidivism of two companies that entered resolutions in 2023 and 2024: Gunvor S.A. and SAP. SAP received a relatively high 40% reduction in penalty for its resolution of bribery allegations concerning South African and Indonesian officials, even with prior resolutions (i.e., recidivism) taken into account. SAP had engaged in, by DOJ’s estimation, “significant prior misconduct” concerning export controls and, five years earlier, FCPA violations in Panama. Nonetheless, DOJ noted—apparently to explain the treatment of the prior FCPA offense—that SAP conducts business all over the world and has many “touchpoints” with various regulators internationally.
By contrast, Gunvor received a 25% reduction in the applicable fine in connection with a scheme to bribe government officials in Ecuador, and this was taken from the 30th percentile above the bottom of the guidelines, representing significantly less favorable treatment. DOJ emphasized that this treatment stemmed largely from the fact the Ecuadorian-official bribery took place while Gunvor was under investigation by Swiss authorities for a separate scheme to bribe officials in Africa (resolved with Swiss authorities in 2019, as part of which Gunvor admitted having inadequate anti-bribery controls). But DOJ did not explain why Gunvor was not credited for its global business model and “touchpoints” with regulators in the same way that SAP was.
The contrasts may leave practitioners with more questions than answers about the treatment of a company’s prior conduct, but it appears at the least that arguments remain available for distinguishing past conduct and negotiating its impact on cooperation and remediation credit.
ANTI-CORRUPTION DEVELOPMENTS ON THE GLOBAL STAGE
U.S. Continues to Promote Collaboration with International Enforcement Agencies
Several events from 2023 highlighted the growing role of the U.S. in driving collaboration with other nations’ enforcement agencies.
In August 2023, DOJ announced that Corporación Financiera Colombiana S.A. (“Corficolombiana”), a Columbian financial services institution, had agreed to criminal and civil resolution with U.S. and Colombian authorities to resolve FCPA charges. The Department touted this resolution as the first joint resolution between the two countries. This action involved a conspiracy with Brazilian construction conglomerate Odebrecht S.A., which had itself been the subject of a record $3.5 billion FCPA resolution in 2016. That earlier case had required extensive collaboration with Brazilian and Swiss authorities, and the Corficolombiana resolution demonstrates an expansion of such collaboration to Colombian authorities. Moreover, DOJ credited the company for penalties paid to the Colombian authorities, in the same way it had credited Odebrecht for making such payments to Brazilian and Swiss authorities.
Finally, perhaps as a logical extension of these successful cross-national collaborative efforts, Acting AAG Argentieri announced a new DOJ resource specifically designed to enhance such efforts: the International Corporate Anti-Bribery Initiative (ICAB). ICAB will task three U.S. prosecutors to specific global regions to work with local counterparts, whose mission will be to share information and develop foreign bribery cases with their local agencies.
U.K. Developments
The U.K. Serious Fraud Office (SFO) appointed a new Director, Nick Ephgrave, following the conclusion of the five-year tenure of outgoing Director Lisa Osofsky. Ephgrave brings a different background to the role, as a former assistant commissioner with the Metropolitan Police Service, and not a career prosecutor or even lawyer. In February 2024, in his first public remarks since assuming the role, Ephgrave emphasized swift resolution of cases and a pragmatic new enforcement action strategy, including not being afraid to shut down investigations that do not appear likely to progress to charges. He also suggested the SFO may move to compensate whistleblowers, modelling off the U.S. example, and may make greater use of cooperating defendants (known as “assisting offenders” in the U.K. system) to obtain information in exchange for more lenient sentences, as permitted under the Serious Organized Crime and Police Act.
Time will tell if Director Ephgrave’s bold pronouncements will yield more or swifter investigations, but his office will at least have some new advantages in doing so. In October 2023, the Economic Crime and Corporate Transparency Act 2023 became law, giving SFO prosecutors several tools in their efforts to investigate corporate fraud, though several of the law’s changes for fraud cases already extended to corruption cases. These include a new strict liability offense for “failure to prevent fraud” (supplementing existing “failure to prevent” offenses); expansion of “Section 2A” information-demanding powers to cover fraud cases in addition to the existing bribery and corruption contexts; and most broadly, changes in the “identification doctrine.” The latter development effectively reduces the level of control of a company that bad actors must have before imposing full corporate-entity liability. The previous standard imposed liability only where malefactors represented the “directing mind and will” of the company, while the new standard requires only “senior manager” involvement.
