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Measured By This Goal, DOJ Policy Has Failed

failure3

Imagine a government enforcement agency unveiling an enforcement policy that had X as a stated goal and then nearly six years later, X occurred only 7% of the time.

The answer would seem clear: the goal of the enforcement policy failed.

As highlighted below, in releasing the 2016 FCPA Pilot Program and thereafter in 2017 in releasing the FCPA Corporate Enforcement Policy (CEP), the DOJ stated that a “main goal” was to encourage voluntary disclosures to permit prosecution of individuals. Yet, nearly six years later there have been FCPA prosecutions of individuals in only 7% of cases the DOJ has self-identified as being resolved pursuant to / or consistent with the Pilot Program or the CEP.

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Compliance Professionals Should Take The Corruption Perceptions Index With A Grain Of Salt

Grain of Salt

In an annual non-event, Transparency International (TI) released its so-called Corruption Perceptions Index (CPI) (see here). The CPI “ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and business people. It relies on 13 independent data sources and uses a scale of zero to 100, where zero is highly corrupt and 100 is very clean.”

According to TI, the “data sources are collected by a variety of reputable institutions, including the World Bank and the World Economic Forum” and the “sources and surveys which make up the CPI are based on carefully designed and calibrated questionnaires, answered by experts and businesspeople.”

According to TI, this year’s CPI “reveals that corruption levels remain at a standstill worldwide” and “131 countries have made no significant progress against corruption over the last decade, and this year 27 countries are at a historic low in their CPI score.”

The CPI generates a lot of media coverage and is a popular tool for business organizations in ranking risk (and thus prioritizing compliance). However, for the reasons highlighted in this post compliance professionals should take the CPI with a grain of salt.

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From The Docket

Judicial Decision

As highlighted in this prior post, in 2016 Misonix made a voluntary disclosure to the DOJ and SEC to “inform both agencies that the Company may have had knowledge of certain business practices of the independent Chinese entity that distributes its products in China, which practices raise questions under the Foreign Corrupt Practices Act.”

In 2017 Cicel (Beijing) Science & Technology Co. Ltd. brought a variety of civil claims against Misonix concerning its business relationship with the company. Among the claims brought by Cicel was a breach of contract claim. Misonix acknowledged that it terminated the contract, but argued that it “was justified in doing so because of Misonix’s FCPA investigation” regarding Cicel. In response, Cicel claimed that the investigation “was a ruse for breaching the contract.”

As highlighted in this prior post, a judge allowed Cicel’s claim to proceed beyond the motion to dismiss stage.

Recently, a judge granted Misonix’s motion for summary judgment on the breach of contract claim. The decision (2022 WL 188994) provides a rare public view into the origin’s of Misonix’s scrutiny and investigation.

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Rewind: Remembering The DOJ’s Embarrassing Africa Sting Case

Rewind

Twelve years ago this week, one of the most embarrassing DOJ FCPA enforcement actions began – an enforcement action that a federal court judge would ultimately call “a long and sad chapter in the annals of white collar criminal enforcement.”

In January 2010, DOJ announced criminal charges against 22 executives and employees of companies in the military and law enforcement products industry for engaging in a scheme to pay bribes to the minister of defense of an African country.

However, there was no actual involvement from any minister of defense. Rather, FBI agents, with the assistance of an individual who had already pleaded guilty to real, unrelated FCPA offenses (Richard Bistrong), posed as representatives of a Gabonese minister. While it was not the first use of proactive, undercover investigative techniques in an FCPA investigation, it was certainly the largest and most dramatic use of such techniques in the FCPA’s history, and the full force of the government’s surveillance capabilities were used against individuals from mostly small private companies located across America.

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This Is Why FCPA Inc. Needs A Common Language

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For years, these pages have highlighted the need for a Foreign Corrupt Practices Act common language as to the basic question of “what is an FCPA enforcement action?” (See herehereherehere, here).

This article titled “A Common Language to Remedy Distorted FCPA Enforcement Statistics” exposes in detailed fashion various distorted FCPA enforcement statistics. As highlighted in the article, the absence of a FCPA common language has numerous negative effects including infecting nearly all FCPA enforcement statistics.

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