The US Department of Justice (DOJ) and Securities and Exchange Commission (SEC) closed out 2022 by announcing two major corporate settlements under the Foreign Corrupt Practices Act (FCPA): one for a total of $160 million (coordinated with Brazil) and another for a total of $460 million (coordinated with South Africa). The December announcements capped off a year in which DOJ and SEC disclosed a total of eight FCPA corporate enforcement actions. These include a $1.1 billion global agreement that the commodity trading and mining firm Glencore reached with authorities in the United States, United Kingdom, and Brazil-an agreement that required guilty pleas in New York and a compliance monitor for three years. Both the number and total dollar amount of corporate FCPA settlements were higher in 2022 than in 2021, though remained lower than in 2019 or 2020.
Individual defendants also were in DOJ's cross-hairs in 2022. DOJ announced new FCPA charges against nine different individuals and also relied on federal money laundering and fraud statutes to pursue other individuals for alleged bribery schemes involving government officials around the world. DOJ won jury trials in Florida and New York, but also received a few significant setbacks, including in the Southern District of Texas and the Second Circuit Court of Appeals.
On January 17, 2023, DOJ's Criminal Division released an updated Corporate Enforcement and Voluntary Self-Disclosure Policy that comes on the heels of other revisions in late 2022 to the department's corporate criminal enforcement policies. At the annual American Conference Institute's 39th International Conference on the FCPA in Washington, DC, and elsewhere, DOJ officials also spoke publicly about the approach to FCPA enforcement. They sought to emphasize not just the supply side but also the demand side of bribery, the asserted willingness to take challenging cases to trial, the expanding influence of international cooperation, the interplay between corruption enforcement and sanctions and export control enforcement, and how regulators evaluate corporate compliance programs.
Below we cover these developments and more from the second half of 2022. For developments from the first half of last year, see Arnold & Porter's Global Anti-Corruption Insights: Summer 2022.
FCPA Enforcement Updates From the Second Half of 2022
Enforcement Against Corporations
The second half of 2022 saw DOJ enter into deferred prosecution agreements with three companies to resolve FCPA charges. DOJ reported that:
- GOL Linhas Aéreas Inteligentes S.A. Will Pay Over $41 Million in Resolution of Foreign Bribery Investigations in the United States and Brazil (9/15/22)
- ABB Agrees to Pay Over $315 Million to Resolve Coordinated Global Foreign Bribery Case: ABB Subsidiaries in Switzerland and South Africa Plead Guilty to Bribery Conspiracy (12/2/22)1
- Honeywell UOP to Pay Over $160 Million to Resolve Foreign Bribery Investigations in US and Brazil (12/19/22)
The SEC announced parallel FCPA settlements with Gol, ABB, and Honeywell, as well as a settlement with Oracle in September. All of these SEC actions were resolved through administrative orders, outside of court.
In addition, on December 21, 2022, the French aerospace company Safran S.A. received a formal declination, pursuant to the DOJ's FCPA Corporate Enforcement Policy, based on the company's voluntary self-disclosure, cooperation with the government's investigation, remediation, and disgorgement of $17.9 million in profits related to bribes paid to win lucrative train lavatory contracts with the Chinese government. This was DOJ's second official declination of the year.
Also in December, Swedish telecom company Ericsson agreed to a one-year extension of a three-year compliance monitorship in connection with a 2019 deferred prosecution agreement to resolve FCPA charges related to bribery of officials in Djibouti, China, Vietnam, Indonesia, and Kuwait.
Enforcement Against Individuals
While the SEC did not charge any individuals under the FCPA in the second half of 2022, DOJ continued to pursue cases against individuals under the FCPA and also relied on the money laundering and fraud statutes to prosecute a range of alleged international bribery schemes.
