On the heels of Thanksgiving comes an annual pilgrimage to the Gaylord Convention Center outside Washington, D.C. for the American Conference Institute's international conference on the Foreign Corrupt Practices Act.
The 40th anniversary edition of the conference began with remarks from David Fuhr, Chief of the Justice Department's (DOJ) FCPA Unit, and Charles Cain, Chief of the Securities & Exchange Commission's (SEC) FCPA Unit, as well as a keynote address from Acting Assistant Attorney General Nicole Argentieri. These senior officials offered their perspectives on new policies, recent enforcement actions, and other hot topics.
- Voluntary Disclosures of Misconduct: In
February, DOJ adopted a new policy setting national standards for
companies to receive credit for voluntary self-disclosure of
criminal conduct. Fuhr acknowledged that "the decision whether
to disclose is, for many companies, a difficult one that depends on
the circumstances." But Fuhr and Argentieri both highlighted a
concerted effort within DOJ to encourage companies to self-report,
cooperate with the government, and remediate any issues.
Fuhr emphasized that self-reporting should be timely — meaning "reasonably prompt" — if a company wants the most lenient possible treatment. He gave examples of what DOJ did and did not consider to be "reasonably prompt" disclosure. A company that took three months to substantiate an allegation and then reported it to the government the very next day satisfied the DOJ's timeliness standard. On the other hand, a company that waited 16 months after receiving an allegation of misconduct and reported it nine months after substantiating the allegation did not meet the standard. Fuhr and Argentieri noted that even if a company fails to qualify for a declination because of untimely disclosure, it still can receive meaningful credit for fully cooperating with the government's investigation and remediating misconduct.
For his part, Cain acknowledged that the SEC does not have a formal policy like the DOJ's to reward companies for voluntary self-reporting, but he nonetheless made a "pitch for coming in early." - Whistleblower Awards: When asked about the SEC's whistleblower program, Cain said he believes large whistleblower awards (such as a US$279 million award announced in May), have led to more tips coming in. Cain noted, however, that the tips vary in quality. He also observed that more and more whistleblowers are now represented by counsel.
- Individual Prosecutions: The senior
enforcement officials all said they are focused on holding
individuals accountable for violations of the law. AAG Argentieri
reported that the DOJ Criminal Fraud Section (which includes, but
is not limited to, the FCPA Unit) has charged over 240 individuals
this year. Both DOJ speakers noted recent prosecutions of bribe
payers as well as bribe takers, including high-level foreign
government officials. Fuhr said DOJ is looking for impactful cases
that will have a strong deterrent effect and is prepared to take
those cases to trial. According to Fuhr, in 2024 there will be an
"active and full trial docket" of cases under the FCPA,
anti-money laundering laws, and other laws that combat
corruption.
Cain spoke about how the SEC — which has not charged any individuals with violations of the FCPA in the past couple years — faces certain challenges in bringing cases against individuals. For instance, he noted the need to establish personal jurisdiction over individuals located abroad, as well as the SEC's lack of statutory tools such as money laundering laws that are often used by DOJ to bring cases against individuals. - Corporate Compliance Programs: The FCPA chiefs
observed that many (though not all) companies are building
increasingly sophisticated compliance programs — a positive
development. Fuhr recognized that "no compliance program can
be perfect" and that "in a large multinational company
there are of course risks." He said that DOJ prosecutors, when
evaluating how to treat companies under investigation, appreciate
hearing from corporate compliance officers who can provide a
realistic assessment of key risks and demonstrate thoughtful
approaches to risk mitigation. According to Fuhr and Cain, the
absence of any recent enforcement actions imposing independent
compliance monitors does not mean that monitors will not be
required when warranted in future cases.
The FCPA Unit chiefs also addressed particular elements of compliance programs that organizations have been encouraged to adopt, including:
- Preservation of electronic business records, which the enforcement officials acknowledged can be a challenge for companies whose employees are accustomed to communicating through third-party messaging applications on their personal devices and for companies subject to strict data privacy laws in different jurisdictions
- Creation of incentives for compliance through compensation systems, which they also acknowledged can be a challenge, including because of labor and employment law considerations
- Data Analytics: AAG Argentieri said we are "upping our game when it comes to data analytics," using new tools that can interpret and synthesize large volumes of data, such as in financial records. (She did not specify what those tools are.) Argentieri noted that DOJ likes to see companies using the data available to them to identify and address potential misconduct. Cain similarly mentioned the SEC's interest in data analytics.
- International Corporate Anti-Bribery Initiative: Argentieri announced a new initiative that will help US prosecutors build relationships with counterparts around the world and facilitate information sharing to fight corruption, particularly where corruption is affecting financial markets and undermining the rule of law. While the initiative will be housed within DOJ's FCPA Unit, there will be coordination with the DOJ's Money Laundering and Asset Recovery Section; Office of International Affairs; and Office of Overseas Prosecutorial Development, Assistance and Training. The U.S. State Department will be involved as well, Argentieri said.
Stay tuned for more updates from the 40th Anniversary ACI FCPA Conference.
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