Nice Pay Day, But What Did You Accomplish?
When I published “The Facade of FCPA Enforcement” in 2010 (see here) the trend of FCPA-inspired tag-a-long private civil suits was in its early stages. Thus, the section of my article – why the facade of FCPA enforcement matters – did not include discussion of such suits.
Now that the trend is clear, add FCPA-inspired private civil suits to the list of reasons why the facade of FCPA enforcement matters.
The game is very predictable. In the days and weeks following an FCPA enforcement action, or even a company disclosing or otherwise being the subject of FCPA scrutiny, the suits and/or “investigations” by plaintiffs firm will start to mount
In this prior post, I asked whether FCPA-inspired civil suits have a purpose or a parasitic. I stated that 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. This prior post detailed June 2011 Congressional testimony on behalf of the U.S. Chamber Institute for Legal Reform that touched upon FCPA-civil litigation and I generally agree with the criticisms made of this “piggyback-litigation phenomenon.”
Several prior posts (here and here) profile how such derivative claims seldom, if ever, get past the motion to dismiss stage. Yet, several companies make the business judgment to settle such claims for what amounts to nuisance value for the company, but which represents a handsome pay day for plaintiff’s counsel for doing and accomplishing next to nothing.
Two recent Foreicgn Corrupt Practices Act related civil settlements prove this point.
In July, Halliburton announced here that a Texas state court issued an order preliminarily approving the proposed settlement of a derivative claim concerning a variety of misconduct, including Bonny Island, Nigeria conduct giving rise to the previous FCPA enforcement action against Halliburton and its related entities.
Pursuant to the proposed settlement, within 90 days of a final settlement date, Halliburton’s board agreed to implement various corporate governance and internal control revisions. The items most related to FCPA compliance should not be hard to accomplish because pursuant to the 2009 FCPA DOJ/SEC settlement, Halliburton already was under an existing obligation, including through engagement of a compliance monitor, to implement a host of FCPA related compliance enhancements.
Yet pursuant to the proposed settlement agreement, for its innovative work (that is my term), Plaintiffs’ counsel in the derivative action will seek approval of its fees and expenses not to exceed $7 million and Halliburton will not oppose such fees and will pay them through its insurance carriers.
Likewise, Johnson & Johnson recently announced (here) a proposed settlement of a derivative claim concerning a variety of misconduct, including the conduct giving rise to its 2011 FCPA enforcement action. As detailed in this prior post, pursuant to the settlement via a DPA, the company is already subject to enhanced compliance obligations related to the FCPA. The prior post noted that such enhanced compliance obligations were unusual and surprising given the DOJ’s conclusion that J&J already generally had “effective” policies and procedures. In the words of the DOJ “J&J had a pre-existing compliance and ethics program that was effective and the majority of problematic operations globally resulted from insufficient implementation of the J&J compliance and ethics program in acquired companies.”
Yet, along comes the Plaintiffs’ firms with a derivative action and pursuant to the settlement, J&J has agreed to reimburse Plaintiffs’ counsel in an amount not exceeding $10 million and to pay approximately $450,000 in its expenses.
Like many things in this new era of FCPA enforcement, FCPA-civil related suits have, in many cases, spiraled out of control. Yet with many, including now Plaintiffs firms, with a vested financial interest in seeing the status quo prevail, it is doubtful any meaningful change is on the horizon.
Yet the question can be asked, do FCPA civil-related suits accomplish anything? Do such suits serve a purpose or are they parasitic? Is this another reason why the “facade” of FCPA enforcement matters.
A Wide-Ranging Interview
The FCPA Report is an online publication that contains articles on a variety of FCPA topics to assist lawyers in relevant practice areas, in-house counsel, and risk and compliance managers stay ahead of the curve. It launched this June and features thematic sourced and researched by primarily lawyers, as well as contributed articles by experts in the field, interviews with leading figures, and reports on important developments. It is available to subscribers and trial subscribers at www.fcpareport.com.
I was pleased to do a telephone interview with the FCPA Report in mid-August. Today’s post sends you to the wide-ranging Q&A previously published, in two parts, in the FCPA Report and linked to here with permission.
Topics covered in the Q&A include the following: statute of limitations, judicial scrutiny, the duration of FCPA scrutiny, voluntary disclosure, Wal-Mart’s FCPA scrutiny, facilitation payments, obtain or retain business, foreign official, corporate fines, victims issues, a private right of action, FCPA Inc. and the revolving door, the three buckets of FCPA financial exposure and Foreign Corrupt Practices Act reform.
