This post provides a summary of Foreign Corrupt Practices Act enforcement activity and related developments from the second quarter of 2017. (See here for a similar post for the first quarter of 2017).
DOJ Enforcement (Corporate)
The DOJ brought 2 corporate FCPA enforcement actions in the second quarter. DOJ recovery in these actions was approximately $15 million. None of these enforcement actions have resulted (at least yet) in any related DOJ individual FCPA enforcement actions.
CDM Smith Inc. (June 21st)
See here for the prior post
Charges: None
Resolution Vehicle: “Declination” with disgorgement
Guidelines Range: Not set forth in the letter agreement
Settlement: $4 million
Origin: Voluntary disclosure
Monitor: No
Individuals Charged: No
Linde North America Inc. / Linde Gas North America LLC (June 16th)
See here and here for the prior posts
Charges: None
Resolution Vehicle: “Declination” with disgorgement and forfeiture
Guidelines Range: Not set forth in the letter agreement
Settlement: $11.2 million ($7.8 million in disgorgement, $3.4 million in forfeiture)
Origin: Voluntary disclosure
Monitor: No
Individuals Charged: No
DOJ Enforcement (Individual)
The DOJ did not bring any individual FCPA enforcement actions in the second quarter.
SEC Enforcement (Corporate)
The SEC did not bring any corporate FCPA enforcement actions in the second quarter.
SEC Enforcement (Individual)
The SEC did not bring any individual FCPA enforcement actions in the second quarter.
Other Developments or Items of Interest
June
As highlighted in this post, in a unanimous decision in Kokesh v. SEC the Supreme Court rejected the SEC’s position and held that disgorgement “in the securities-enforcement context is a ‘penalty’ within the meaning of [28 U.S.C.] 2462 and so disgorgement actions must be commenced within five years of the date the claim accrues.” Although not an FCPA action, Kokesh is FCPA relevant given that, since the SEC first sought a disgorgement remedy in an FCPA enforcement action in 2004, disgorgement has become the dominant remedy sought by the SEC in corporate FCPA enforcement actions including for conduct beyond any conceivable limitations period.
As highlighted in this post, Kokesh should impact SEC FCPA enforcement against issuers. However, statute of limitations issues are meaningless when issuers (as often happens in the FCPA context) waive statute of limitations defenses or agree to toll the statute of limitations. Thus, whether Kokeshwill impact SEC FCPA enforcement against issuers depends on whether issuers will continue to roll over and play dead when under FCPA scrutiny or actually mount a defense.
This post highlights how a footnote in Kokesh seems to be inviting a future disgorgement case perhaps on the fundamental issue of whether the SEC has any statutory basis to seek disgorgement. Finally, This post highlights what others are saying about Kokesh and this post highlights how the FCPA received some mentions during oral argument in the case.
While FCPA enforcement is largely devoid of judicial scrutiny, sentencing of individual defendants remains a judicial function and provides a rare (and often overlooked) public glimpse of someone other than the enforcement agencies weighing in on issues relevant to FCPA enforcement. As highlighted in this post, at a recent FCPA sentencing a federal court judge went off about various aspects of FCPA enforcement.
For the first time in over two years the DOJ is being put to its burden of proof in an FCPA enforcement action. U.S. v. Ng Lap Seng involves alleged bribery of United Nations officials that includes FCPA charges and as highlighted in this post on the eve of the trial the parties battled over the FCPA’s “local law” affirmative defense.
May
As highlighted in this post, speaking in Brazil Acting Principal Deputy Assistant Attorney General Trevor McFadden talked about “some recent developments regarding the DOJ’s international cooperation efforts,” “some of the diverse tools in [the DOJ’s] prosecutorial toolbox that allow [it] to prosecute corruption” and “the importance of transparency in [DOJ] anti-corruption prosecutions.”
Staying on the topic of the many recent DOJ FCPA speeches, as highlighted in this post McFadden (as well as Attorney General Jeff Sessions) nicely articulated the policy rationale for an FCPA compliance defense. However, actions speak louder than words and the DOJ (and SEC) have continually failed to support the best positive incentivize to maximize “soft” enforcement of the FCPA.
As highlighted in this post, Hui Chen (the DOJ’s Compliance Counsel) recently called out the “lack of precision and intellectual rigor” in much compliance writing and commentary. That’s not all Chen has focused on as highlighted in this post regarding her recent social media activity.
April
It was an active speaking month for DOJ officials. As highlighted in this post, Acting Principal Deputy Assistant Attorney General Trevor McFadden made sense when talking about “declinations” and also stated that FCPA investigations should be “measured in months, not years.” As to this later point, the post highlighted that the DOJ said the same thing in 2005, yet 4.25 years was the median length of time companies that resolved FCPA enforcement actions in 2016 were under scrutiny. A few days later, McFadden delivered another FCPA speech.
Attorney General Jeff Sessions also recently delivered the DOJ’s FCPA script. As to repeated statements by DOJ officials regarding individual accountability, here are the facts: The last 17 DOJ corporate FCPA enforcement (4 in 2017 thus far and 13 in 2016) have lacked related DOJ charges against company employees. Indeed, in the past decade over 75% of DOJ corporate enforcement actions have lacked related DOJ charges against company employees. Moreover, as highlighted in this prior post, the number of DOJ individual FCPA enforcement actions in 2016 and 2015 were fewer than the following years: 2008, 2009, 2010, 2011, 2013, and 2014.
Regarding the FCPA’s other enforcement agency, the SEC announced that FCPA Unit Chief Kara Brockmeyer will be leaving. This post highlights additional data points to consider regarding Brockmeyer’s tenure as FCPA Unit Chief. As highlighted in this post, Robert Khuzami, head of the SEC’s Division of Enforcement in 2012 and a signatory of the 2012 FCPA Guidance, has called for additional FCPA guidance or “changing” the “somewhat controversial FCPA.”
On Capitol Hill, a bi-partisan group of Senators introduced the “Combating Global Corruption Act of 2017″ and this post provides a summary of the bill and offers two thoughts regarding the bill relevant to the FCPA.
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