Category: COVID-19

The Impact Of COVID-19 On FCPA Enforcement

Approximately three weeks into the full effects of the COVID-19 crisis, it seems likely that FCPA enforcement in 2020 will be below historical averages in terms of the number of enforcement actions. (See here, here and here for historical averages for corporate and individual FCPA enforcement). Depending on the duration of the full effects of the COVID-19 crisis, its impact on FCPA enforcement may carry over into future years as well (recognizing that the life cycle of the FCPA inquiry tends to be approximately 4 years – see here).

Set forth below are some general observations as well as DOJ and SEC responses received to the following question: has COVID-19 had an impact on FCPA investigations and/or enforcement actions.

Corruption Settlements, Coronavirus And The Road Paved With Good Intentions

A guest post today from Hughes Hubbard & Reed attorneys Kevin Abikoff and Aline Osorio.

In connection with the 2018 consolidated anti-corruption resolution with Petrobras, the Brazilian prosecutors as part of the settlement with Petrobras sought and obtained approval to allow payment of $682 million from the settlement to benefit education and the environment in Brazil.

On March 19, 2020, the Brazilian prosecutor general applied to the Brazilian Supreme Court to redirect the unspent portion of the settlement funds away from their original destination and instead to be used in the fight against the COVID-19 pandemic in Brazil.

It’s Important To Remember That The Internal Controls Standard Is “Reasonable”

This recent post discussed how the COVID-19 crisis once again demonstrates that there is a difference between the FCPA anti-bribery provisions (the statute) and how the FCPA’s anti-bribery provisions are enforced by the DOJ/SEC.

In the current crisis, some have raised legitimate concerns that doing risk assessments, due diligence of third parties, monitoring of third parties, in-country audits, and a host of other internal controls “best practices” have become difficult if not practically impossible – and thus Foreign Corrupt Practices Act violations are lurking. After all, the DOJ says a business organization should do the above-listed things (among others) in its Evaluation of Corporate Compliance Programs (“ECCP”)

Compliance professionals – take a deep breath. The ECCP is not the law and courts have held that failure to follow supposed “best practices” is not a legal violation.

Rather, in times like these remember that the internal controls standard is “reasonable.” “Reasonable” is a term used throughout the law and when used the standard contemplates a variety of factors including the circumstances in which conduct occurs. Indeed, this position finds grounding in the FCPA itself, its legislative history, FCPA judicial decisions, and even prior FCPA enforcement agency guidance.

The Difference Between The FCPA (The Statute) And The FCPA As Enforced During The COVID-19 Crisis

Many people, not surprisingly, view current events through the lens of their profession. Indeed, there have been some thoughtful pieces written about the Foreign Corrupt Practices Act as the COVID-19 crisis unfolds. (See here, here, here and here).

Some of these articles have focused on the FCPA risks of moving product across borders, interacting with customs and border officials, and/or interactions with “foreign officials” in connection with licensing, permitting, and other regulatory issues.

My own two cents on FCPA issues in the midst of COVID-19 is that it once again demonstrates the difference between the FCPA (the statute as written by Congress and interpreted by courts) and the FCPA as enforced by the DOJ and/or SEC. (See here, here, and here for prior similar posts).