Friday Roundup
The guidance is coming – the guidance is coming, compliance by the numbers, checking in on Wynn-Okada, industry news, and refreshing candor. It’s all here in the Friday roundup.
Guidance
Since Assistant Attorney General Lanny Breuer announced last November that the DOJ would be issuing FCPA guidance in 2012 (see here for the prior post), approximately 25 years after Congress encouraged the DOJ to issue guidance, FCPA Inc. has been waiting patiently, and too long (see here for the prior post), for such guidance.
There have been whispers that the guidance would be released in October and this recent Wall Street Journal Corruption Currents post by Chris Matthews, citing “people familiar with the matter” confirms those whispers.
Compliance Practices By The Numbers
What percentage of the Fortune 500 have publicly available, stand-alone FCPA compliance policies and procedures? Do the policies and procedures include discussion of the FCPA’s books and records and internal control provisions? How do companies address facilitation payments? What about gift-giving?
Answers can be found in this recent article in Corporate Counsel by Ryan McConnell (Baker & McKenzie), Jay Martin (Baker Hughes) and Paula Bonavides (a University of Houston law student).
Wynn-Okada
Remember Kazuo Okada, the former business partner of Steve Wynn, accused of various FCPA violations by Wynn Resorts earlier this year? Given the nature of Wynn’s investigative report authored by former FBI Director Louie Freeh of Freeh, Sporkin & Sullivan LLP (see this prior post which provides a detailed summary of the report) it is not surprising, as noted in this Reuters article, that Okada has filed a defamation lawsuit in Japan against the casino company and its officials. According to the article, Okada is claiming $140 million in damages and he alleges that Wynn’s actions led to a decline in his company’s stock price, a decline in new business opportunities, and damaged his reputation. As noted in the Reuters article, a Wynn spokesperson said that Okada’s lawsuit is an “attempt to distract” from the real issues facing Okada and his company “as identified in the Freeh Report.”
Industry News
Speaking of Freeh, in addition to his role in the Wynn-Okada dispute, he is also known in FCPA circles for being the monitor in the Daimler FCPA enforcement action. (See here for the prior post).
As noted in this release from Pepper Hamilton LLP, the firm “and the lawyers of Freeh Sporkin & Sullivan, LLP announced the union of the legal talent of the two firms and Pepper Hamilton’s acquisition of Freeh Group International Solutions, LLC.”
Refreshing Candor
FCPA Inc. participants are of course an active group of speakers. But rarely does one find much candor in the discussions. FCPA Inc. participants often filter what they say cognizant of client issues and mindful of what the small world of enforcement agency officials will think of them. I’ve had numerous exchanges with industry participants in which a person says something insightful or provocative. I then offer up the opportunity to publish a guest post on FCPA Professor, and the person declines.
Against this backdrop, this recent transcript of the 2012 Chief Legal Officer Leadership Forum hosted by Argyle Executive Forum is a nice read in that Adam Siegel (the c0-chair of global white collar group at Freshfields Bruckhaus Deringer) speaks with refreshing candor. Siegel (here, a former federal prosecutor) states as follows.
Regarding a compliance defense.
“Well, the U.K. act, even though it’s perceived as being broader and worse than the FCPA, has this wonderful feature to it, which is that a corporation is legally not responsible if it had adopted adequate procedures. It’s a great argument that we can take to the business about why they ought to invest in an appropriate compliance program. It means we’re actually innocent and you’re not begging some 27-year-old – apologies to anyone in the room of that age – to exercise their enormous discretion and give the corporation and shareholders a pass because some rogue employee in Indonesia has decided that they were going to do something to hit their targets this year.”
On the increase in FCPA enforcement.
“In 2005, due to some changes in personnel and some other issues of justice, someone realized that they can use this statute more aggressively. If you think back to 2007, we had a major record in FCPA civil and criminal finds; $150 million. I think people were amazed that in that year that was what the government was able to do. Fast forward to 2010 and you’re at $1.8 billion. I mean, if any of us in this room have a business that has grown at that rate, I think we’d all be very happy and our shareholders would be delighted.”
On the global trend of increased enforcement.
“I think some of it is pressure from globalization. I think a lot of it is looking at the numbers on that chart. I think a lot of the global anti-bribery movement is driven by regulators around the world saying, Okay, a German company just paid $300 million to the U.S. That’s sort of funny to us. Where are we in this? I think there is some international pressure. There is the pressure of raising the bar, but there’s also a very cynical pressure of raising money. We’re in an economic climate today where I don’t think there’s a single government in the world that isn’t struggling to find resource. This area has emerged, again, as a money making center, which is kind of bizarre.”
