This previous post covered the net $100.2 million FCPA enforcement action against Trafigura concerning conduct in Brazil.
This post highlights additional issues to consider.
Timeline
Trafigura was under FCPA scrutiny since at least early 2019 (see here from the prior post).
Thus, from start to finish the company was under scrutiny for approximately 5 years.
I’ve said it many times, and will continue saying it until the cows come home: if the DOJ/SEC want their FCPA enforcement programs to be viewed as more credible and more effective, the enforcement agencies must resolve instances of FCPA scrutiny much quicker.
This is particularly true in the Trafigura matter given that the company, in the words of the DOJ, among other things:
“provid[ed] timely updates on facts learned during its internal investigation related to conduct … ; (ii) ma[de] factual presentations to the government; (iii) facilitat[ed] the interviews of employees and agents, including an employee located outside the United States, and arrang[ed] for counsel for employees where appropriate; and (iv) produc[ed] relevant nonprivileged documents and data to the government, including documents located outside the United States in ways that navigated foreign data privacy laws, accompanied by translations of certain documents;”
78dd-3 Prosecution
The criminal charge that Trafigura resolved was conspiracy to violate the FCPA’s anti-bribery provisions – specifically the so-called 78dd-3 prong of the FCPA applicable to “persons other than issuers or domestic concerns” (FCPA speak for foreign, non-issuer companies).
78dd-3 was added to the FCPA in 1998 and has the following jurisdictional element “while in the territory of the United States, corruptly to make use of the mails or any means or instrumentality of interstate commerce or to do any other act in furtherance” of a bribery scheme.
Relevant to this issue, the “overt acts” alleged in further of the conspiracy included:
“On or about October 23, 2011 , Co-Conspirator 1, acting for and on behalf of TRAFIGURA BEHEER B.V., arrived at Miami International Airport in the Southern District of Florida.
On or about October 24, 2011 , Co-Conspirator 1, acting for and on behalf of TRAFIGURA BEHEER B.V., met at a conference in Miami Beach, Florida, with Berkowitz, Brazilian Official 3, Brazilian Official 4, and others, and agreed that TRAFIGURA BEHEER B.V. would continue to pay bribes on a per-barrel basis to Petrobras officials.”
Old Conduct
From a policy standpoint, how far back should conduct in an FCPA enforcement action go?
As highlighted above, the “overt acts” alleged to meet the required jurisdictional element occurred in 2011 (approximately 12 years prior to the enforcement action).
The general range of conduct alleged in the enforcement action was between 2009 and 2014 (10-15 years prior to the enforcement action).
Again, from a policy standpoint, how far back should conduct in an FCPA enforcement action go?
If 10-15 years is “ok” – is 15-20 years “ok”? Is 20-25 years “ok”?
Normally statute of limitations is the legal answer to “ok.”
However, in most corporate FCPA enforcement actions the company – to demonstrate its cooperation – will agree to toll or waive statute of limitations. Thus, this bedrock legal principle often means very little in corporate FCPA enforcement actions.
More Specifics Please
One of the more interesting portions of an FCPA enforcement action – and one the DOJ frequently reminds those in the compliance community to review – is the “facts and circumstances” justifying (in the DOJ’s view) a particular resolution.
However, if the DOJ wants the compliance community to pay attention to these “facts and circumstances” it should provide the compliance community with more specifics.
Rather, the DOJ often serves up a word salad with many vague and ambiguous terms and concepts.
Set forth below are actual terms and concepts used in the Trafigura enforcement action – but query what they actually mean?
- “[Trafigura] in particular during the early phase of the government’s investigation, failed to preserve and produce certain documents and evidence in a timely manner and, at times, took positions that were inconsistent with full cooperation;
- “[Trafigura] was slow to exercise disciplinary and remedial measures for certain employees whose conduct violated company policy;
- “while [Trafigura] ultimately accepted responsibility for its criminal conduct, its prior posture in resolution negotiations also caused significant delays and required the Offices to expend substantial efforts and resources to develop additional admissible evidence before [Trafigura] constructively reengaged with the Offices in agreeing to a negotiated resolution …”
Agreeing To A Standard That Does Not Even Exist In The FCPA
As previously highlighted on these pages, one of the more curious aspects of resolving FCPA enforcement actions is the company agreeing to – in the future – complying with standards that do not even exist in the FCPA.
For instance, in the Trafigura resolution documents the company “represent[ed] that it has implemented and will continue to implement a compliance and ethics program” which “shall be designed to prevent and detect violations of the FCPA and other applicable anti-corruption laws throughout its operations.”
The company further agreed to “adopt new or modify existing internal controls, compliance policies, and procedures in order to ensure that the Defendant maintains: (a) an effective system of internal accounting controls designed to ensure the making and keeping of fair and accurate books, records, and accounts; and (b) a rigorous anti-corruption compliance program that incorporates relevant internal accounting controls, as well as policies and procedures designed to effectively detect and deter violations of the FCPA and other applicable anti-corruption laws.”
However, there is no requirement in the FCPA that internal controls be “effective” or that internal controls shall be designed to “prevent and detect” violations of the FCPA.
Rather, the statutory standard is to “make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets” and to “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that” certain limited financial objectives are met.
The FCPA defines “reasonable assurances” and “reasonable detail” to mean “such level of detail and degree of assurance as would satisfy prudent officials in the conduct of their own affairs.”
