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"We are in a new era of FCPA enforcement" Assistant AG Lanny Breuer declared in remarks at a conference
on Tuesday. The Department of Justice is stepping up FCPA enforcement,
which is good for business, despite the contention of some critics.
Increased enforcement is reflected in by a few basic statistics.
In 2004 Mr. Breuer noted, the Department of Justice charged two individuals
under the Foreign Corrupt Practices Act and collected about $11 million in
criminal fines. In 2005, five individuals were charged and about $16.5 million
in criminal fines were collected. In contrast, in 2009 over 50 individuals were
charged and nearly $2 billion in criminal fines were collected. Presently, 35
defendants are awaiting trial on FCPA charges.
Another indication of the stepped-up enforcement effort
is the ability of DOJ to conduct industry wide investigations. The point is
illustrated by the recent cases against freight forwarding company Panalpina
World Transport, its U.S. subsidiary and five oil and gas service companies and
their subsidiaries (here).
This stems from the fact that one way which corporations secure cooperation
credit is by furnishing the government with information about competitors and
clients. The Panalpina investigation began in 2006, based on information
DOJ obtained from the firm's customers.
Meaningful cooperation credit is available for companies
that assist the government's investigative efforts, Mr. Breuer stressed in an
often repeated theme. The results in the Panalpina cases illustrate the
range of options available to the government. There, one company obtained a
non-prosecution agreement while others entered into deferred prosecution
Cooperation requires extensive effort, however. As an
example of what it means to "really cooperate," the Assistant AG cited the
efforts of Panalpina. There, the company conducted investigations in "46
jurisdictions, hired an outside audit firm to perform forensic analysis, and
promptly reported the results of its internal investigation in over 60 meetings
and calls with the Department and the SEC. In part, because of its extensive
cooperation, we entered into a deferred prosecution agreement with the
Panalpina parent company."
Mr. Breuer concluded with three points of advice for
business organizations. First, check your compliance programs and make sure
they are effective. Second, if they are lacking take the necessary steps to
correct them. Third, if wrong doing is discovered, self-report. The results
will be significantly different if the company self-reports, rather than having
DOJ discover the conduct.
For more cutting edge commentary on
developing securities issues, visit SEC Actions, a
blog by Thomas Gorman.