What Is the Current State of Anti-Bribery and Corruption Prosecution?

Trump and the FCPA

Instances of global corruption pepper our newspapers and news feeds. Closer to home, allegations of corruption have taken center stage in the American political landscape, and President Trump has been openly critical of the Foreign Corrupt Practices Act, leaving many in the compliance field to wonder whether regulatory agencies will retain the authority necessary to fight corruption.

Corruption is in the news on a daily basis, raising difficult questions at the heart of the viability of democracies around the world. Corruption is fueling unrest in the Middle East and the republics of the former Soviet bloc, and allegations of corruption have recently led to the resignations of leaders across the globe, from South Korea to South Africa. “Hacktivist” data breaches reveal secret networks of offshore accounts and other forms of wealth in the hands of the political elite, and governments in Western Europe and North America strive to improve their methods for detecting corrupt transactions wafting through their financial institutions.

Perhaps most alarmingly, accusations of corruption were hurled between the two main presidential candidates in the U.S. election of 2016. Efforts to untangle those allegations continue to dominate our newspaper headlines and cocktail party conversations.

With public attention laser-focused on corruption as a matter of public policy, where does this leave those responsible for corporate anti-bribery and corruption compliance programs?

A Bit of Context

According to a study prepared by the Stanford Law School,[1] between 2004 and 2016, U.S. regulators dramatically increased enforcement activity of the Foreign Corrupt Practices Act (FCPA), extracting more than 98 percent of the $9.6 billion in sanctions assessed during the entire 40-year history of the law. Adding to the basket of anxieties faced by corporate compliance officers, the Dodd-Frank Act of 2010 afforded greater protections to whistleblowers and provided for handsome bounties to those who report corporate wrongdoing, including FCPA violations.

Since the election of Donald Trump – a vocal critic of the FCPA[2] – anyone interested in anti-bribery and corruption compliance has spent the past year wondering whether the administration of President Trump will continue to prosecute the FCPA with the enthusiasm shown by the administrations of his two predecessors.

So What’s the Deal with This Administration?

While predicting the actions and philosophies of the current administration is notoriously difficult, several patterns have emerged during the past year. The FCPA Blog, a website that aggregates data on FCPA enforcement activity, reports that 2017 was the most active year for disclosures of new FCPA-related investigations, with 45 new publicly-disclosed investigations.[3]

In his public statements, Attorney General Jeff Sessions has vowed to enforce the FCPA with an emphasis on holding individuals accountable for corporate misconduct, while continuing to take into account the quality of companies’ compliance programs.[4]

What seems clear from public statements of both the Attorney General and others at the Justice Department is that regulators will be less interested in breaking records for dishing out fearsome penalties and more interested in motivating companies and individuals to comply voluntarily with the law.

Last October, Deputy Attorney General Rod Rosenstein gave the keynote address at the New York University Program on Corporate Compliance and Enforcement. He joked about memos named after Deputy Attorneys General, quipping that “[t]he Deputy Attorney General should not be known for writing memos.” This was no doubt an allusion to the September 2015 Justice Department memo Individual Accountability for Corporate Wrongdoing, authored by former DAG Sally Yates. The stated purpose of the Yates Memo, as it came to be known, was to increase the emphasis on individual misconduct in corporate investigations undertaken by the Justice Department.

In his October 2017 remarks, DAG Rosenstein reported that his office was working to collect guidance that has been issued and to incorporate it, as appropriate, into the U.S. Attorneys’ Manual for the purpose of making policies readily accessible to members of law enforcement, as well as to those who are obligated to comply with the law. He acknowledged his general agreement with DAG Yates’s motives for issuing her memo, namely that investigators should be cautious about closing investigations without having pursued the individuals who broke the law. He agreed with critics who have long pointed out that this “…practice created the appearance that personal criminal immunity could be exchanged for corporate cash, through settlement agreements in which the United States committed not to prosecute individuals.”[5]

If the Yates policy is to be updated, DAG Rosenstein emphasized that any changes would reflect the Department’s resolve to hold individuals accountable for corporate wrongdoing, affirm that the government should not use criminal authority to extract civil payments unfairly and make the policy more clear and concise. He further stressed that the policy would reflect input from stakeholders both inside and outside the Department of Justice.

Where Are We Now?

The administration is clearly interested in presenting an image of law and order, but the party in power and the philosophy of the president strongly lean toward reducing business regulation whenever possible. It is nonetheless worth noting that President Trump’s National Security Strategy, released this past December,[6] includes references to fighting corruption throughout the document. In fact, corruption was addressed in all four pillars of the Strategy: Protect the American People, The Homeland and the American Way of Life; Promote American Prosperity; Preserve Peace through Strength; and Advance American Influence. It was further mentioned as integral to the Regional Strategies of the Middle East, the Western Hemisphere and Africa.

The wild cards facing compliance professionals will be continuing hacktivist revelations of corrupt misbehavior and whistleblowers who reveal corporate secrets in exchange for bounties provided by law enforcement. Companies that abandon rigorous compliance programs do so at their peril.

[1] Stanford Law School Foreign Corrupt Practices Act Clearinghouse, a Collaboration with Sullivan & Cromwell LLP, http://fcpa.stanford.edu/chart-penalties.html

[2] During the CNBC Squawk Box episode of May 15, 2012, the discussion turned to the Wal-Mart FCPA investigation. Donald Trump, a regular guest on the program, said “this country is absolutely crazy” to prosecute alleged FCPA violations, adding that the FCPA is a “horrible law and it should be changed” because it puts U.S. business “at a huge disadvantage.” https://www.cnbc.com/video/2012/05/15/trump-dimons-woes-zuckerbergs-prenuptial.html?play=1

[3] http://www.fcpablog.com/blog/2018/2/28/2017-was-most-active-year-for-new-fcpa-related-investigation.html

[4] https://www.justice.gov/opa/speech/attorney-general-jeff-sessions-delivers-remarks-ethics-and-compliance-initiative-annual

[5] Deputy Attorney General Rod Rosenstein Keynote Address on Corporate Enforcement Policy, October 6, 2017, https://wp.nyu.edu/compliance_enforcement/2017/10/06/nyu-program-on-corporate-compliance-enforcement-keynote-address-october-6-2017/

[6] https://www.whitehouse.gov/wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf