We would all agree that interaction with the federal government
and its regulatory agencies has become increasingly complex.
Nowhere is this more evident than in the area of organizational
liability for the misdeeds of corporate officers, agents, and
employees. Business organizations are more frequently being held
criminally responsible for the misconduct of those who act under
their authority. What ultimately happens to those organizations
held accountable for criminal conduct is largely determined by
rules and regulations promulgated by the United States Sentencing
Commission. Starting with the Sarbanes-Oxley Act of 2002, the
Commission has broadened and refined is guidelines regarding
organizational sentencing. SOX directed the Commission to review
and amend as appropriate, the guidelines and policy statements to
ensure that the guidelines that apply to organizations are
sufficient to deter and punish organizational
misconduct.1 The Commission has expanded its
Organizational Guidelines as a result. Chapter 8 of the Sentencing
Guidelines sets out in great detail, the considerations a
sentencing court should undertake when determining how to sentence
an organizational defendant.
Key to ameliorating punishment is the existence of a viable and
effective compliance and ethics program. Organizations should have
in place a compliance program tailored to meet the rigorous
expectations of the Commission before they come under
scrutiny by the authorities. Recognizing the complexities of
negotiating all of the requirements set forth in the Guidelines,
the commission has now adopted a policy statement encouraging
business organizations to "include the use of an outside
professional advisor to ensure adequate assessment and
implementation of the (compliance program)."2
An effective compliance and ethics program should be designed to
prevent and detect criminal conduct, promote an organizational
culture that encourages compliance with the law, and should include
the following elements:
Oversight of the program by the organization's governing
Day-to-day operational responsibility for compliance assigned
to specific high level personnel with direct access to the
organization's governing authority.
Communication of the standards set forth in the program
throughout the organization
Regular training in compliance and ethics
A publicized system allowing confidentiality for employees
reporting criminal conduct without fear of retaliation
Periodic evaluation of the program's effectiveness
Business organizations should be aware of the need for an
effective compliance and ethics program and should have their
programs reviewed by an advisor familiar with the intricacies of
the federal sentencing guidelines. The Sentencing Commission puts
it best. "The prior diligence of an organization in seeking to
prevent and detect criminal conduct has a direct bearing on the
appropriate penalties and probation terms for the organization if
it is convicted and sentenced for a criminal
Shearman & Sterling’s bi-annual Trends & Patterns report provides insightful analysis of recent enforcement trends and patterns in the US, the UK, and elsewhere as well as helpful guidance on emerging best practices in FCPA and global anti-corruption compliance programs.
In December 2014, the U.K. Serious Fraud Office ("SFO") secured its first criminal convictions against a number of individuals for offenses under the Bribery Act 2010 (the "Act") and, in a separate case, a corporation for offenses under the Prevention of Corruption Act 1906 (a predecessor to the Act).
The increased globalization of the private investment industry
has given rise to an enhanced focus by U.S. prosecutors and
regulators on rooting out corrupt business activities in private
equity firms and hedge funds.
The December 23, 2014, announcement by the U.S. DOJ that Alstom, S.A. pled guilty to two FCPA charges and agreed to pay $772 million in fines generated headlines for the record-breaking size of the fine.
The Department of Justice and the Securities and Exchange Commission jointly issued a 120-page "resource guide" to the Foreign Corrupt Practices Act in November 2012, which confirms the DOJ's and the SEC's narrow view of several key defenses under the FCPA.
The U.S. District Court for the Southern District of New York issued an interesting comity decision on whether U.S. courts should defer to foreign countries’ secrecy and blocking statutes when considering motions for discovery of documents located abroad.