*****
A good weekend to all.
A Government Required Transfer Of Shareholder Wealth To FCPA Inc.?
This is the second time I have written about this general issue. See here for the previous post regarding Johnson & Johnson and its “enhanced compliance obligations.”
The recent Foreign Corrupt Practices Act enforcement action against Pfizer is notable in many respects. (See here for a prior post detailing certain notable aspects). It is also notable for the “enhanced compliance requirements” Pfizer is required to adhere to pursuant to the terms of the deferred prosecution agreement.
Below are the pertinent facts alleged by the DOJ and/or SEC relevant to the issues discussed in this post
The substantial bulk of the enforcement action concerns conduct of Pharmacia Corporation (an entity Pfizer acquired in 2003) and Wyeth (an entity Pfizer acquired in 2009).
In the 18 months following its acquisition of Wyeth, Pfizer conducted a due diligence and investigative review of the Wyeth business operations and integrated Pfizer’s internal controls system into the former Wyeth business entities.
The DOJ or SEC do not allege that anyone at Pfizer’s or Wyeth’s corporate headquarters knew of or approved the conduct at issue.
As soon as the problematic conduct came to the attention of Pfizer’s corporate headquarters, it made a timely voluntary disclosure to the enforcement agencies.
Pfizer’s self-investigation was thorough and wide-ranging. The DOJ stated as follows. “From 2004 to the present, Pfizer, using external counsel and forensic accountants, internal Legal, Compliance, and Corporate Audit personnel, conducted an extensive, global review of its operations regarding allegations of improper payments to Government officials and government doctors, including in Pfizer HCP markets and those of other Pfizer subsidiaries.” Likewise, the SEC stated as follows. “[Since 2004, Pfizer] diligently and thoroughly undertook a global internal investigation of its operations in no less than 19 countries …”.
Pfizer provided significant cooperation to the enforcement agencies in their investigations.
Pfizer undertook early and extensive remedial efforts and has made substantial and continuing improvements to its global anti-corruption compliance policies and procedures. The DOJ stated as follows. “[S]tarting immediately in 2004, Pfizer launched extensive remedial actions including: undertaken a comprehensive review of its compliance program, implementing enhanced anti-corruption compliance policies and procedures on a worldwide basis, developing global systems to support employee compliance with the enhanced procedures, adding FCPA-specific reviews to its internal audits, performing proactive anti-corruption compliance reviews in approximately ten markets annually, and conducting comprehensive anti-corruption training throughout the organization.” Likewise, the SEC stated as follows. “Pfizer also undertook a comprehensive review of its operations, enhanced its internal controls and compliance functions, engaged in significant disciplinary measures, and developed and implemented global FCPA compliance procedures, including the development and implementation of innovative proactive procedures, and sophisticated supporting systems.”
Thus, for approximately eight years, Pfizer has been doing the right thing. When the enforcement agencies themselves use words such as thorough, wide-ranging, extensive, global, worldwide, diligent, comprehensive, proactive, significant, innovative and sophisticated, there can be no reasonable doubt about this.
Yet, just as in the Johnson & Johnson enforcement action, the Pfizer DPA requires the company to adhere to “enhanced compliance obligations.” These obligations require the company to, among other things, “select at least five markets to receive FCPA proactive reviews a year” and each proactive review shall include, at a minimum, “on-site visits by an FCPA review team,” a “review of a representative sample … of contracts with and payments to individual foreign government officials or health care providers, as well as other high-risk transactions in the market,” and “where appropriate, feasible, and permissible under local law, review of the books and records of a sample of distributors …”.
FCPA compliance policies and procedures are good. Yet given the allegations against Pfizer (as opposed to entities Pfizer acquired) and given what Pfizer has done over the past eight years, are the “enhanced compliance obligations” truly necessary?
Or is this another example of a company being required by the government (under risk of prosecution for failure to do so) to engage in fishing expeditions (when the company has already gone fishing) just for the sake of going fishing again and thus represent a boundless and unconstrained transfer of shareholder wealth to FCPA Inc.?
Such fishing expeditions are, of course, lucrative for FCPA Inc. Hence one of the reasons you probably do not see those in the industry raising concerns about the emerging trend of “enhanced compliance obligations.”
