In recent months, I’ve had several exchanges with various individuals (including journalists) about FCPA enforcement and the false narrative that FCPA enforcement has stopped.
When shown clear evidence that the narrative is indeed false, two common responses have been:
(1) but FCPA enforcement activity during the Trump administration involves matters initiated / begun (use whatever term you want) during a prior administration; and
(2) but the Trump administration has closed / abandoned (use whatever term you want) FCPA inquiries or investigations without bringing an enforcement action.
These common responses ignore the fact that both dynamics have been part of FCPA enforcement for nearly 50 years.
As highlighted on these pages for many years, when there is an actual FCPA enforcement action against a company, 4.0 – 5.0 years is often the median length of time the company is under scrutiny (see here, here and here for statistics from recent years).
With individual FCPA enforcement, the time periods can likewise be as long as “targets” of an investigation may be interviewed by the government prior to charges being brought, charges may be filed under seal for a meaningful time period, as this week’s development demonstrates an individual may evade law enforcement for years, and/or an individual – upon being charged – may mount a legal defense (and not plead guilty) and the resulting litigation process may take years.
For instance, as to some of the individuals charged with FCPA offenses during the second Trump administration, only time will tell if those cases are concluded over the next two years.
The “but FCPA enforcement activity during the Trump administration may not count” assertion actually goes back to the first Trump administration.
This 2021 post posed the question – somewhat “tongue-in-cheek” – whether the first FCPA enforcement action of the Biden administration should be “discounted” / not credited to the Biden administration because it began prior to the Biden administration?
After all, as discussed in the post, the enforcement action concerned the unsealing of a criminal indictment filed in federal court in February 2019 during the Trump administration.
So was it a Trump administration enforcement action?
Or perhaps the first FCPA enforcement action in the Biden administration was actually an Obama administration FCPA enforcement action because – as highlighted in the prior post – the DOJ began filing civil forfeiture actions in 2014 concerning the assets at issue.
Did anyone in the FCPA space in 2021 even care about this “attribution” issue?
Prior to the Trump administration (first or second), did anyone in the FCPA ever care about this issue?
If one wants to discount or not credit FCPA enforcement actions during the Trump administration which began during a prior administration, that is fine, but it is an interesting position.
In other words, the amount of FCPA enforcement during an administration is a function of the administration, but when enforcement occurs (at least in certain administrations) it doesn’t count?
If that is one’s position there needs to be consistency and recognition that this dynamic has existed as along as FCPA enforcement itself.
In other words, FCPA enforcement actions during the first Obama administration may have been initiated during the Bush administration, FCPA enforcement actions during the first Bush administration may have been initiated during the Clinton administration, etc.
The second response when shown clear evidence of the false narrative that FCPA enforcement has stopped is the “but the Trump administration has closed / abandoned FCPA inquiries or investigations without bringing an enforcement action.
Here again, this dynamic has existed as long as the FCPA itself.
For starters, there is really no way of accurately assessing how many FCPA inquiries / investigations by the DOJ/SEC were closed without an actual enforcement action.
The DOJ/SEC rarely discloses this information which means that the public is often at the liberty of company disclosures to assess this issue.
However, only issuers may have disclosure obligations regarding FCPA scrutiny (even here there have been instances of issuers never disclosing FCPA scrutiny and the first the public learns of the scrutiny is the day of an enforcement action).
When it comes to non-issuers (by far the largest category of companies subject to the FCPA’s anti-bribery provisions), there really is no reliable, comprehensive way of knowing if an instance of FCPA scrutiny has been closed by the DOJ without an actual enforcement action.
Assessment issue aside, DOJ/SEC closing an FCPA inquiry / investigation without bringing an enforcement action is nothing new.
As highlighted in this prior post, in 1983 in the context of FCPA reform hearings, a House Committee wanted to better understand and access the DOJ’s FCPA enforcement program. Thus, the committee requested various information from the DOJ including its closed FCPA cases. The DOJ responded with “summaries of all closed investigations of alleged FCPA violations” and its response detailed 83 investigations summarized over 18 pages.
Since 2009, this site has highlighted numerous instance of FCPA scrutiny in the public domain not resulting in an actual FCPA enforcement action. Such developments have typically been published under the title “Scrutiny Alerts and Updates” or something similar.
Moreover, instances of a company voluntarily disclosing conduct to the DOJ/SEC (often the single largest source of FCPA inquiries / investigations in some years) yet not resulting in an enforcement action have happened so frequently that since 2010 this site has advocated for an FCPA reform proposal around the dynamic. (See here).
As highlighted here, the issue of the DOJ closing an FCPA inquiry / investigation without an enforcement action was also discussed during the House FCPA hearing in in 2011 and the issue was also the focus of media attention in 2023 (see here) to name just a few other examples.
Indeed, the DOJ during the Biden administration (and other administrations) also dropped FCPA inquiries / investigations without bringing an enforcement action. This prior post (with an intentional click-bait headline “Biden DOJ Dropped FCPA Inquiry Of Defense Contractor”) discussed the specifics. The prior post noted that this was not an uncommon development.
