U.S. and U.K. Anti-Corruption Enforcement Moving Forward – Part 1

fcpa enforcementAs has been widely reported in the mainstream and legal media, U.S. anti-corruption efforts have stepped up considerably over the past few years. These efforts have largely been focused on breathing new life into an old law, the Foreign Corrupt Practices Act (FCPA), which previously was seldom enforced.[1] As recent large-dollar pleas and settlements demonstrate, the increased resources devoted to FCPA enforcement at the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have yielded more and bigger cases.

In the United Kingdom, where existing anti-corruption laws were also infrequently enforced, the passage of the so-called U.K. Bribery Act of 2010, which came into effect on July 1, could signal a more stringent enforcement environment. The actual impact of the new law will depend less on the law’s text than on the resources U.K. prosecutors are given to enforce it and their ability to use those resources to bring successful prosecutions in a timely manner.

Since these recent developments suggest that anti-corruption initiatives will be around for the foreseeable future, an assessment of the enforcement landscape is in order.

U.S. Efforts: More Resources, More Investigations, More Prosecutions


In 2010, the Department of Justice imposed the most criminal penalties in FCPA-related cases in any single 12-month period—well over $1 billion. This milestone represents the culmination of a concerted effort on the part of the two federal agencies responsible for its enforcement – DOJ and SEC – to make FCPA a priority. That these efforts are underway is old news: companies that do business overseas are by-and-large aware of this trend and have responded to it (or are in the process of responding to it) by developing robust FCPA compliance plans. While compliance programs are not in-and-of-themselves defenses to FCPA charges, they can both reduce the likelihood of FCPA violations occurring and mitigate the severity of the sentencing consequences when they do.

This trend towards increasingly aggressive prosecution will likely continue for the foreseeable future. Among other things, both agencies have devoted considerable resources to these efforts, increasing the number of attorneys and agents devoted to these types of cases. Reported cases are up over last year: 227 criminal FCPA matters (prosecutions and investigations) pending in 2011, up from 169 in 2010.[2] All indications are that DOJ will remain focused on the pharmaceutical, medical products, oil and gas, and telecommunications industries.

One recent crime detection tool that has yet to bear fruit publically is the much publicized whistleblower provision of the Dodd-Frank Act.[3] While the Dodd-Frank whistleblower provision is not directed at FCPA enforcement exclusively, tips about FCPA violations are predicted to be among those triggered by Dodd-Frank. The incentives to provide tips couldn’t be clearer or better publicized: FCPA whistleblowers can now stand to receive at least 10 percent and up to 30 percent of the fines collected worldwide,[4] and recent FCPA settlements and judgments have topped $177 million,[5] $200 million[6] and $559 million.[7] According to SEC chairwoman Mary Schapiro, the quality of incoming tips has improved since Dodd-Frank went into effect.[8] It remains to be seen, however, whether increased quality (and/or quantity) will result in more or better prosecutions.

Another notable recent development is that the SEC has for the first time employed a deferred prosecution agreement (DPA)[9] to dispose of an FCPA case.[10] DPAs – which are vastly preferable to companies over formal civil or criminal charges – have long been employed by the DOJ. The SEC’s use of a DPA in the FCPA context may well signal its willingness to dispose of less serious fact pattern matters faster (via a DPA), resulting in an increase in the overall number of prosecutions. Certainly more SEC FCPA targets will be asking for DPAs.

Another significant development is the judicial interpretation of the FCPA itself. Until recently the interpretation of the FCPA was largely in the purview of DOJ and SEC attorneys because the vast majority of cases were resolved by plea or settlement before trial (or even the filing of motions). This pattern, in turn, was largely due to the type of FCPA offender targeted, namely publically held, multinational corporations, the majority of which made the business decision to settle charges by paying a fine rather than face the uncertainty of trial and potential sentencing. Indeed ccompanies have generally been willing to pay fines and enter plea agreements if an investigation uncovered possible evidence (even scant evidence) of an apparent bribe to a foreign official by an employee. Since liability was seldom contested, the FCPA was seldom interpreted by a court. There are some signs that this changing.

More matters are proceeding to trial for various reasons, including the increased targeting of individuals as defendants, which in turn means more judicial interpretation. Earlier this year, Lindsey Manufacturing, a privately held farming manufacturing company, went to trial and was found guilty in May 2011, along with two executives, of bribing officials at the Mexican Comisión Federal de Electricidad (CFE).[11] This verdict marked the first conviction after trial of a company defendant under the FCPA. The case also marked the first time a court interpreted the parameters of a “foreign official” for purposes of the FCPA, specifically whether employees of a state-owned enterprise (SOE) qualify. In finding that they do, the judge outlined five “non-exclusive” characteristics of “instrumentalities” within the terms of the FCPA. That decision was followed, in short order, by a similar one in United States v. Carson.[12] Presumably this issue will soon be before a court of appeals.


Although these cases were prosecution victories, the recent decision by U.S. District Court Judge Richard Leon, who is presiding over the so-called Africa sting cases, was just the opposite.[13] On June 14, 2011, Judge Leon granted defendant Pankesh Patel’s Rule 29 motion for acquittal at the close of the government’s case as to Count Three of the indictment, which charged Patel, a U.K. subject, with violating the FCPA by sending a DHL package containing a purchase agreement arguably in furtherance of the illegal scheme from the U.K. to the U.S. Judge Leon agreed with the defense that Patel’s act, which took place in the U.K., did not meet the jurisdictional requirements of 15 U.S.C. § 78dd03(f)(1) relating to non-domestic concerns insofar as FCPA only extends to conduct committed “while in the territory of the United States.” The judge rejected prosecutors’ arguments that since Patel committed other acts in the U.S., the FCPA was triggered regardless of where this particular act was committed.