Yet such concerns should be raised and have been raised here.
Friday Roundup
Add a few to the list, take a few off, a word on guest posts, take a deep breath, whose fault is it, once again nobody was charged. It’s all here in the Friday roundup.
Add Another
Most companies bury FCPA disclosures deep in SEC filings. Not so with Nordion Inc. (here – a Canadian based health sciences company with shares traded in the U.S). It took the open and direct route by issuing a release (here) specifically devoted to the topic. The release states as follows.
“[The company] disclosed that it is conducting an internal inquiry and investigation of a foreign supplier and related parties focusing on compliance with the Canadian Corruption of Foreign Public Officials Act (CFPOA) and the U.S. Foreign Corrupt Practices Act (FCPA). Through the Company’s own internal review as part of its CFPOA compliance program, Nordion discovered potential compliance irregularities. As a result, the Company recently commenced an internal investigation of the possible compliance issues. These issues relate to potential improper payments and other related financial irregularities in connection with the supply of materials and services to the Company. The investigation is being conducted by outside legal counsel and external forensic and accounting firms who are experts in such compliance. These external advisors are reporting regularly to a special Committee of the Board constituted to deal with this matter. Nordion has voluntarily contacted the regulatory and enforcement authorities, including the Canadian and U.S. Department of Justice, the Royal Canadian Mounted Police (RCMP), the U.S. Securities and Exchange Commission (SEC) and the Public Prosecution Service of Canada, to provide details of the matter and advise that an internal investigation is underway. The internal investigation is in its early stages and the Company’s external advisors have met with these authorities and will continue to provide reports to them as the investigation progresses.Nordion is committed to the highest standards of integrity and diligence in its business dealings and to the ethical and legally compliant business conduct by its employees, representatives and suppliers. The Company reviews its compliance programs on a regular basis to assess and align them with emerging trends and business practices. Corrupt or fraudulent business conduct is in direct conflict with the Company’s Global Business Practice Standards and corporate policies. The Company will continue to investigate this matter and cooperate with regulatory and enforcement authorities with a view to an expedient resolution.”
By my estimation, in the past four months, approximately twenty companies have become subject to FCPA scrutiny (whether through disclosures or FCPA-related civil complaints). In addition, industry sweeps as to the Hollywood movie industry and retail industry have reportedly been launched. See here for a prior post titled “The Sun Rose, A Dog Barked, and a Company Disclosed FCPA Scrutiny.”
Academi, Inc., formerly known as Xe Services, formerly known as Blackwater was also in the news this week. As noted in this FBI release, pursuant to a deferred prosecution agreement (here) the company admitted to certain facts and agreed to a $7.5 million fine in connection with certain export controls and firearms law violations. As noted in the release, the DPA “also acknowledges and references a $42 million settlement between the company and the Department of State as part of a settlement of violations of the Arms Export Control Act and the International Trafficking in Arms Regulations.” As noted in this previous post, Blackwater has been under investigation for FCPA violations in Iraq (and Sudan as noted in the FBI release). The above DPA specifically states however that “this agreement does not apply to the Foreign Corrupt Practices Act investigation independently under investigation by the DOJ.” As noted in this previous post, Blackwater’s FCPA scrutiny in Iraq inspired Representative Peter Welch to introduce H.R. 5366, the “Overseas Contractor Reform Act,” an impotent debarment bill that passed the House in September 2010 (see here).
There are also developments to report on the other side of the Atlantic as the U.K. Serious Fraud Office announced hereas follows. “The Director of the Serious Fraud Office has decided to open a criminal investigation into allegations concerning GPT and aspects of the conduct of their business in the Kingdom of Saudi Arabia.” As noted in this Bloomberg piece, GPT is a unit of European Aeronautic Defence & Space Co. (EADS), and the investigation involved suspected payments to win a telecommunications deal with Saudi Arabia’s royal family. The Financial Times stated that the “Serious Fraud Office’s criminal inquiry is a step-change for the agency after it said in March that it was happy with an internal investigation the company was conducting.”
Although he is no longer in Congress, former Representative Todd Tiahrt is probably delighted by this news. See here for the prior post.
Take a Few Off
Huntsman Corporation recently disclosed as follows in a SEC filing (here).
