In several pronouncements made in recent months, the U.S. Department of Justice has signaled a turning of the tides in the type of Foreign Corrupt Practices Act (FCPA) cases it will pursue, as compared to the previous administration. Simultaneously, the recently established International Anti-Corruption Prosecutorial Taskforce signals that foreign authorities will not hesitate to pursue global anticorruption cases that the DOJ declines to pursue.
By way of background, the U.K. Serious Fraud Office (SFO), France’s Parquet National Financier (PNF), and the Office of the Attorney General of Switzerland (OAG) issued a joint founding statement, announcing establishment of the taskforce in March. SFO Director Nick Ephgrave said the taskforce will “make use of every power and partnership available” to tackle international bribery and corruption “wherever it occurs.”
In its joint statement, the agencies laid out four priorities of the taskforce:
- Create a “leaders’ group” focused on the “regular exchange of insight and strategy;”
- Create a working group to devise proposals for cooperation on cases;
- Share best practices to take advantage of combined expertise; and
- Build a strengthened foundation for operational collaboration.
Jean-François Bohnert, head of the PNF, added that the taskforce will strengthen PNF’s long-standing coordination with the SFO and OAG to tackle bribery and corruption cases. Notably, the DOJ was a key player in many high-profile coordinated resolutions, including Airbus’s record $3.9 billion global resolution with the PNF, SFO, and DOJ in 2020; and Rolls-Royce’s $800 million global resolution with the PNF, SFO, and DOJ in 2017.
The invitation for other “like-minded” agencies to join could further expand the taskforce’s jurisdictional reach.” In public pronouncements, Bohnert remarked that the taskforce has, so far, received inquiries from enforcement authorities in Germany, Italy, Netherlands, Spain, and Latin America.
In practical terms, legal and compliance teams should watch for an uptick in enforcement activity for violations of the Swiss Criminal Code, SFO’s U.K. Bribery Act, and France’s Sapin II, which has especially stringent compliance requirements.
Brazil’s anti-corruption enforcement authority, the Office of the Comptroller General (Controladoria-Geral da União or “CGU”), is another agency that has stated its “commitment to promoting business integrity,” as previously covered by the American Conference Institute (ACI). Examples of this include the launch of the CGU’s Brazil Pact for Business Integrity and its Pró Ética program.
Prudent legal and compliance teams understand that the heightened focus on anti-corruption activity globally is further reason to champion the importance of remaining vigilant and continue to carefully assess and amend, where necessary, anticorruption policies, procedures, training, and internal controls.
FCPA enforcement
Formation of the taskforce followed shortly after President Trump’s Executive Order calling for a 180-day FCPA enforcement pause and a revision of the FCPA enforcement guidelines to more closely align with the administration’s priorities.
The DOJ’s revised guidelines now direct Criminal Division prosecutors to pursue FCPA investigations and enforcement actions that directly undermine “U.S. national interests.” Misconduct that involves cartels and transnational criminal organizations, or that deprive “specific and identifiable” U.S. companies of “fair access to compete” will get priority.
Opening an FCPA investigation now requires authorization from the Criminal Division’s assistant attorney general, or a more senior DOJ official. Such authority no longer rests with the Fraud Section or the FCPA Unit.
Focus will turn to criminal misconduct by individuals, rather than cases of “nonspecific malfeasance” by companies. In remarks made at an ACI event June 10, Matthew Galeotti, head of the Criminal Division, explained that the DoJ will focus on the “specific misconduct of individuals, rather than collective knowledge theories.”
Prosecutors also will consider an FCPA investigation’s “collateral consequences” on the company’s operations throughout the entirety of the investigation, “not just at the resolution phase,” the guidelines state.
“Conduct that does not implicate U.S. interests should be left to our foreign counterparts or appropriate regulators,” Galeotti said in his remarks.
No “piling on” continues
In a June 5 memorandum to Criminal Division personnel, Galeotti signaled that the DOJ’s no “piling on” policy that was effect under President Trump’s first term continues, but with a caveat. As with the 2018 anti-piling on policy, prosecutors are directed to coordinate with other federal, state, or foreign enforcement authorities in parallel enforcement actions to avoid imposing unnecessary, duplicative monetary penalties on companies.
Galeotti’s memo takes a slightly different direction, however, putting the vindication of crime victims front and center. The memo directs prosecutors not to credit penalties imposed by other authorities that forego either restitution or forfeiture that could be used to compensate victims.
It further directs prosecutors not to credit criminal penalties imposed by other authorities that would “otherwise be used for general victim support,” like the Crime Victims Fund, “unless the foreign authority has a more effective mechanism for directly compensating victims of the underlying crime.”
In all cases, the memo states that prosecutors will not credit payments to other authorities when a company does not “meaningfully attempt to coordinate resolutions,” typically meaning paying the other authority within a year of the Criminal Division resolution. Companies resolving an anticorruption case should heed this warning.
Voluntary self-disclosure
In his remarks at the ACI conference, Galeotti also provided further clarity around the revised Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP). “The benefits to companies that voluntarily self-report, cooperate, and remediate have never been clearer and more certain: Those companies will receive a declination,” he stated.
In the days following issuance of the CEP, Galeotti met with SFO Director Ephgrave to discuss where they can strengthen their partnership in tackling financial crime, their “shared commitment to encouraging voluntary self-disclosure,” and how to expediate complex investigations.
Companies looking for a recent real-world example of this should refer to Liberty Mutual’s case, which marks the first corporate resolution since the DOJ’s FCPA enforcement pause. According to the Aug. 7 declination letter, an investigation had “found evidence” that, from approximately 2017 to 2022, Liberty Mutual’s India subsidiary, Liberty General Insurance (LGI), paid approximately $1.47 million in bribes to officials at six state-owned banks in India in exchange for referring bank customers to LGI’s insurance products.
The investigation found that “certain LGI employees took steps to conceal the true nature of the payments, including by classifying the payments as marketing expenses and using third-party intermediaries to make the payments to the officials.” These bribes brought in approximately $9.2 million in revenue and $4.7 million in profits.
The Criminal Division said it declined prosecution based on numerous factors set forth in the CEP, including Liberty Mutual’s timely and voluntary self-disclosure; and its “full and proactive cooperation” for providing all known relevant facts, including individuals involved, and “agreeing to continue to cooperate with any ongoing government investigations.”
Liberty Mutual’s “timely and appropriate remediation” included “early and fulsome acceptance of responsibility,” conducting a “thorough and systematic root-cause analysis,” and “separating itself from personnel involved in the misconduct.” It also disgorged the $4.7 million in ill-gotten gains.
Additionally, the Criminal Division credited Liberty Mutual with making “significant improvements” to its compliance program, including:
- enhanced vetting, monitoring, and oversight of payments to third parties throughout its global markets;
- structural reorganization, coupled with increased legal and compliance resources; and
- enhancing its compliance policies on ephemeral messaging applications for business purposes.
In separate remarks, Galeotti said that “several” more resolutions under the revised CEP are forthcoming. “The message you can take from these actions is clear: Timely, voluntary self-disclosure, cooperation, and taking responsibility for misconduct can help you avoid prolonged investigations and secure the benefits the Criminal Division offers.”
ACI’s “42nd Annual Conference on FCPA and Global Anticorruption” will be held on Dec. 3-4 in Washington DC. For more information, and to register, please visit:
https://www.americanconference.com/fcpa-dc/