Many recent FCPA-related prosecutions have focused on alleged corruption in Latin America. For example, several cases unfolded against individuals for alleged bribery of officials at PDVSA, Venezuela's state-owned oil company. See, e.g., Two Financial Asset Managers Charged in Alleged $1.2 Billion Venezuelan Money Laundering Scheme (7/12/22); Venezuelan Businessman Charged in Bribery and Money Laundering Scheme (8/24/22); Venezuelan Sentenced to One Year in Prison for Bribery Scheme (10/3/22). Two individual defendants-non-US employees of a Swiss wealth management firm-continued to fight FCPA and money laundering charges alleging that they facilitated and concealed bribes to PDVSA officials. The defendants persuaded a federal District Court Judge in Texas to dismiss the charges based on a narrow interpretation of the FCPA and money laundering statute's extraterritorial reach, among other arguments. Stay tuned: in October, the US Court of Appeals for the Fifth Circuit heard oral argument on the government's appeals.2 The Fifth Circuit's decision may have important implications for FCPA enforcement going forward.
In another case involving Venezuela, a federal jury in December convicted the former National Treasurer of Venezuela and her husband of money laundering offenses related to their acceptance of over $100 million in bribes for providing a private media company with access to government bond purchases at favorable exchange rates.
In other news related to Latin America, a federal grand jury in the Southern District of Florida indicted three men for FCPA violations stemming from an alleged scheme to pay bribes to obtain business from state-owned insurance companies in Ecuador. The Eastern District of New York unveiled new charges against a former Vitol oil trader implicated in schemes to bribe officials at state-owned oil companies in Ecuador and Mexico using a web of bank accounts and shell companies around the world.3 A former Bolivian government minister pleaded guilty to conspiracy to launder the proceeds of a bribery scheme involving a US company doing business with the Bolivian government. And the former president of the El Salvadorean soccer federation, who had pleaded guilty to a racketeering conspiracy, was sentenced to 16 months in prison for accepting bribes from an American media company in exchange for the broadcast rights to the El Salvador soccer team's 2018 World Cup qualifier matches.
Criminal prosecutions also swept up individuals accused of bribery in other parts of the world. In November, a former Goldman Sachs banker reportedly was arrested in the United Kingdom on FCPA charges related to a power plant project in Ghana-nearly two years after he consented to a judgment in the SEC's civil case related to the same alleged conduct. And in December, two former heads of a New York-based NGO pleaded guilty to FCPA violations involving bribes paid to elected officials in the Marshall Islands to pass certain legislation.
DOJ also scored a win in a case against a former US government official involved in overseas bribery. In November, a former US Navy employee was sentenced to five years in prison after a federal jury in DC convicted him of bribery, conspiracy to commit bribery, and lying to investigators in connection with bribes paid by a South Korea-based company to win contracts to provide services to US military ships.
In a setback for DOJ, this past August the US Court of Appeals for the Second Circuit affirmed the acquittal of Lawrence Hoskins, a former Alstom executive in Europe, on FCPA charges. United States v. Hoskins, 44 F.4th 140 (2d Cir. 2022). After closely parsing of the facts established at trial, the Second Circuit agreed with the trial judge that, as a matter of law, the government had failed to prove that Hoskins was an agent of Alstom's US subsidiary and therefore not subject to the FCPA for his overseas conduct. This marks the second time that the Circuit has sided against the government on an FCPA issue in the Hoskins case, in what has become a nearly decade-long prosecution over conduct that dates back to 2002.4
On January 17, 2023, Assistant Attorney General Kenneth Polite announced that DOJ's FCPA Corporate Enforcement Policy would become known as the Corporate Enforcement and Voluntary Self-Disclosure Policy, applicable to all criminal matters handled by the DOJ Criminal Division. This revised policy provides criteria for a declination or a reduced fine of up to 75% when a company voluntarily self-discloses misconduct, fully cooperates with DOJ, and takes timely and appropriate remedial action.
