With a changing of the guard in Washington and the lingering COVID-19 pandemic, enforcement of the US Foreign Corrupt Practices Act (FCPA) has been relatively quiet so far this year. Under President Biden and Attorney General Garland, the Department of Justice (DOJ) has announced only one new FCPA corporate enforcement action, and the new criminal charges it has brought against individuals for their roles in foreign corruption schemes mostly arise out of long-running cases involving state-owned oil companies in Latin America. But more aggressive enforcement of the FCPA—and other federal anti-corruption laws—may not be far away. In June, President Biden issued a "Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest," and in January Congress gave the DOJ and US Securities and Exchange Commission (SEC) new enforcement tools in the National Defense Authorization Act of 2021.
Meanwhile, other countries around the world—including Brazil, Italy and the United Kingdom—have been flexing their anti-corruption law enforcement muscles this year.
Table of Contents
- US Enforcement Updates
- President Biden's National Security Memorandum on Fighting Corruption
- US Legislative Developments
- UK Enforcement Updates
- Other Selected Updates
US Enforcement Updates
FCPA Enforcement Actions Against Companies
The DOJ and SEC entered into parallel settlements of FCPA charges with two companies in the first half of 2021 (one during the Trump Administration and one during the Biden Administration):
- Deutsche Bank Agrees to Pay over $130 Million to Resolve Foreign Corrupt Practices Act and Fraud Case (1/8/21); SEC Charges Deutsche Bank with FCPA Violations Related to Third-Party Intermediaries (1/8/21)
- Amec Foster Wheeler Energy Limited Agrees to Pay Over $18 Million to Resolve Charges Related to Bribery Scheme in Brazil (6/25/21); SEC Charges Amec Foster Wheeler Limited With FCPA Violations Related To Brazilian Bribery Scheme (6/25/21)
Both of these corporate cases illustrate the risks of dealing with third-party intermediaries in foreign countries, as well as the benefits of cooperation with enforcement authorities—the criminal resolutions each involved three-year deferred prosecution agreements, without independent compliance monitors. For more from Arnold & Porter on the Deutsche Bank case, which involved commodities fraud as well as FCPA charges, see Deutsche Bank To Pay More Than $130 Million To Settle FCPA and Spoofing Charges.
FCPA Enforcement Actions Against Individuals
In the first half of 2021, the SEC announced the resolution of only one FCPA enforcement action against an individual. See SEC Obtains Final Judgment Against Former Executive of Financial Services Company (6/23/21). According to the SEC, this executive, Asante Berko, consented to a final judgment "for his role in orchestrating a bribery scheme to help a client to win a government contract to build and operate an electrical power plant in the Republic of Ghana, in violation of the" FCPA. Id.
The DOJ, for its part, made the following announcements in two cases involving FCPA charges against individuals for their roles in corruption schemes related to state-owned oil companies in Latin America:
- Businessman Sentenced for Foreign Bribery and Money Laundering Scheme Involving PetroEcuador Officials (1/28/21)
- Former Chief Executive Officer of Publicly Traded Petrochemical Company Pleads Guilty to Foreign Bribery and Securities Law Violations (4/15/21)
Criminal Money Laundering Charges in Cases Involving International Corruption
The DOJ this year also has pursued money laundering charges in a number of cases involving international corruption. Federal money laundering statutes allow the DOJ to bring enforcement actions against defendants who may not be subject to the FCPA, which criminalizes the bribery of government (but not private sector) officials and penalizes the givers (but not takers) of bribes.
Specifically, the DOJ announced new charges against, and guilty pleas by, individuals in long-running corruption-related cases involving state-owned oil companies in Brazil,1 Ecuador2 and Venezuela.3 The DOJ also announced charges relating to alleged bribes to secure a contract with the Bolivian Ministry of Defense. See Former Minister of Government of Bolivia, Owner of Florida-Based Company, and Three Others Charged in Bribery and Money Laundering Scheme (5/26/21).
In addition, the DOJ reached a settlement with a Swiss bank for laundering bribes through the United States to international soccer officials. See Bank Julius Baer Agrees to Pay More than $79 Million for Laundering Money in FIFA Scandal (5/27/21).
The SEC awarded $28 million to a whistleblower whose tips led to SEC and DOJ enforcement actions against Panasonic Avionics Corp. resulting in a $280 million settlement. See SEC Awards More Than $28 Million to Whistleblower Who Aided SEC and Other Agency Actions (5/19/21); see also Panasonic Whistleblower's SEC Award Exceeds $28M.