“During the third quarter of 2010, we completed an internal investigation of the operations of Petro Araldite Pvt. Ltd. (“PAPL”), our majority owned joint venture in India. PAPL manufactures base liquid resins, base solid resins and formulated products in India. The investigation initially focused on allegations of illegal disposal of hazardous waste and waste water discharge and related reporting irregularities. Based upon preliminary findings, the investigation was expanded to include a review of the production and off-book sales of certain products and waste products. The investigation included the legality under Indian law and U.S. law, including the U.S. Foreign Corrupt Practices Act, of certain payments made by employees of the joint venture to government officials in India. Records at the facility covering nine months in 2009 and early 2010 show that less than $11,000 in payments were made to officials for that period; in addition, payments in unknown amounts may have been made by individuals from the facility in previous years. […] Also in May 2010, we voluntarily contacted the U.S. Securities and Exchange Commission (“SEC”) and the U.S. Department of Justice (“DOJ”) to advise them of our investigation and that we intend to cooperate fully with each of them. We met with the SEC and the DOJ in October 2010 to discuss this matter and we continue to cooperate with these agencies. Steps have been taken to halt all known illegal or improper activity, including the termination of employment of management employees as appropriate. In May 2012, the SEC and DOJ notified us that they would not recommend any enforcement action be taken against our Company in this matter.”
Since August 2010 (see here for the prior post), I have proposed that when a company voluntarily discloses an FCPA internal investigation to the DOJ and the SEC, and when the DOJ and/or SEC decline enforcement, the DOJ and/or the SEC should publicly state, in a thorough and transparent manner, the facts the company disclosed to the agencies and why the agencies declined enforcement on those facts.
In the meantime, we can only speculate as to why the enforcement agencies did not bring an enforcement action against Hunstman. Of note, in the DOJ’s written declination responses after the June 2011 House hearing (see here), the DOJ stated that it has declined matters when, among other circumstances, “the improper payments involved minimal funds compared to the overall business revenue.”
As noted in this previous post, in April Hercules Offshore disclosed as follows. “On April 4, 2011, the Company received a subpoena issued by the Securities and Exchange Commission (“SEC”) requesting the delivery of certain documents to the SEC in connection with its investigation into possible violations of the securities laws, including possible violations of the Foreign Corrupt Practices Act (“FCPA”) in certain international jurisdictions where the Company conducts operations. The Company was also notified by the Department of Justice (“DOJ”) on April 5, 2011, that certain of the Company’s activities were under review by the DOJ. On April 24, 2012, the Company received a letter from the DOJ notifying the Company that the DOJ has closed its inquiry into the Company regarding possible violations of the FCPA and does not intend to pursue enforcement action against the Company. The DOJ indicated that its decision to close the matter was based on, among other factors, the thorough investigation conducted by the Company’s special counsel and the Company’s compliance program. The Company, through the Audit Committee of the Board of Directors, intends to continue to cooperate with the SEC in its investigation. At this time, it is not possible to predict the outcome of the SEC’s investigation, the expenses the Company will incur associated with this matter, or the impact on the price of the Company’s common stock or other securities as a result of this investigation.”
Earlier this week, the company updated its disclosure as follows. “On August 7, 2012, Hercules Offshore, Inc. (the “Company”) received a letter from the Securities and Exchange Commission (“SEC”) notifying the Company that the SEC staff has completed its investigation into the Company regarding possible violations of the Foreign Corrupt Practices Act (“FCPA”) and does not intend to pursue enforcement action against the Company. As previously disclosed, the Company was notified by the SEC and the Department of Justice (“DOJ”) in April 2011, that certain of the Company’s activities were under review by the SEC and DOJ with respect to possible violations of the FCPA in certain international jurisdictions where the Company conducts operations. The Company previously disclosed that it received a letter from the DOJ on April 24, 2012, notifying the Company that the DOJ has closed its inquiry into the Company regarding possible violations of the FCPA and does not intend to pursue enforcement action against the Company. The DOJ noted that it terminated its investigation ‘…based on a number of factors, including, but not limited to, the thorough investigation undertaken by Hercules and the steps that Hercules has taken in the past and continues to take to enhance its compliance program, including efforts to ensure compliance with the FCPA.’ As a result of the termination by the SEC and the prior termination by the DOJ, there are no open FCPA investigations against the Company.”
As evident from the disclosures, unlike Huntsman, the FCPA scrutiny of Hercules was not based on a voluntary disclosure, but inquiries from the SEC and DOJ. Whether this represents a declination or a dud is the question.