In a widely discussed memo issued by Deputy Attorney General Lisa Monaco in September, DOJ publicized several revisions to its Corporate Enforcement Policy. The memo sheds light on the DOJ's current approach to corporate recidivism, cooperation, independent corporate compliance monitors, and other topics.5
In December, at the annual ACI FCPA conference in Washington, Acting Principal Deputy Assistant Attorney General Nicole Argentieri discussed what has become known as the "Monaco Memo," while other DOJ and SEC officials spoke about various enforcement and compliance trends. For more of Arnold & Porter's coverage of the ACI FCPA Conference, see:
- Chiefs of the DOJ and SEC's FCPA Units Take the Stage at the ACI FCPA Conference
- "Sanctions and Export Controls as the New FCPA: The Increasing Overlap of Anti-Corruption, Export Controls, and Economic Sanctions"
- Culture for Breakfast: Insights on Creating a Culture of Compliance
- Day Two of the ACI FCPA Conference: DOJ Officials Discuss International Cooperation, Rooting Out Corruption, and Corporate Compliance
- FCPA Enforcers Take Questions at ACI Conference Town Hall
As we previously have reported, collateral civil litigation often accompanies corporate FCPA enforcement actions. Recent developments from some of the cases winding their way through US courts include:
- Goldman Sachs and certain individual defendants agreed to settle a shareholder derivative suit related to the company's deferred prosecution agreement for violations of the FCPA in connection with obtaining and retaining business from a Malaysian sovereign wealth fund known as 1MDB. Fulton Cnty. Employees' Ret. Sys. on Behalf of Goldman Sachs Grp. Inc. v. Blankfein, No. 19-CV-1562 (VSB), 2022 WL 4292894 (S.D.N.Y. Sept. 16, 2022).
- The US District Court for the District of New Jersey dismissed a Caremark claim brought by shareholders of Cognizant Technology Solutions alleging that the board failed to exercise oversight consistent with its fiduciary duties in the years leading up to an FCPA enforcement action by the SEC. In re Cognizant Tech. Sols. Corp. Derivative Litig., No. CV1701248KMCLW, 2022 WL 4483595 (D.N.J. Sept. 27, 2022).
- The Second Circuit, in a summary order, upheld the SEC's decision to deny a whistleblower award in connection with an FCPA enforcement action. Doe v. Sec. & Exch. Comm'n, No. 21-2537, 2022 WL 16936098 (2d Cir. Nov. 15, 2022).
Selected International Enforcement Updates
Anti-corruption enforcement also was active outside of the United States during the latter half of 2022. For example, in September, Canada's Royal Canadian Mountain Police announced charges against Ultra Electronics Forensic Technology Inc. and four of its former executives under the Canadian Corruption of Foreign Public Officials Act. The defendants allegedly directed a bribery scheme in the Philippines to influence a government contract there.
Brazilian authorities entered into leniency agreements with three companies also subject to FCPA enforcement actions, including Gol, Honeywell, and Keppel Offshore, a company that had settled with US, Singaporean, and certain other Brazilian authorities back in 2017 for corruption offenses related to business with Petrobras, the Brazilian state oil company.
The Peruvian government provided extensive cooperation to the United States in forfeiture actions resulting in the return to Peru of approximately $686,000 linked to the corruption and bribery of Peru's former president by Brazil-based Odebrecht S.A.
In November, a London court ordered the British unit of Swiss trading and mining company Glencore to pay over $310 million in penalties for bribery offenses related to its oil operations in Africa. Shortly thereafter, Glencore agreed to pay $180 million to the Democratic Republic of Congo to resolve claims of corruption there. These developments follow Glencore's settlement of related FCPA charges with the US DOJ in May 2022.
1 For more commentary on the ABB settlement, the first-ever coordinated FCPA resolution with South Africa, see New FCPA Enforcement Actions Announced on the Heels of the Annual ACI Conference.
2 See United States v. Rafoi-Bleuler, No. 22-20658 (5th Cir.); see also United States v. Rafoi-Bleuler, 4:17-cr-00514 (S.D. Tex. Nov. 10, 2021).
3 Superseding Indictment, United States v. Aguilar, 1:20-cr-00390 (E.D.N.Y. Dec. 2, 2022).
4 For more analysis of the Hoskins case, see Agent Zero: Second Circuit (Again) Limits Criminal Liability in Long-Running Hoskins Case.
5 For more analysis, see DOJ Announces New Policies on Corporate Criminal Enforcement; DOJ's Monaco Memo Reverberates in SEC Approach to Recidivism.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.