This prior post highlighted the net $1.66 billion Foreign Corrupt Practices Act enforcement action against Goldman Sachs and a related entity.
This prior post posed the question, based on the government’s allegations, what should happen when compliance is decent (and often good), but not great? The prior post also highlighted how the Goldman enforcement action was much different than certain other top ten FCPA enforcement actions.
This prior post discussed various developments related to the Goldman FCPA enforcement action.
This post continues the analysis by highlighting additional issues to consider from the enforcement action.
Timeline
As highlighted in this prior post, Goldman began attracting scrutiny for its involvement in the IMDB fund in approximately October 2015. Thus, from start to finish Goldman’s FCPA scrutiny lasted approximately 5 years.
Yes, there were multiple law enforcement agencies around the world involved in the conduct at issue. Yes, for the last 9 months the global pandemic has likely impacted the pace of law enforcement inquiries. Nevertheless, 5 years to resolve to FCPA inquiry is far too long.
This is particularly true in the Goldman matter given that, in the words of the DOJ, Goldman:
“collect[ed] and produc[ed] voluminous evidence located in other countries; ma[de] regular factual presentations and investigative updates to the Offices; and voluntarily ma[de] foreign-based employees available for interviews in the United States.”
No Independent Monitor
On one level, it may seem odd for the largest FCPA enforcement action in history (in terms of settlement amount) not to include an independent corporate monitor as a condition of settlement.
Yet, on another level, as discussed in this prior post, the Goldman enforcement action was much different than certain other top ten FCPA enforcement actions. Moreover, as discussed in this post, in recent years it is very rare for a U.S. company resolving an FCPA enforcement action to have an independent monitor imposed.
Approximately two years ago, the DOJ released a new monitor policy titled “Selection of Monitors in Criminal Division Matters” (see here) setting forth factors DOJ attorneys should consider in deciding whether to impose a monitor as a condition of settlement.
Many of these factors do not appear to be present in the Goldman enforcement action. For instance, the misconduct was not “pervasive across the business organization” but rather involved a few employees who took numerous steps t0 conceal their conduct, and lie about their conduct, to others in the company.
Moreover, in the relevant considerations portion of the DPA, the DOJ addressed certain other factors such as:
“the Company ultimately engaged in remedial measures, including (i) implementing heightened controls and additional procedures and policies relating to electronic surveillance and investigation, due diligence on proposed transactions or clients and the use of third-party intermediaries across business units; and (ii) enhancing anti-corruption training for all management and relevant employees;” and
“the Company has committed to continuing to enhance its compliance program and internal controls, including ensuring that its compliance program satisfies the minimum elements set forth in Attachment C to this Agreement (Corporate Compliance Program).”
In short, the DOJ determined that an independent compliance monitor was unnecessary based on “the Company’s remediation and the state of its compliance program, and the Company’s agreement to report to the” DOJ for a three year period regarding “remediation and implementation of the compliance program and internal controls, policies, and procedures described in Attachment C” (as well as submitting to the DOJ reports and follow-up reports).
Similar Prior Enforcement Action
In many respects and for the reasons discussed in this prior post, the Goldman enforcement action is very similar to the 2016 FCPA enforcement action against Och-Ziff (like Goldman a financial services company and like the Goldman matter also in the Top Ten list).
The Och-Ziff enforcement action, like the Goldman matter, largely centered on two employees who concealed their conduct involving a third party from other company employees. Like the Goldman action, the Och-Ziff matter also occurred against the backdrop of the DOJ/SEC highlighting various aspects of Och-Ziff’s control environment during the relevant time period. However, in the Och-Ziff action, like the Goldman matter, the DOJ and SEC found that the company failed to act consistent with those controls in connection with certain transactions involving third parties.
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