In comments delivered at a September 2023 symposium, SFO Chief Capability Officer Michelle Crotty highlighted the importance of her office’s cross-border collaboration with international authorities in the cases against Airbus (in 2020, with U.S. and French authorities) and Glencore (in 2022, with U.S., Swiss, and Dutch agencies), which Crotty touted as the SFO’s premier actions from the five-year tenure of outgoing Director Lisa Osofsky. Such collaboration appears to be a new cornerstone for the SFO, with Crotty noting that the new Director Nick Ephgrave “will also be – like Lisa – invested in maintaining and building the SFO’s relationships both within the UK and overseas.”
EU
With the 2024 Olympic Games on the horizon, France has launched an anti-corruption push into the games’ organizing. France is the first host country to be operating under an “anti-corruption clause” included in its Olympic games contract. Incidentally, the 2024 summer games were awarded in 2017, the same year France adopted its anti-corruption law, Sapin II. The country has applied that law’s obligations, which generally require companies to create anti-corruption compliance programs, to the Olympic organizing committee, which is thus under the jurisdiction of the French Anti-Corruption Agency (AFA). The AFA and prosecutors have announced four inquiries into the awarding of contracts in connection with the games and the pay of their chief organizer.
As we’ve written about previously here, in 2023 the AFA also issued jointly with the National Financial Prosecutor’s Office (PNF) guidance regarding internal anti-corruption investigations. The guide includes recommendations for corporate compliance with the Sapin Act as well as the whistleblower-related obligations of the 2022 Waserman Act.
OECD
Romania and Croatia in 2023 became the 45th and 46th nations to sign onto the OECD Anti-Bribery Convention. Beyond agreeing to implement the standards for criminalization of bribery required by the convention, both countries will now also participate in reviews from the OECD to assess priorities for combatting foreign bribery. While participating in the convention is a public step towards elevating anticorruption as a priority, it remains to be seen what changes to their enforcement efforts the nations will implement. At the least, practitioners and clients in these nations should be aware of the increased possibility of cross-border collaboration between the local enforcement agencies and U.S. authorities as a result of their joining the convention.
Latin America
Brazil received its “Phase 4” peer-review in 2023, the first OECD assessment conducted in the country since 2014. Unsurprisingly, the report, compiled by assigned reviewer nations Colombia and the U.K., credited the landmark Odebrecht investigation and resolution, while noting areas for further progress in order to sustain this success. Among these, the report highlighted the reviewers’ opinion that Brazil’s statute of limitations for foreign bribery is hindering enforcement efforts, with one long-running investigation yielding eight acquittals due to the statute. In Brazil, the statute of limitations applies to both to the time to secure a conviction and to execute the sentence, and is recalculated retrospectively based on the sentence actually imposed. Because sentences do not commence until a conviction has become final, after exhausting all appeals, and because that appeals process can take many years, the OECD report noted the difficulty in obtaining enforceable convictions. According to the report, Brazil had not to-date obtained any foreign bribery sanctions against individuals, in stark contrast to its recent enforcement actions against corporate entities.
Also in Brazil, two recent decisions in December 2023 and January 2024 by Federal Supreme Court Justice Dias Toffoli have suspended fine obligations from leniency agreements entered into with J&F Investment (owner of meatpacking giant JBS) and Novonor (formerly Odebrecht). These decisions follow Justice Toffoli's September 2023 decision to annul substantial evidence from Operation Car Wash, which was implicated in both corporate resolutions, based on leaked messages from the operation task force that revealed purportedly improper cooperation between the prosecutors and a judge. Whether the evidentiary decision continues to yield ramifications for the myriad investigations stemming from Operation Car Wash remains an item to watch closely in 2024.
China
In July 2023, China launched a national campaign against corruption in the healthcare sector. The initiative spearheaded by the National Health Commission and nine other government agencies aims to tackle unethical practices in obtaining and paying for healthcare services, with specific emphasis on improper remunerations to hospitals and healthcare providers (HCPs). In addition to increased scrutiny and audits of hospitals and HCPs, government agencies have also sharpened their focus on pharmaceutical and medical device companies. The initiative has seen coordinated national and local government action, including through a credit evaluation mechanism maintained by the National Healthcare Security Administration, by which local governments can designate companies as “unethical,” with implications for their eligibility to participate in government-run volume-based procurement systems. Entities active in China’s healthcare space must remain vigilant in 2024 as this crackdown continues to unfold and should assess their compliance programs as enforcement activities ramp up.
In another development, in February 2024 China revised its state secrets law to expand the scope of information within its purview. The law now requires business entities to disclose to the government their “work secrets,” a term which is not yet defined with specificity but encompasses items “that are not state secrets but will cause certain adverse effects if leaked.” The latest legislative development expanding China’s national-security controls continues a trend going back at least a decade, with incremental developments—including last year’s updates to the anti-espionage law—making external investigations and diligence more challenging, and more fraught with potential investigations by Chinese authorities into domestic law violations.
For the full series, please see: White Collar Year in Preview
