Today’s post concerns FCPA-related civil litigation.
Courts have held – the leading case is Lamb v. Phillip Morris Inc., 915 F.2d 1024 (6th Cir. 1990) – that the FCPA does not contain a private right of action. Yet in recent years plaintiffs attorneys have attempted to play a role in this new era of FCPA enforcement by bringing derivative claims against officers and directors, securities class action suits, unfair competition claims, and RICO claims.
If a company resolves an FCPA enforcement action or is the subject of FCPA scrutiny, it is likely that multiple plaintiffs firms will soon thereafter issue press releases announcing an “investigation.”
In December 2011 (see here for the prior post) Aon Corporation (“Aon”), one of the largest insurance brokerage firms in the world, agreed to resolve an FCPA enforcement action. Via a DOJ non-prosecution agreement and a settled SEC civil complaint in which the company was not required to admit or deny the SEC’s allegations, Aon agreed to pay approximately $16.3 million. As noted in the prior post, and in this subsequent post, the conduct at issue involved Aon Limited (a subsidiary of Aon based in and organized under the laws of the U.K.) and focused on Costa Rica. There was no fact, suggestion or implication in the resolution documents that anyone at Aon knew of, participated in, or authorized the conduct at issue. The only factual mention of Aon in the resolution documents is that Aon Limited “reported financially through a series of intermediary entities into its U.S.-based issuer parent, Aon Corporation” and elsewhere that “the books and records of Aon Limited were consolidated into those of Aon Corporation.”
Further relevant to the question posed in this post, in resolving the enforcement action, the DOJ acknowledged Aon’s: “extraordinary cooperation” in its investigation; “timely and complete disclosure of facts” relating to the conduct at issue; and “early and extensive remedial efforts” including the “substantial improvements the company has made to its anti-corruption compliance procedures.” Furthermore, in resolving the enforcement action, Aon agreed to a host of FCPA related compliance enhancements.
Nevertheless, along comes this release from a securities class actions firm announcing that it “is investigating the Board of Directors of Aon” and that “the investigation focuses on possible breaches of fiduciary duties by the Board of Directors in relation to allegations that the company violated the Foreign Corrupt Practices Act.”
The release ends of course, as they all do, with the following. “If you own common stock in Aon and wish to obtain additional information, please visit us at [name of securities class action firm]. [Name of firm securities class action firm] also encourages anyone with information regarding Aon’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.”
When a company’s FCPA violations are found to be condoned or encouraged by the board or executive officers, such plaintiff causes of action would seem to be warranted. But these situations are rare in FCPA enforcement actions and from the DOJ and SEC resolution documents in the Aon enforcement action, these circumstances were not present in the Aon matter.
As noted in this prior post, the Chamber of Commerce (in addition to supporting FCPA reform) has blasted FCPA-related civil litigation. And with good reason.
The question needs to be asked – do the vast majority of these plaintiff FCPA related civil suits or “investigations” serve a purpose or are they merely parasitic?