Guest Posts
Part of the mission of FCPA Professor is to facilitate a forum for discussion and analysis of FCPA and related issues among FCPA practitioners, business and compliance professionals, scholars and students, and other interested persons. Given this mission, I frequently publish guest posts (see here for approximately 60 such posts). In publishing guest posts, it should not be assumed in all cases that I agree in whole or in part with the content of such posts. Rather, providing the forum for delivery into the marketplace of ideas is what I hope to facilitate and I encourage all who want to make their voice heard on the issues to consider submitting a guest post.
A Deep Breath
The FCPA is a unique statute, with unique and difficult to manage risks.
Nevertheless , it was refreshing to see this piece by Pamela Marple (Chabourne & Park – here) in the NACD Director Advisory titled “The FCPA: A New Bear in the Woods?” Marple begins as follows. “Over the past five years, the Foreign Corrupt Practices Act has solidified itself as an industry brimming with expert forums, company departments and substantial news coverage. Is this statute really the bear in the woods some say it is?” Marple states as follows. “The existence of the FCPA industry (and professionals who are available to conduct internal investigations at a high price) does not mean that this reaction is what is always required. What is required first and foremost is reasonable judgment exercised by directors and professionals who seek both compliance and solutions—without assuming a bear is present at every turn.”
As I previously commented (here) to Corporate Board Member, corporate directors need to keep a proper perspective. There’s a whole industry out there that’s trying to sell the steroids version of FCPA compliance. But directors should not get their undies in a bundle over this. This is an issue, just like any other risk area, that directors need to have on their radar screen. Corporate directors should not panic when it comes to FCPA compliance.
Whose Fault is It?
Do FCPA violations occur because companies subject to the law go into foreign markets intent on engaging in bribery or because the companies are confronted by corrupt foreign officials seeking to line their own pockets?
Circumstances vary of course, but this recent article in the African Globe includes comments from human rights lawyer and Senior Advocate of Nigeria Femi Falana who focused on the former. The article stated as follows. “In order to cover up the involvement of western governments and corporations in the promotion of corruption, terrorism and drug abuse in Africa, the impression is often created by top public officials of some foreign governments that Africans are the most corrupt people in the world,” Falana observed noting that only last week, the US Secretary of State, Mrs. Hillary Clinton, kicked off her 11-day tour of some African states in Senegal by condemning corruption in Africa and urging African leaders to fight it in order to get good governance in the continent. He said it was also the kernel of President Barack Obama’s message to Africans when he made a brief stopover in Ghana three years ago. “While we do not condone corruption, it is high time the Obama administration was told to stop blaming the victims of grand corruption promoted and fuelled by western countries led by Switzerland, France, United Kingdom and United States,” Falana said.”
Nobody Was Charged
A recent New York Times article (here) once again raises the issue of why few corporate fraud enforcement actions result in individual charges. The article states as follows. “The Justice Department has collected $8.6 billion over the last three years, more than in any similar period in history, but relatively few prosecutions of individuals have come from the biggest settlements.”
A reason?
In the FCPA context, I submit and stated during my 2010 Senate testimony (here), involves the quality of the corporate enforcement action. Given the prevalence of NPAs and DPAs in the FCPA context and the ease in which DOJ offers these alternative resolution vehicles to companies subject to an FCPA inquiry, companies often agree to enter into such resolution vehicles regardless of the DOJ’s legal theories or the existence of valid and legitimate defenses. It is simply easier, more cost efficient, and more certain for a company to agree to a NPA or DPA than it is to be criminally indicted and mount a valid legal defense even if the DOJ theory of prosecution is questionable. (See here for my scholarship “The Facade of FCPA Enforcement). Individuals, on the other hand, face a deprivation of personal liberty, and are more likely to force the DOJ to satisfy its high burden of proof as to all FCPA elements.
A telling statistic?
As noted in this prior post, since alternative resolution vehicles were first used in the FCPA context (December 2004) there have been 61 “core” corporate DOJ FCPA enforcement actions. 47 of the 61 ”core” corporate DOJ FCPA enforcement actions (77%) have been resolved via an NPA (19 instances) or a DPA (28 instances). In these 47 “core” corporate DOJ FCPA enforcement actions, only 7 enforcement actions (15%) have resulted in any individual FCPA criminal charges against company employees. In other words, when the DOJ resolves an FCPA enforcement action via a NPA or DPA, there is only a 15% likelihood that individual criminal charges will be filed against any company employee or those affiliated with the company. [Note: the above statistics were calculated in Sept. 2011]
For previous posts on this very same issue see here.
*****
A good weekend to all.