This previous post highlighted the $4.7 million FCPA enforcement action against Liberty Mutual concerning an alleged bribery scheme involving a foreign subsidiary in India.
This post highlights additional issues to consider.
Timeline
According to the DOJ, Liberty Mutual made a “timely and voluntary self-disclosure of the misconduct to the Fraud Section in March 2024, which was identified during an internal investigation that was still ongoing at the time of the disclosure.”
Given that four years has been the approximate length of FCPA scrutiny in recent years, 1.5 years of FCPA scrutiny is rather speedy.
Interesting
Granted, Liberty Mutual’s FCPA scrutiny was in the “pipeline” long before the current DOJ released its revised FCPA guidelines in June 2025 (see here).
Even so, the Liberty Mutual enforcement action is an interesting “first” enforcement action since the revised FCPA guidelines.
According to the DOJ, the guidelines, among other things:
- were to “target[] enforcement actions against conduct that directly undermines U.S. national interests,”
- directed prosecutors to focus “on cases in which individuals have engaged in criminal misconduct and not attribute nonspecific malfeasance to corporate structures,”
- required prosecutors to “consider […] whether the alleged misconduct deprived specific and identifiable U.S. entities of fair access to compete and/or resulted in economic injury to specific and identifiable American companies or individuals”; and
- required prosecutors to “focus” FCPA enforcement on “alleged misconduct that bears strong indicia of corrupt intent tied to particular individuals …”
It is hard to find any of this – as to Liberty Mutual – in the enforcement action recognizing that the factual “allegations” are just one paragraph (as they often are in declinations with disgorgement).
Moreover, it is difficult to glean from the enforcement action just what viable FCPA anti-bribery violations Liberty Mutual committed.
It is black letter law that employees of foreign subsidiaries are not automatically agents of the parent company. The Supreme Court has noted that just because a subsidiary’s services are important to a parent corporation does not therefore mean that a subsidiary is an agent of the parent corporation for purposes of imputing liability because to so hold would stack the deck, for it would always yield a pro-agency answer.
The Liberty Mutual enforcement action was based entirely on the conduct of “certain employees of the Company’s subsidiary in India” followed by the conclusory statement that they were “acting as agents” of Liberty Mutual. In fact, the enforcement action acknowledges – as many do – that the subsidiary employees “took steps to conceal the true nature of the payments, including by classifying the payments as marketing expenses and using third-party intermediaries to make the payments to the officials.”
For more on this issue, see here:
“Moreover, the Indian entity is arguably not, in fact, a subsidiary of Liberty Mutual, and its employees may not be agents of the U.S. insurer. This is because, during most of the period that the bribes were paid, Indian law required insurance companies to be “Indian owned and controlled.” Foreign companies could not own more than 49 percent of an insurance company, and were limited in the number and type of board appointments they could make. Liberty Mutual still only owns a minority stake in the Indian entity, which began as a joint venture with a local majority owner (who later sold its stake to two other companies).”