President Biden's National Security Memorandum on Fighting Corruption
On June 3, 2021, President Biden issued a "Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest." The Memorandum directs the National Security Advisor and Assistant to the President to conduct an interagency review process over the next 200 days, with input from 15 different agencies and offices, to bolster the ability of the US government to combat "the abuse of power for private gain, the misappropriation of public assets, bribery, and other forms of corruption," both at home and abroad. "Corruption," the Memorandum explains, "threatens United States national security, economic equity, global anti-poverty and development efforts, and democracy itself."
Although the Memorandum does not announce any specific policy changes, new programs, or fresh targets of enforcement, it does signal some likely areas of focus for the Biden Administration's anti-corruption efforts. The Memorandum emphasizes:
- Interagency coordination;
- International coordination;
- Transparency in the financial system;
- Accountability for "professional service providers"; and
- Recovery of stolen assets.
The Memorandum also may herald the intensified use of certain legal tools to fight corruption, such as sanctions designations, as well as criminal enforcement actions.
For more analysis from Arnold & Porter on the Memorandum, including expected areas of focus for the Biden Administration, see President Biden Makes the Fight Against Corruption a National Security Imperative, Signals Areas of Focus for His Administration.
US Legislative Developments
The National Defense Authorization Act of 2021, which became effective on January 1, 2021, made a couple notable changes to the legal landscape for enforcement of anti-corruption laws, including the FCPA. Specifically, Congress permitted the DOJ and Department of Treasury to subpoena foreign-located bank records for any investigation under federal criminal law, as long as the foreign bank maintains a US correspondent account and without regard to whether the correspondent account was used as part of the potential violation of US law. See 2021 NDAA Subjects More Foreign Bank Records to Subpoena.
Moreover, in the wake of last year's Supreme Court decision in Liu v. SEC, Congress explicitly granted the SEC the ability to seek disgorgement for violations of federal securities laws while also expanding the statute of limitations for disgorgement in fraud-based cases from five years to 10 years.
UK Enforcement Updates
The UK Serious Fraud Office (SFO), which enforces the UK Bribery Act of 2010, has made the following announcements this year regarding enforcement actions:
- Former senior Petrofac executive pleads guilty to bribery offences (1/14/21)
- Fourth oil executive sentenced for paying bribes to win a multi-million pound contract in post-occupation Iraq (3/1/21)
- Former Unaoil executive ordered to pay £402k in confiscation (6/17/21)
- SFO confirms DPA in principle with Amec Foster Wheeler Energy Limited (6/25/21)
The SFO also has faced a number of legal challenges this year. After entering into a Deferred Prosecution Agreement (DPA) with Serco Geografix Limited in 2019, the SFO's prosecution against two of its former directors collapsed in April upon discovery that the SFO had failed to disclose certain documents to the defense. The case against the directors, which began in March 2021, concerned allegations dating back to 2011. This is the latest example of the SFO failing to secure convictions against individuals after having entered into a DPA with companies they have worked for. Moreover, Eurasian Natural Resources Corporation (ENRC) is suing the SFO in the commercial court for its alleged mishandling of a longstanding corruption investigation. ENRC has also brought simultaneous proceedings against a law firm it retained to conduct an internal investigation into corruption, for allegedly expanding the SFO's investigation in order to generate fees. Both the SFO and the law firm deny any wrongdoing, and the trial continues.
For more from the United Kingdom, see Arnold & Porter's UK Economic Crime Group: Enforcement Update discussing, inter alia, the status of various SFO investigations, relevant decisions from the UK Supreme Court, and the ongoing impact of Brexit and COVID-19.
Other Selected International Updates
- Brazil, which has been winding down its "Operation Car Wash" task force that for the past seven years has prosecuted a host of corruption cases involving Petrobras, earlier this year announced corporate settlements with Amec Foster Wheeler and Samsung Heavy Industries Co, Ltd.
- In March, following a trial that spanned more than three years, an Italian court acquitted Eni SpA, Royal Dutch Shell Plc, and several individuals in a corruption case involving the acquisition of a Nigerian oilfield.
- Following years of debate, the German federal government is making significant progress toward the adoption of legislation establishing corporate criminal liability. The draft Corporate Sanctions Act is now in the final stages of the legislative process and widely expected to be adopted during the 2021 legislative session. For more analysis, see Start Preparing For Germany's Corporate Sanctions Act.
2. United States v. Raymond Kohut: Docket No. 21-CR-00115-ENV | CRIMINAL-FRAUD | Department of Justice (3/4/21). ; Two Men Charged in Ecuadorian Bribery and Money Laundering Scheme (3/2/21); Information (4/6/21).
3. See Information (1/27/01); Former Venezuelan Official Pleads Guilty in Connection with International Bribery and Money Laundering Scheme (3/23/21); Plea Agreement and Factual Proffer (4/15/21).
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