Recently, we wrote about the 2010 enforcement environment. Today’s post looks forward to 2011 and some things to keep an eye out for in the coming year. Without further ado:
Prosecutions of Individuals. In 2010 we saw a significant number of individuals prosecuted for FCPA and related violations. A number of defendants resolved their prosecutions criminally with the Department of Justice (DOJ) or civilly with the Securities and Exchange Commission (SEC). In 2010 the DOJ also prosecuted multiple putative “foreign officials” (see here and here). In 2011 the DOJ will continue to prosecute individuals. As DOJ Criminal Division Assistant Attorney General Lanny Breuer recently stated, “Just as important as the collection of fines and penalties, we have aggressively pursued individual executives under the FCPA.” And late last year, AAG Breuer opined the prosecution of individuals was a cornerstone of deterring further FCPA violations. We have no reason to doubt AAG Breuer.
Industry-wide Investigations. In recent years industry-wide investigations have yielded considerable results for the DOJ and SEC. Whether aerospace and defense, oil and gas, telecommunications, tobacco, or the defunct UN Oil for Food Program continue to make headlines remains to be seen. Industry-wide investigations afford the regulators and their investigators considerable advantages. For example, the government is able to become familiar with how a particular industry operates, even how a particular agent or foreign instrumentality operate, and how FCPA violations occur in such circumstances. They yield, to modify an expression of the dismal science (economics), “prosecutions of scale.”
Cooperation. We will keep an eye out for cooperation among regulators in the U.S. and their counterparts abroad. Recently, the U.S., EU, and the individual member states entered into new extradition and mutual legal assistance treaties. These formal arrangements, in addition to informal information exchange mechanisms, create a robust environment for international cooperation. Last year we saw increased use of extradition as a weapon in the fight against corruption. And just a few days ago we wrote about the pending extradition of a UK national, Jeffrey Tessler, from England to the U.S. in connection with the Bonny Island, Nigeria, scheme. Expect increased cooperation to continue.
Dodd-Frank Act. Dodd-Frank brought us the whistle blower bounty and extractive resource reporting provisions. We will keep an eye out to see how these two provisions may be implemented. The repercussions for companies already concerned about FCPA compliance may only heighten the compliance concerns of in-house legal and compliance/ethics officers.
Civil Litigation. In recent years an aggressive and burgeoning FCPA plaintiffs’ bar has emerged. It seems soon after a company announces it is conducting an internal investigation, a plaintiffs’ firm announces it is pursuing a civil suit against the entity for the conduct that gave rise to the investigation. Causes of action vary (for example, shareholder derivative, breach of contract or fiduciary duty, and securities fraud) and so do degrees of relative success. These suits will likely continue in 2011.
This is just a sampling of what to watch for in 2011. In closing, we will leave you with one final quote from AAG Breuer: “in the Criminal Division we have dramatically increased our enforcement of the Foreign Corrupt Practices Act in recent years. That statute, which was once seen as slumbering, is now very much alive and well. In fact, over the last two years, we have charged more than 50 individuals with FCPA-related offenses and collected nearly $2 billion in FCPA-related fines and penalties – by far the most people charged and penalties imposed in any similar period.”