As highlighted in this prior post, several of the issues discussed in President Trump’s February 10th Executive Order “Pausing” FCPA enforcement had been percolating for many years and discussed by many individuals.
The same is true regarding several of the issues highlighted in the DOJ’s recent policy memo titled “Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime.” (See here for the prior post).
This is particularly true when it comes to the “efficiency” of DOJ investigations.
The recent policy memo states:
“The work of Criminal Division attorneys to investigate and prosecute white-collar crime is essential to the Department’s efforts to advance American interests, protect victims, and strengthen our national security. But federal investigations into corporate wrongdoing can be costly and intrusive for businesses, investors, and other stakeholders, many of whom have no knowledge of, or involvement in, the misconduct at issue. Federal investigations can also significantly interfere with day-to-day business operations and cause reputational harm that may at times be unwarranted. To maximize efficiency in all corporate investigations, I am therefore directing the implementation of the following procedures in corporate investigations in the Criminal Division, effective immediately:
Efficient Investigations
White-collar schemes are complex and often cross borders. As a result, these schemes take substantial time and effort to unravel. Evidence may be located abroad and records can be voluminous. But from the company’s perspective, investigations into corporate crime can linger for years and, at times, with little meaningful progress. While particular facts and circumstances may require an investigation that spans multiple years, prosecutors must take all reasonable steps to minimize the length and collateral impact of their investigations, and to ensure that bad actors are brought to justice swiftly and resources are marshaled efficiently.
Accordingly, I am directing that prosecutors must move expeditiously to investigate cases and make charging decisions. That means that my office will work closely with the relevant Sections to track investigations and ensure that they do not linger and are swiftly concluded.”
The notion that DOJ investigations can be costly for business organizations and linger for years with little meaningful progress has been discussed by DOJ officials for years.
For instance, as highlighted in this prior post, in 2015 – against the backdrop of ever-escalating FCPA investigative fees (an issue that has been highlighted on these pages for years) – then DOJ Assistant Attorney General Leslie Caldwell gave the “we do not expect companies to aimlessly boil the ocean” speech.
Caldwell stated:
“All too often, criticism is leveled against the Justice Department for purportedly causing companies to spend years, and many millions of dollars, investigating potential violations. This is particularly true in the FCPA context where the need for international evidence can add to the expense and burden of an investigation. Critics wrongly question the wisdom of disclosing misconduct and cooperating with the government in light of what they perceive to be the department’s requirement that companies then must conduct unnecessarily costly, time consuming and widespread investigations.
There is no question that some cooperating companies spend large sums of money investigating potential misconduct and correcting internal controls issues that allowed the misconduct to occur. The decision to incur those costs, however, is one made by those companies, not a requirement of the department. When a company chooses to cooperate with the government, the manner in which the company approaches its cooperation, and its own investigation of the conduct, can significantly affect the length of the investigation and the costs incurred by the company.
Although we expect internal investigations to be thorough, we do not expect companies to aimlessly boil the ocean. Indeed, there have been some instances in which companies have, in our view, conducted overly broad and needlessly costly investigations, in some cases delaying our ability to resolve matters in a timely fashion.
For example, if a company discovers an FCPA violation in one country, and has no basis to suspect that violations are occurring elsewhere, we would not necessarily expect it to extend its investigation beyond the conduct in that country. On the other hand, if the same people involved in the violation also operated in other countries, we likely would expect the investigation to be broader.
This example is not intended to suggest the proper scope of an investigation of any given matter. My point instead is that, to receive cooperation credit, we expect companies to conduct appropriately tailored investigations designed to root out misconduct, identify wrongdoers and provide all available facts. To the extent a company decides to conduct a broader survey of its operations, that decision, and any attendant delay and cost, are the result of the company’s choices, not the department’s requirement.”
Caldwell’s speech set off a war-of-words of sorts in the FCPA space and shortly thereafter Caldwell again took to the podium and stated: “That’s not us. That’s the companies” who are responsible for the pre-enforcement action professional fees and expenses.” (See here).
Long lasting DOJ inquiries are another issue that has been discussed by many individuals for many years.
For instance, in this 2005 speech the DOJ’s then Assistant Attorney General Christopher Wray stated:
“Simply put, speed matters in corporate fraud investigations. The days of five-year investigations, of agreement after agreement tolling the statute of limitations – while ill-gotten gains are frittered away and investor confidence sinks – are increasingly a thing of the past.”
As highlighted here, in 2017 Acting Principal Deputy Assistant Attorney General Trevor McFadden stated it was the DOJ’s “intent … for our FCPA investigations to be measured in months, not years.”
As highlighted here, in 2022 Assistant Attorney General Kenneth Polite stated: “Where misconduct has occurred, everyone involved — from prosecutors to outside counsel to corporate leadership — should be ‘on the clock,’ operating with a true sense of urgency.”
In 2015, Paul Pelletier (former Principal Deputy Chief of the DOJ’s Criminal Division who subsequently ran for Congress as a Democrat) penned a dandy Wall Street Journal editorial titled “The Foreign Bribery Sinkhole at Justice” in which he wrote:
“Absurdly long and costly investigations, however, may cause companies to reassess the value of reporting FCPA violations to the federal government.
When bribery investigations are publicly resolved in a timely fashion, other businesses can more readily identify ongoing bribery schemes operating within their industry or region and ensure that their anti-bribery compliance programs adequately address those current schemes. That opportunity is lost when criminal resolutions drag out for five or more years. Deterrence then is principally the size of the monetary penalty.
The Justice Department needs to do more than churn out resolutions to foreign bribery cases notable only for their record-breaking penalties. Rigorous and prompt FCPA enforcement can have a dramatic impact on the insidious and corrosive effect of corruption overseas and provide … restorative justice …”.
Despite warranted clamor over long lasting DOJ investigations and acknowledgment of the problem by the DOJ, the problem continues.
Each year, this site tracks the average length of time business organizations are under FCPA scrutiny and the average is typically 4-5 years. (See here).
