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DOJ’s McFadden Makes Sense When Talking About “Declinations” And States That FCPA Investigations Should Be “Measured In Months, Not Years”

mcfadden

Yesterday, Acting Principal Deputy Assistant Attorney General Trevor McFadden deliver this speech in Washington, D.C.

Sure, like a prior recent speech, McFadden did read from the “DOJ’s FCPA script,” but to his credit he did say some important things about FCPA compliance that is refreshing to hear from the DOJ. In addition, McFadden’s statement that his “intent is for our FCPA investigations to be measured in months, not years” should be welcome news to the business community. However, the DOJ has been saying the same thing for years and a wait and see approach is most prudent. For instance, in this 2005 speech then DOJ Assistant Attorney General for the Criminal Division Christopher Wray talked about “real-time enforcement” and stated: “in other words, punishing wrongdoers promptly after they commit their crimes. Simply put, speed matters in corporate fraud investigations . The days of five-year investigations, of agreement after agreement tolling the statute of limitations-while ill-gotten gains are frittered away and investor confidence sinks-are increasingly a thing of the past.”

Moreover, as highlighted in more detail below, McFadden made sense when talking about DOJ “declinations” and his reasons for why the DOJ may not bring a Foreign Corrupt Practices Act enforcement action in an instance of FCPA scrutiny undermines the “declination” definition used by certain FCPA Inc. participants.

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Friday Roundup

Roundup

Odebrecht / Braskem settlement amount is significantly trimmed, a form of bribery?, quotable, deficient internal controls, and scrutiny alerts and updates. It’s all here in the Friday roundup.

Odebrecht / Braskem Settlement Amount Significantly Trimmed

There was much false and misleading reporting about the FCPA settlement amount in the December 2016 FCPA enforcement action against Odebrecht / Braskem.

As highlighted in this post, after accounting for various credits and deductions (including for payments to Brazil and Swiss law enforcement agencies and a claimed inability to pay) the net FCPA settlement amount (subject to potential future adjustments) was approximately $420 million. The $420 settlement amount consisted of approximately $260 million in connection with the Odebrecht criminal information and plea agreement; $94.8 million in connection with the Braskem criminal information and plea agreement; and $65 million in connection with the SEC’s related enforcement action against Braskem.

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Additional Data Points Relevant To Brockmeyer’s Tenure As SEC FCPA Unit Chief

brockmeyer

Earlier this week, the SEC announced that its FCPA Unit Chief, Kara Brockmeyer, will soon be leaving.

Similar to prior DOJ/SEC press releases upon FCPA enforcement attorneys leaving the government, the SEC’s release largely defines Brockmeyer’s tenure in terms of quantity of enforcement actions brought and settlement amounts secured. (See here for a prior post discussing this dynamic). The vast majority of this FCPA enforcement, because of the prominence of SEC administrative actions as well as NPAs and DPAs, occurred in the absence of any judicial scrutiny.

This post highlights additional data points relevant to Brockmeyer’s tenure as SEC FCPA Unit Chief, a position she assumed in September 2011 after the SEC’s first formal FCPA Unit Chief Cheryl Scarboro departed (see here for the prior post).

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Civil Monetary Penalties In SEC FCPA Enforcement Actions

SEC

This recent speech by Acting SEC Chairman Michael Piwowar received some coverage based on the following sentence from the speech: “I am generally comfortable with assessing civil monetary penalties in Foreign Corrupt Practices Act cases.”

It’s unclear what Piwowar really meant by this statement.

As highlighted below, approximately 40% of SEC corporate FCPA enforcement actions since 2010 have included civil monetary penalties even if such penalties have traditionally been a very minor component of overall settlement amounts because of the dominance of disgorgement and prejudgment interest.

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The Need For An FCPA Common Language – Visual Proof

visual proof

These pages have frequently highlighted the need for a Foreign Corrupt Practices Act common language as to the basic question of “what is an FCPA enforcement action?” (See here for the article “A Common Language to Remedy Distorted FCPA Enforcement Statistics” which exposes in detailed fashion distorted FCPA enforcement statistics).

As highlighted in the article, the absence of an FCPA common language has numerous negative effects including infecting nearly all FCPA enforcement statistics.

The most reliable and accurate way to keep FCPA enforcement statistics is by using the “core” approach which focuses on unique instances of FCPA scrutiny. Using this approach, there were 27 corporate FCPA enforcement actions in 2016 that resulted in approximately $2.4 billion in net FCPA settlement amounts (see here).

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