In a speech before the American Conference Institute's 36th International Conference on the Foreign Corrupt Practices Act ("FCPA"), DOJ Assistant Attorney General Brian A. Benczkowski highlighted the Criminal Division's prosecutorial achievements and policy initiatives in 2019. He stated that "reports of the death of white collar enforcement at the Department are grossly exaggerated."
Prosecutorial Achievements
Mr. Benczkowski said that, in 2019, the Criminal Division's FCPA Unit:
- reached criminal resolutions with seven corporations, and two declinations requiring disgorgement by two corporations;
- recovered a single-year record of $1.6 billion from corporations (for a total of $2.8 billion recovered globally through coordinated corporate resolutions);
- charged 34 individuals and secured guilty pleas from 30 individuals, surpassing all-time highs for those marks achieved in 2017 and 2018; and
- secured multiple convictions against individuals in jury trials.
Mr. Benczkowski touted this "remarkable prosecution activity," and noted that the number of individual prosecutions reflected "the Department's continued dedication to holding individual wrongdoers accountable across the board." He also noted that the Unit's trials were generating much-needed case law on the FCPA, and opined that, "in another ten years, the FCPA section in white collar crime textbooks will be chock full of judicial opinions."
Mr. Benczkowski also highlighted the Criminal Division's pursuit of foreign corruption through money-laundering enforcement and asset forfeiture. He noted the "historic settlement" reached with Jho Low, the Malaysian national at the center of the 1MDB scandal, who allegedly misappropriated development funds and laundered them through financial institutions around the world (including in the United States). In October 2019, the DOJ announced a settlement with Low and related entities that resulted in the recovery of more than $1 billion in assets associated with 1MDB. That represented the "largest civil forfeiture ever concluded by the Justice Department," according to Mr. Benczkowski.
Mr. Benczkowski said that prosecutorial achievements in foreign corruption cases mirrored the overall trend of white collar enforcement in 2019. He reported that the DOJ's Fraud Section brought charges against 440 individuals in 2019, an all-time high, and had reached 16 corporate criminal resolutions.
Extent of Agency Liability under FCPA
Mr. Benczkowski paid special attention to the prosecution and recent conviction of Lawrence Hoskins. Hoskins, a British national and resident, was allegedly part of a bribery scheme to secure a $118 million contract to build a power plant in Indonesia for the U.S. subsidiary of Alstom S.A. As previously covered, though Hoskins worked for a non-U.S. subsidiary of Alstom: and though he never travelled to the United States during the alleged scheme, the government argued that he was subject to the FCPA because he acted as an "agent" of the U.S. subsidiary. In November 2019, a jury convicted him on that theory.
Seeking to dispel concerns about Hoskins' impact, Mr. Benczkowski said that the DOJ was "not looking to stretch the bounds of agency principles beyond recognition," or to "push the FCPA statute towards its outer edges." Instead, he stated, the DOJ will (i) evaluate each application of agency liability "on its own," (ii) measure the facts to assess whether the government will be able to carry its burden of proof on agency at trial and (iii) exercise "appropriate prosecutorial discretion" to assess whether the case presents an appropriate application of agency liability. Mr. Benczkowski stressed that the DOJ would "strongly favor prosecution" in instances in which it sees evidence of the use of corporate structures to shield a parent from criminal liability or the use of agents to shield a high-level individual executive from accountability.
Compliance
Mr. Benczkowski said that he hoped his comments provided a "window" into the DOJ's thinking and approach to cases, particularly regarding the factors that prosecutors consider when evaluating corporate compliance programs. He recognized that companies may experience a "sense of increased risk" when enhancing their compliance programs, as those enhancements may identify previously undetected misconduct or other areas of legal exposure. He said that the DOJ has attempted to implement policies that help companies "trust" that they are making the right investments in compliance. He listed several DOJ policy strides in that regard, including:
- providing updated guidance on the Evaluation of Corporate Compliance Programs, conveying that the DOJ places "significant value on compliance program investment and improvement";
- providing "enhanced compliance training" to DOJ prosecutors, which gives them a "more sophisticated understanding of compliance program design and the challenges to effective implementation";
- issuing a monitorship selection policy that incentivizes companies to invest in compliance programs after misconduct is discovered;
- improving voluntary self-disclosure guidance under the FCPA Corporate Enforcement Policy, which lets companies know that if a problem is discovered, there is a means for self-disclosing it in a way that mitigates risk; and
- adhering to the DOJ's "piling-on policy," which facilitates the containment of risk by ensuring companies that they will be handled fairly in the event that a problem is detected.
Mr. Benczkowski said that the Criminal Division would continue to adhere to its policy pronouncements, and continue "making worthwhile refinements to existing policies and developing our own building blocks for the future."
Commentary
AAG Benczkowski's comments highlight an active year for the DOJ, both in its FCPA Unit and the Criminal Division more broadly. The AAG's comments make clear that the DOJ seeks to temper its record activity by assuring the bar and the corporate community that it will use its discretion and exercise prosecutorial authority only in appropriate circumstances. The DOJ's efforts to contain the impact of the Hoskins decision is one example of such assurances. Asking corporate compliance officers to trust in DOJ's policies regarding compliance enhancements is another.
The AAG's highlighting of the 1MDB recovery likely signifies that DOJ will continue to utilize AML as a means of prosecuting actions that are beyond the reach of the FCPA, though the recent acquittal of the defendant in the Mozambique "tuna bonds" fraud scandal, who was charged with wire fraud and money laundering related to foreign bribery, was a setback in that regard.
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