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Globalized Corporate Prosecutions

Brandon Garrett (Professor of Law at the University of Virginia School of Law – here) has released a preliminary draft of an article scheduled to be published in the Virginia Law Review in December.   The article (here) is titled, “Globalized Corporate Prosecutions” and the abstract is as follows.

“In the past, domestic prosecutions of foreign corporations were not noteworthy. This has changed dramatically. Federal prosecutors now advertise a muscular approach targeting major foreign firms and even entire industries. High-profile prosecutions of foreign firms have shaken the international business community. Not only is the approach federal prosecutors have taken novel, but corporate criminal liability is itself a form of American Exceptionalism, and few other countries hold corporations broadly criminally accountable. To study U.S. prosecutions of foreign firms, I assembled a database of publicly reported corporate guilty plea agreements from the past decade. I analyzed U.S. Sentencing Commission data archives on federal corporate prosecutions and also data concerning federal deferred and non-prosecution agreements with corporations. Not only are large foreign firms prosecuted with some frequency, but they typically plead guilty and are convicted. In this Article, I develop how foreign corporate convictions have become common in distinct substantive criminal areas, but the trends and types of foreign corporate prosecutions share important features in common. The prosecutions are concentrated in crimes prosecuted by Main Justice, and international treaties and cooperation agreements have facilitated extraterritorial prosecutions. Larger and public foreign firms are prosecuted, and the typical resolution involves not only higher than average fines, but also a guilty plea and not pre-indictment leniency. I argue that due to their new prominence, we should consider foreign corporation prosecutions as a group so that we can better evaluate and define the emerging prosecution approach.”

While not specific to the FCPA, Garrett’s data demonstrates that FCPA enforcement constitutes a large percentage of enforcement actions against foreign companies.   (To learn more about recent FCPA enforcement actions against foreign companies visit the Foreign Issuer tab under the Search feature of this site).  As previously highlighted on these pages (see here and here for instance), many of these enforcement actions are based on broad and novel jurisdictional theories.  Accordingly, Garrett’s general observation (“foreign corporate prosecutions raise unexplored issues regarding scope of prosecutorial discretion, jurisdiction, and judicial review”) is particularly pertinent to FCPA enforcement actions against foreign companies.

FCPA enforcement actions against foreign companies are not expected to wane any time soon.  If anything, they are likely to increase and I predict the increase will slowly shift away from Europe-based companies to China-based companies as more list on U.S. exchanges and otherwise do business outside of China’s borders – including in several corruption prone regions.

Garret’s existing database of NPAs and DPAs (here) is already a valuable resource and his new corporate plea database is expected to be as well.


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