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FCPA Enforcement Actions Against Foreign Companies From OECD Convention Peer Countries

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As highlighted in this post, like prior years (see here) much of the largeness of 2017 FCPA enforcement resulted from corporate enforcement actions against foreign companies.

Specifically, of the 13 corporate enforcement actions from 2017, 5 (approximately 40%) were against foreign companies (based in many instances on mere listing of securities on U.S. markets and in a few instances on sparse allegations of a U.S. nexus in furtherance of an alleged bribery scheme). Even more dramatic, of the net $1.13 billion FCPA settlement amounts from 2017 corporate enforcement actions, approximately 90% of this number was from enforcement actions against foreign companies.

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“Non-U.S. Efforts To Prosecute Overseas Bribery Are Hampered By The Absence Of Clear, Credible Statements From U.S. Prosecutors”

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Frederick Davis (Debevoise & Plimpton) recently authored a dandy piece that nicely articulates a problem in the international fight against overseas corruption and that is: “non-U.S. efforts to prosecute overseas bribery are hampered by the absence of clear, credible statements from U.S. prosecutors that they will desist from prosecuting if a local prosecutor does so in good faith.”

Before highlighting Davis’s article, as previously highlighted on these pages U.S. enforcement of the Foreign Corrupt Practices Act against foreign companies from OECD Convention countries, often based on sparse / novel jurisdictional theories, presents a host of problems.  Indeed, the OECD Convention recognized this issue and states: “when more than one Party has jurisdiction over an alleged offence described in this Convention, the Parties involved shall, at the request of one of them, consult with a view to determining the most appropriate jurisdiction for prosecution.”

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OECD Report Misses The Mark

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Recently, a High-Level Advisory Group on Anti-Corruption and Integrity, “composed of independent experts from a variety of professional backgrounds in the anti-corruption field” drafted a lengthy report to the OECD to “strengthen its work on combating corruption and promoting integrity.”

In the report the Group makes 22 separate recommendations.

Problem is, the report completely misses the mark on the most obvious and effective way to reduce corruption.

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FCPA Enforcement Actions Against Foreign Companies From OECD Convention Peer Countries

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2016 was a record-breaking year for Foreign Corrupt Practices Act enforcement, both in terms of the number of core corporate actions resolved as well as overall settlement amounts.

As highlighted in this post, much of the largeness of 2016 FCPA enforcement resulted from corporate enforcement actions against foreign companies. (For purposes of this post, a foreign company means the “residence” of the corporate parent company and not for instance, Analogic’s foreign subsidiary or JPMorgan’s foreign subsidiary being offered up to resolve the DOJ prong of the corporate enforcement action). 

Specifically, of the 27 corporate enforcement actions from 2016, 11 (41%) were against foreign companies (based in many instances on mere listing of securities on U.S. markets and in a few instances on sparse allegations of a U.S. nexus in furtherance of an alleged bribery scheme). Even more dramatic, of the net $2.27 billion settlement amounts from 2016 corporate enforcement actions, approximately $1.44 billion (63%) resulted from enforcement actions against foreign companies.

Given that all of the foreign companies that resolved 2016 FCPA enforcement actions were from peer OECD Convention countries, the question should be asked whether these FCPA enforcement actions represented a proper use of the FCPA – at least from a policy standpoint.

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The U.K.’s DPA With Rolls-Royce Violates OECD Convention Article 5 And Other Observations

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Previous posts here and here highlighted the $800 million global resolution of various enforcement actions against Rolls-Royce. As noted in a prior post, the bulk of the $800 million consisted of an approximate $625 million enforcement action by the U.K. Serious Fraud Office that was resolved through a deferred prosecution agreement – only the third DPA executed by the SFO.

This post highlights why the DPA violates Article 5 of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions to which the U.K. is a signatory country. The post also contains additional observations about the U.K. DPA.

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