Among the many false narratives in the FCPA space is that Walmart’s FCPA scrutiny began with the New York Times front page article in April 2012. (See here).
However, as FCPA Professor readers know – because it was covered in real-time on this site – Walmart disclosed its FCPA scrutiny on December 8, 2011 (see here for the prior post).
Thus, if you are scoring at home, Walmart’s FCPA scrutiny is now seven years old.
On December 8, 2011, Walmart disclosed in this quarterly filing:
“During fiscal 2012, the Company began conducting a voluntary internal review of its policies, procedures and internal controls pertaining to its global anti-corruption compliance program. As a result of information obtained during that review and from other sources, the Company has begun an internal investigation into whether certain matters, including permitting, licensing and inspections, were in compliance with the U.S. Foreign Corrupt Practices Act. The Company has engaged outside counsel and other advisors to assist in the review of these matters and has implemented, and is continuing to implement, appropriate remedial measures. The Company has voluntarily disclosed its internal investigation to the U.S. Department of Justice and the Securities and Exchange Commission. We cannot reasonably estimate the potential liability, if any, related to these matters. However, based on the facts currently known, we do not believe that these matters will have a material adverse effect on our business, financial condition, results of operations or cash flows.”
Having FCPA scrutiny last seven years is simply unconscionable and inexcusable on any level.
As has been stated numerous times on these pages, if the DOJ/SEC want the public to view their FCPA enforcement programs as being effective and credible, FCPA scrutiny must simply be resolved quicker – particularly against cooperating companies as nearly all business organization do when under FCPA scrutiny.
The DOJ has long recognized this.
For instance, in a 2005 speech, the DOJ Assistant Attorney General stated:
“Simply put, speed matters in corporate fraud investigations . The days of five-year investigations, of agreement after agreement tolling the statute of limitations-while ill-gotten gains are frittered away and investor confidence sinks-are increasingly a thing of the past.”
Likewise, as highlighted in this prior post in April 2017, the DOJ’s Acting Principal Deputy Assistant Attorney General stated: “[Our] intent is for our FCPA investigations to be measured in months, not years.”
However, actions speak louder than words and the length of Wal-Mart’s FCPA scrutiny is simply unconscionable and inexcusable on any level. Indeed, it has been over a year since Walmart disclosed a likely settlement amount of $283 million. (see here).
A few years ago, Paul Pelletier, a former Principal Deputy Chief of the DOJ’s fraud section, wrote some good pieces (see here and here for prior posts) regarding the long time periods associated with FCPA scrutiny. See here for an FCPA Flash podcast with Pelletier on the same issue.
As Pelletier stated in “The Foreign Bribery Sinkhole at Justice”
“When bribery investigations are publicly resolved in a timely fashion, other businesses can more readily identify ongoing bribery schemes operating within their industry or region and ensure that their anti-bribery compliance programs adequately address those current schemes. That opportunity is lost when criminal resolutions drag out for five or more years. Deterrence then is principally the size of the monetary penalty.
The Justice Department needs to do more than churn out resolutions to foreign bribery cases notable only for their record-breaking penalties. Rigorous and prompt FCPA enforcement can have a dramatic impact on the insidious and corrosive effect of corruption overseas and provide the restorative justice the Corporate Fraud Task Force sought to achieve.”
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