For The First Time In Nearly Six Years, The DOJ Issues An Opinion Procedure Release
The Foreign Corrupt Practices Act when enacted directed the DOJ Attorney General to establish a procedure to provide responses to specific inquiries by those subject to the FCPA concerning conformance of their conduct with the DOJ’s “present enforcement policy.”
Pursuant to the governing regulations of the so-called DOJ Opinion Procedure Release Program, only “specified, prospective—not hypothetical—conduct” is subject to a DOJ opinion. While the DOJ’s opinion has no precedential value, its opinion that contemplated conduct conforms with the FCPA is entitled to a rebuttable presumption should an FCPA enforcement action be brought as a result of the contemplated conduct.
As highlighted below, last week (for the first time since November 2014) the DOJ issued an opinion procedure release.
It Is Absurd To Ask “Are Agents Ever Legal Under The FCPA?”
In this recent post, Richard Cassin (Founder and Editor at Large of the FCPA Blog) asks “are agents ever ‘legal’ under the FCPA?” He writes:
“My serious purpose in asking if agents are legal under the FCPA is about compliance with the accounting standards. […] Concerning the FCPA internal controls provisions, my question is: Can issuers meet the requirement if they use intermediaries? Or, is the use of an agent, which necessarily involves some loss of control, always non-compliant with management’s legal duty to provide reasonable assurance that transactions are accurately recorded, lawful, and in accordance with management’s authorization?”
These are absurd questions.
Travel Agencies Are Third Parties Too
Companies doing business in the global marketplace engage all types of third parties. Generally, Foreign Corrupt Practices Act compliance tends to focus, with good reason, on third parties such as agents, representatives, distributors and others that assist a company in obtaining or retaining business.
However, given the DOJ and SEC’s broad interpretation of that key element of the FCPA’s anti-bribery provisions, any third party that has a point of contact with a foreign official – even if outside the context of foreign government procurement – can potentially expose a business organization to scrutiny and enforcement.
Alexion Pharmaceuticals Resolves $21.5 Million Enforcement Action
Yesterday, the SEC announced that Alexion Pharmaceuticals (a company that has been under scrutiny since mid-2015) agreed to approximately $21.5 million to resolve an enforcement action based on the actions of foreign subsidiaries involving the company’s primary drug Soliris.
The conduct at issue focused on Alexion Illac Ticarent Limited Sirketi (Alexion Turkey), Alexion Pharma OOO (Alexion Russia), Alexion Pharma Brazil and Alexion Pharma Colombia SAS (all wholly-owned subsidiaries whose books and records were consolidated into Alexion’s financial statements).
Novartis Joins The Repeat Offender Club – This Time Paying Approximately $347 Million To Resolve An FCPA Enforcement Action
What happens when the Greek, Swiss, and South Korean subsidiaries of a Swiss company engage in improper conduct in Greece, Vietnam and South Korea? Why of course, approximately $345 million flows into the U.S. treasury.
Yesterday, Novartis joined the long and growing list of FCPA repeat offenders as the DOJ and SEC announced (see here and here) a combined approximate $347 million enforcement action. (As highlighted in this prior post, in 2016 Swiss pharmaceutical company Novartis coughed up $25 million to resolve a SEC FCPA enforcement action focused on the conduct of its indirect Chinese subsidiaries).
Yesterday’s enforcement action included a DOJ component (in which the company agreed to pay approximately $234 million) and a SEC component (in which the company agreed to pay approximately $113 million).