This post provides a summary of Foreign Corrupt Practices Act enforcement activity and related events from the third quarter of 2014. (See here for a similar post from Q1 and here for Q2).
DOJ Enforcement (Corporate)
The DOJ did not bring any corporate enforcement actions in the third quarter.
Year-to-date, the DOJ has brought three corporate enforcement actions (HP related entities, Marubeni, and Alcoa). DOJ recovery in these enforcement actions has been approximately $388 million. At present, none of these enforcement actions have resulted in any individual charges against company employees.
DOJ Enforcement (Individual)
The DOJ did not bring any individual enforcement actions in the third quarter.
Year-to-date, the DOJ has brought three core actions in which various individuals have been charged. (See here, here and here).
SEC Enforcement (Corporate)
The SEC resolved one corporate enforcement (Smith & Wesson) via an administrative order in the third quarter. SEC recovery in this enforcement action was approximately $2 million. The enforcement action has not resulted, at least yet, in any individual charges against company employees.
Year-to-date, the SEC has resolved three corporate enforcement actions (Smith & Wesson, HP and Alcoa) – all via administrative orders. SEC recovery in these enforcement actions has been approximately $195 million. At present, none of the enforcement actions have resulted in any individual charges against company employees.
Smith & Wesson (July 28th)
See here and here for prior posts.
Charges: None. Administrative cease and desist order finding violations of the FCPA’s anti-bribery, books and records and internal control provisions.
Settlement: Approximately $2 million ($107,852 in disgorgement, $21,040 in prejudgment interest, and a civil monetary penalty of $1,906,000
Disclosure: The enforcement action originated after a Smith & Wesson employee was criminally charged in the DOJ’s manufactured Africa Sting enforcement action.
Individuals Charged: No (as to the conduct alleged in the corporate enforcement action).
Related DOJ Enforcement Action: No.
SEC Enforcement (Individual)
The SEC did not bring any FCPA charges against individuals in the third quarter.
Year-to-date there have not been any SEC FCPA enforcement actions against individuals.
Other Developments or Items of Interest
DOJ Speeches
As in past years, September was a busy month for DOJ policy speeches that touched upon FCPA topics.
As highlighted in this post, DOJ’s Principal Deputy Assistant Attorney General for the Criminal Division, Marshall Miller, delivered a speech focused on how the DOJ is “addressing criminal conduct when it takes place at corporations and other institutions.” While not specific to the Foreign Corrupt Practices Act, Miller did reference the FCPA several times during the speech. The post highlighted how an FCPA reform proposal can help the DOJ better achieve its policy objectives, as sensibly articulated in Miller’s speech, in the FCPA context.
As highlighted in this post, DOJ Attorney General Eric Holder, who recently announced his resignation, delivered a speech that touched upon several issues of general interest such as the statement that “the buck needs to stop somewhere where corporate misconduct is concerned.”
“Foreign Official” Cert Petition
As highlighted in this post, for the first time in FCPA history, a substantive cert petition was filed in the Supreme Court asking the court to review the 11th Circuit’s recent “foreign official” decision in U.S. v. Esquenazi. As highlighted in this post, the Washington Legal Foundation and the Independence Institute joined to file an amicus brief in support of Petitioners as to Question 1 of the Petition (the “foreign official” issue). As highlighted in this post, I also filed an amicus brief in support of Petitioners as to Question 1.
Odd Whistleblower Dynamics
As highlighted in this post, the Second Circuit’s recent decision in the Liu Meng-Lin v. Siemens creates an odd dynamic in that a foreign national is unable to maintain a private cause of action under Dodd-Frank’s anti-retaliation provisions based on allegations that his foreign employer retaliated against him for internally reporting conduct that could implicate the Foreign Corrupt Practices Act, yet that same foreign national can be awarded a whistleblower bounty under Dodd-Frank should the SEC bring an enforcement action based on the information the foreign national provided to it.
Indeed, the odd dynamic was addressed by the SEC in its recent $30 million whistleblower award to a foreign national (see here for the post).
SEC’s Case Against Jackson & Ruehlen Ends With a Whimper
As highlighted in this post, on the brink of the SEC’s first-ever FCPA trial, the SEC’s enforcement action against Mark Jackson & James Ruehlen ended with a whimper. Since the case was filed in February 2012, the SEC’s case against the defendants was consistently trimmed as the SEC attempted to meet its burden (see this post as well as here). Among other things, a portion of the SEC’s claims were dismissed or abandoned on statute of limitations grounds and the trial court judge ruled, in an issue of first impression, that the SEC has the burden of negating the FCPA’s facilitation payments exception. Without admitting or denying the SEC’s allegations, the defendants consented to “obey the law” injunctions and were not required to pay any civil fines.
As highlighted in this post, it was notable that the SEC failed in the individual enforcement action in the aftermath of the DOJ/SEC extracting more than $200 million from a various companies based on the same primary enforcement theory at issue in the Jackson & Ruehlen matter.
Books, Articles, Videos and Events of Interest
The book “The Foreign Corrupt Practices Act in a New Era” continues to generate a buzz. (See here).
Elevate your FCPA knowledge and practical skills at the FCPA Institute – Miami (Jan. 12-13th). (See here).
Improve the FCPA compliance discussion through videos here and here. The first video engages employees in a business organization and inspires them to spot risk. The second video stresses the important role gatekeepers play in ensuring compliance and minimizing risk.
A new article, “FCPA Ripples,” highlights how settlement amounts in an actual FCPA enforcement action are often only a relatively minor component of the overall financial consequences that can result from FCPA scrutiny or enforcement in this new era.
In the spirit of the football season, this article highlights how a successful football organization can inform FCPA compliance in a business organization.