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The Origins Of 2019 Corporate Enforcement Actions

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This recent post compared corporate FCPA enforcement actions in 2019 to prior years. However, before a Foreign Corrupt Practices Act enforcement action is announced, scrutiny must first arise.

This post highlights the origins of the 14 core corporate enforcement actions in 2019. (See here for a similar post highlighting the origins of 2018 corporate enforcement actions; here for 2017 corporate enforcement actions and here for 2016 corporate enforcement actions).

As highlighted in the post, like prior years, 2019 corporate enforcement actions originated in a variety of ways from voluntary disclosures, to pro-active government investigations and industry sweeps, to foreign law enforcement investigations and foreign media reporting.

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The DOJ’s Latest Voluntary Disclosure Guidance Is Absurd

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Yet again, see here for a prior post, the Department of Justice recently revised its Foreign Corrupt Practices Act Corporate Enforcement Policy (CEP) – originally released in November 2017. (See here for the current version).

As highlighted below, while two of the three revisions make sense, the revision concerning voluntary disclosure is absurd.

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Checking In On Lennox International’s Absurd Voluntary Disclosure

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There is no legal obligation to voluntarily disclose actual violations of the Foreign Corrupt Practices Act, something even the DOJ has acknowledged various times. But then again, returning to an issue first highlighted in this 2009, voluntary disclosure is the fuel that feeds FCPA enforcement and is extremely lucrative for FCPA Inc. Indeed, who can forget the words of the former DOJ Fraud Section Chief in this Wall Street Journal article “if you get two of these [FCPA investigations] a year as a partner, you’re pretty much set.”

Lennox International is involved in the heating, air conditioning, and refrigeration markets.

This October 2016 post asked what made Lennox so hot that it disclosed to the DOJ and SEC an investigation into a $475 payment in Russia to release a shipment of goods being held by customs officials.

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An FCPA Enforcement Action Against A U.S. Company Is More Than Twice As Likely To Originate From A Voluntary Disclosure Compared To An FCPA Enforcement Action Against A Non-U.S. Company

Statistical Analysis

At last week’s FCPA Institute – Boston (attended by a diverse group of professionals from leading companies and firms from around the world) a participant asked about any differences between the percentage of U.S. company Foreign Corrupt Practices Act enforcement actions that originate with a voluntary disclosure vs. FCPA enforcement actions against non-U.S. companies that originate with a voluntary disclosure.

I responded that U.S. company enforcement actions were much more likely to result from voluntary disclosures compared to non-U.S. company enforcement actions, but promised to provide the actual numbers and they are set forth below (courtesy of FCPAnalytics).

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Issues To Consider From The Juniper Networks Enforcement Action

Issues

This prior post highlighted the SEC’s $11.7 million Foreign Corrupt Practices Act enforcement action against Juniper Networks. This post continues the analysis by highlighting additional issues to consider.

Timeline

As highlighted in this prior post, Juniper Networks disclosed its FCPA scrutiny in mid-2013. Thus, from start to finish the company’s FCPA scrutiny lasted an unconscionable six years.

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