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FCPA Enforcement Officials Address COVID-19 Related Questions

Soapbox

Earlier this week, Daniel Kahn (Sentior Deputy Chief, DOJ Criminal Division – Fraud Section) and Charles Cain (SEC FCPA Unit Chief) participated in this webinar.

During the webinar, Kahn and Cain addressed a variety questions related to their respective enforcement agencies relative to the COVID-19 crisis.

Set forth below are the issues addressed and their responses.

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DOJ’s Kahn Answers The PPE FCPA Hypothetical

PPE

One common Foreign Corrupt Practices Act hypothetical that has been repeated often over the last couple of months sort of goes like this. The current COVID-19 crisis presents increased FCPA risks because, among other things, businesses are scrambling to secure personal protective equipment (PPE) for their workers and some of this PPE may be located in foreign countries and/or manufactured by foreign governments or state-owned or state controlled enterprises. (See here, here, here, and here for examples).

I’ve never really understood this hypothetical. Among other things, in the FCPA’s 40+ year history I am not aware of any enforcement action in which the alleged improper conduct occurred in connection with the purchase of a good or service rather than in connection with selling or facilitating the sale of a good or service.

Moreover, as highlighted in this prior post, the FCPA has, among other elements, a corrupt intent element.

As highlighted below, during a webinar yesterday Daniel Kahn (Senior Deputy Chief, U.S. Department of Justice Criminal Division – Fraud Section) addressed a version of this hypothetical.

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Friday Roundup

Roundup

Listening in, SEC work continues, and for the reading stack. It’s all here in the Friday roundup.

Listening In

As highlighted in this recent post, Herbalife recently disclosed that it is poised to pay $123 million to resolve its long-standing FCPA scrutiny. In a recent investor conference call, John Agwunobi (CEO of the company) stated about the company’s disclosure: “we do believe that it [the disclosure] has freed us of any material, nonpublic information that would have affected our ability to repurchase shares.”

Goes to show that FCPA scrutiny and enforcement are often entwined with other legal issues.

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Assessing The Narrative That FCPA Enforcement Will Increase Post Covid-19 Crisis, Because That’s What Happened Post-Financial Crisis

people thinking

There are some narratives in the Foreign Corrupt Practices Act space that seem to take on a life of their own without a factual basis (see here, here and here for instance).

Once such recent narrative is that FCPA enforcement will increase post COVID-19 because a crisis presents business desperation and a greater willingness to secure business improperly. Part of the narrative is that after the so-called financial crisis of late 2008 – 2009 FCPA enforcement increased.

This post analyzes that narrative and debunks it because there is no evidence that FCPA enforcement increased circa 2010-2012 because of the financial crisis.

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The OECD Working Group On Bribery Is “Going To Examine The Possible Impact And Consequences Of The Coronavirus Pandemic On Foreign Bribery”

whocares2

It is fair to say that the current COVID-19 crisis has the ability to potentially impact pretty much anything in the world at this point.

Recently the OECD Working Group on Bribery (made up of representatives from the States Parties to the OECD Convention) released a statement indicating that it is “going to examine the possible impact and consequences of the coronavirus pandemic on foreign bribery.”

The statement reads in full:

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