I recently spoke with David M. Stuart, one of the attorneys who represented Telia Company AB, a Sweden-based telecommunications provider that settled violations in September for a grand total of $965 million in financial sanctions.
He’s a partner at Cravath, Swaine & Moore in New York, and he spoke to me about the future of the FCPA in the new administration.
The Telia case
Telia agreed to pay a penalty as part of a deferred prosecution agreement in the amount of $548 million to the Department of Justice (offset by $274 million paid to the Dutch authorities), plus over $457 million in disgorgement to the Securities and Exchange Commission (offset by $40 million paid in criminal forfeiture and an additional $208.5 million anticipated to be paid to the Swedish authorities).
(Author’s Note: The Public Prosecution Service of the Netherlands announced a separate agreement with Telia in connection with related proceedings. In the spirit of cross-border coordination, the Telia action is just one of a number of joint Dutch-U.S. bribery investigations or resolutions — others just this year include ING and VimpelCom.)
Credit for cooperation: This is an area that will be much-watched in FCPA circles. Deputy AG Rod Rosenstein at DOJ announced last week that the FCPA Pilot Program was not only being made permanent but being expanded.
Its new policy creates a presumption that those companies that voluntarily disclose a FCPA violation, fully cooperate with the DOJ in an investigation, and timely and appropriately remediate, will receive a declination from the DOJ, absent “aggravating circumstances.”
Despite the penalty assessed, U.S. officials noted that Telia was rewarded for its early and robust cooperation in the investigation and FCPA compliance program remediation efforts.
“The Telia case offers lessons in demonstrating cooperation and building a corporate compliance program. The company brought in a new, highly experienced CCO and a deputy under her to cover the Company’s Eurasian operations, plus a new group general counsel with experience working as counsel to telecoms,” Stuart said.
A new CEO and the Chair of its board of directors also publicly committed to fully rectify the situation and adhere to a stronger FCPA compliance program going forward.
Huge fines under a Trump administration?
The Telia fine is a significant one – one of the largest FCPA sanctions on record. “But it’s not exactly attributable to the DOJ under Attorney Jeff Sessions and SEC under Chair Jay Clayton,” Stuart pointed out.
Both agencies began their pursuit and investigative activities years before these men assumed their posts, he said.
(Jay Clayton recused himself from the Telia matter at the SEC due to a conflict of interest. His former law firm, Sullivan and Cromwell, represents Telia in corporate transactions.)
“It’s really too early to predict the future of enforcement; we’ve had only one transitional year. It’s possible the DOJ and SEC may not pursue marginal cases, but so far, the authorities have demonstrated a strong commitment to enforcing the law as they always have done. And there’s been no policy directive or other pronouncement suggesting that they intend to ease up on FCPA enforcement,” Stuart said.
Furthermore, regardless of whether enforcement priorities shift, Stuart points out that as long as the FCPA continues to be the law, responsible companies and their compliance departments obviously need to keep taking it seriously.
When it comes to FCPA compliance regimes at businesses, Stuart says that “regulators will continue to expect the development of comprehensive and effective programs.”
Stuart thinks that while most responsible companies have the right internal policies and procedures, the more important feature of a firm being able to avoid FCPA pitfalls is its culture.
A company with a deficient corporate culture may not perform effective investigations or appropriately follow up on suspicious activity or allegations of misconduct.
A culture that emphasizes zero tolerance for corruption is critical — at the beginning and end of any investigation.
Julie DiMauro is a regulatory compliance expert whose analysis appears on Thomson Reuters’ Regulatory Intelligence subscription service designed for compliance and risk professionals in financial services. Follow her on Twitter @Julie_DiMauro and email her here.