The general equivalent to the Department of Justice in the United Kingdom is the Serious Fraud Office (SFO).
Compared to the DOJ, the SFO does a much better job of keeping the public informed of its investigations.
Recently, the SFO updated its case archive concerning two long-standing bribery investigations involving ENRC Ltd. and Rio Tinto.
Russ Ryan spent ten years in the SEC’s Division of Enforcement, including his last three years as Assistant Director of the Enforcement Division. He also spent substantial time in private practice at King & Spalding and is currently Senior Litigation Counsel at the New Civil Liberties Alliance.
Ryan is one of the best commentators around on many SEC issues and his candor is delightful.
His latest piece published on his LinkedIn page is titled “The SEC Penalty Racket” and it discusses two recent SEC FCPA enforcement actions against Rio Tinto and Flutter International (see prior posts here and here) to illustrate the SEC’s “largely unchecked power to shake down companies with astronomical penalties that far exceed statutory limits set by Congress.”
Previous posts here and here discussed the $15 million FCPA enforcement action against Rio Tinto and the $4 million FCPA enforcement action against Flutter International.
This post highlights additional issues to consider.
Interesting
While one would like to think that FCPA enforcement actions “just happen” when they are ready to happen, certain FCPA enforcement actions are seemingly timed to coincide with a company’s reporting cycle, government enforcement “marketing,” or other issues.
Separate FCPA enforcement actions announced on the same day are rare.
In the minds of some (including former FCPA enforcement officials – see here), Foreign Corrupt Practices Act enforcement is a convenient cash cow for the U.S. government.
Those who believe this will find new support in the first corporate FCPA enforcement action of 2023.
The basic findings are as follows.
Approximately 12 years ago, Rio Tinto (a metal and mining company with headquarters in Australia and the United Kingdom) hired a French investment banker and close friend of a former senior Guinean government official as a consultant to help the company retain mining rights in Guinea.
Even though both Australia and the United Kingdom have laws and law enforcement resources to adequately address the conduct at issue, the U.S. nevertheless extracted $15 million from Rio Tinto because the company had American Depository Shares that traded on a U.S. exchange.
There is little substantive Foreign Corrupt Practices Act case law, even fewer judicial decisions of precedent. Nevertheless, in the aftermath of FCPA enforcement actions or merely FCPA scrutiny, plaintiffs counsel (no doubt representing shareholders on a contingent fee basis) frequently file securities fraud class actions hoping some get past the motion to dismiss stage.
In deciding motions to dismiss, federal trial court judges occasionally directly comment upon FCPA issues and this post highlights a recent example in a matter involving Rio Tinto. As discussed below, a federal court judge found the term “instrumentality” in the FCPA’s “foreign official” definition “unclear” and otherwise narrowly construed the term in a way contrary to the DOJ’s current position.