Recent FCPA enforcement has caused a backlash that could result in various legislative and other “fixes.” The U.S. Chamber of Commerce, for one, has denounced FCPA enforcement as uncontrollable. Congressional hearings were held in June 2011 regarding FCPA developments, at which various interested parties–including former U.S. Attorney General Michael Mukasey–testified. At least one legislator, Congressman Jim Sensenbrenner, R.-Wis., said he planned to introduce a bill to make the FCPA’s provisions clearer for businesses.[14] Others are calling for Congress to amend the FCPA to provide an affirmative defense by demonstrating that a defendant company had a robust compliance system.[15]

Up Next

Carolyn and Sarah will explore in detail the current landscape of the U.K. anti-corruption movement and compare it to the climate in the U.S.


[1] It has been reported that Travel Act counts are being added in some recent indictments; however, it is too early to say if this is part of a nationwide trend.

[2] Transparency International, OECD Progress: 2011 Overview, http://www.transparency.org/news_room/in_focus/2011/oecd_progress_2011.pdf.

[3] Section 922 of the Dodd-Frank Act includes a new section, 21F, to the Securities Exchange Act of 1934.

[4] Joe Palazzolo, Whistleblower Office Put On Hold Amid Budget Concerns, Wall Street Journal, (last visited June 24, 2011), http://blogs.wsj.com/corruption-currents/2010/12/03/whistleblower-office-put-on-hold-amid-budget-concerns/.

[5] SEC Charges KBR and Halliburton for FCPA Violations, http://www.sec.gov/news/press/2009/2009-23.htm (last visited June 20, 2011).

[6] Lisa Brennan, SEC-Daimler FCPA Probe, Fugitive E-Mails, Bloomberg.com, (last visited June 20, 2011), http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aTRZzMX5Jdng.

[7] Dan Slater, Halliburton Breaks FCPA Settlement Record for U.S. Companies, Wall Street Journal (last visited June 20, 2011), http://blogs.wsj.com/law/2009/01/26/halliburton-breaks-fcpa-settlement-record-for-us-companies/.

[8] “While the SEC has a history of receiving a high volume of tips and complaints, the quality of the tips we have received has been better since Section 922 became law.” Mary L. Schapiro, Chairperson, SEC, Opening Statement at SEC Open Meeting: Item 2 — Whistleblower Program (May 25, 2011), available at http://www.sec.gov/news/speech/2011/spch052511mls-item2.htm.

[9] A deferred prosecution agreement is a voluntary alternative to prosecution in which a prosecutor agrees to grant amnesty in exchange for the defendant agreeing to fulfill certain requirements.

[10] Tenaris to Pay $5.4 Million in SEC’s First-Ever Deferred Prosecution Agreement, http://www.sec.gov/news/press/2011/2011-112.htm (last visited June 20, 2011).

[11] United States v. Aguilar, No. 10-01031-AHM, 2011 WL 1792564, at *5 (C.D. Cal. Apr. 20, 2011) (“Defendants never explain why those [state-operated] corporations must be excluded from the definition of ‘instrumentality.’”) (discussed herein as Lindsey).

[12] No. 09-00077-JVS, Doc. No. 373, (C.D. Cal. May 18, 2011).

[13] Judge Leon’s decision was rendered orally; however, a good summary of the relevant exchange can be found at the FCPA Professor Blog, http://fcpaprofessor.blogspot.com/2011/06/significant-dd-3-development-in-africa.html (last visited June 25, 2011).

[14] Joe Palazzolo, Sensenbrenner Will Introduce FCPA Bill, Wall Street Journal, (last visited June 20, 2011), http://blogs.wsj.com/corruption-currents/2011/06/14/sensenbrenner-will-introduce-fcpa-bill/.

[15] Thomas Fox, Proposed Amendments to the FCPA, Securities Law Blog (last visited June 20, 2011), http://www.lexisnexis.com/community/corpsec/blogs/corporateandsecuritieslawblog/archive/2010/12/07/congressional-hearings-for-amendment-of-the-fcpa.aspx.

No related content found.

About the Author

Carolyn F. McNiven and Sarah Marquis

About the Authors
Carolyn McNiven is a partner in law firm DLA Piper’s white collar crime practice in San Francisco. She is a former federal prosecutor and handles white collar criminal defense and related administrative, regulatory and compliance matters for individuals and companies, and has particular expertise in the areas of health care, food and drug, and FCPA compliance counseling, risk assessment and litigation.

Sarah Marquis is an associate in DLA Piper’s corporate crime and compliance division in London. She is an experienced criminal defense lawyer specializing in white collar crime, regulatory and complex international fraud investigations. Sarah advises on fraud, corruption, cartels and money laundering issues. She has a background in defending prosecutions and investigations undertaken by the broad spectrum of U.K. regulators, including the Serious Fraud Office, HM Revenue & Customs, the Financial Services Authority and the Office of Fair Trading. She also has a detailed understanding of the nature of prosecutions and investigations gained in her previous role as a case controller at the Serious Fraud Office, where she was responsible for leading teams through the most serious and complex fraud investigations and prosecutions.