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Bill Steinman: The FCPA is not dead redux

Last week the Department of Justice reminded us that the FCPA remains a force to be reckoned with. And for the second time in as many years, I’ve taken to my keyboard to remind the world that, despite so many hopes and predictions, FCPA enforcement is not dead.

Like augurs of old, legions of commenters have spent a great deal of time and effort since President Trump’s inauguration on January 20, 2017 to discern the current administration’s views on FCPA enforcement. Perhaps, like the ancient prognosticators, many have studied the flights of birds or the patterns of tea leaves swirling in their chalices to find support for expectations of a lull in enforcement activity or even the end of the FCPA.

Let’s take a moment, instead, look over the facts at hand.

First, as we’ve seen on FCPA Tracker, 133 public companies report having open FCPA investigations. That is near the largest number of ongoing investigations ever. And that only includes issuers. There are numerous privately-held businesses that have disclosed corruption issues to the DOJ. Simply put, there are a lot of cases out there, and no doubt many of them will result in robust fines and penalties in the not so distant future.

Second, the enforcement agencies themselves have reminded us time and again over the last 16 months that the FCPA remains one of their top priorities. Roughly a year ago, Attorney General Sessions stated in a speech before the Ethics and Compliance Initiative Annual Conference that the DOJ “will continue to strongly enforce the FCPA.”

Deputy AG Rosenstein has spoken repeatedly about the agency’s robust focus on the FCPA, including the DOJ’s ongoing efforts to increase multilateral cooperation. For example, this past November, Rosenstein emphasized that “[t]he FCPA is the law of the land. We will enforce it against both foreign and domestic companies that avail themselves of the privileges of the American marketplace.”

The SEC echoed these sentiments and also indicated a commitment to bringing cases more quickly in a speech by Enforcement Division Co-Director Steven Peikin earlier that same month. 

In addition to these pronouncements, the DOJ has promulgated policy decisions that show it’s actively thinking about the best way to enforce the FCPA. In early 2018, the department transformed the FCPA Pilot Program into the FCPA Corporate Enforcement Policy, making it a permanent part of the U.S. Attorney’s Manual.

Just last month, Deputy AG Rosenstein announced a policy of increased coordination with foreign enforcement agencies in order to avoid piling on duplicative penalties in corruption cases. A word to the wise — don’t mistake this as a step back from enforcement. If the DOJ and SEC are talking and thinking about the FCPA, that means that anti-corruption enforcement remains a priority.

Third, ask your friendly neighborhood FCPA attorney, and she or he will tell you that it’s been business as usual at the Fraud Section and the Enforcement Division since January 20, 2017. There was no hint of a change in the winds down in the FCPA trenches. Work on investigations continued — and continues — apace. As I’ve said repeatedly over the last 16 months, the settlements will come. There’s a ton of them in the pipeline. Just wait and see.

Fourth, enforcement of the FCPA is entirely consistent, in my view, with the administration’s “America First” approach to foreign policy. Just glance at the ten largest FCPA enforcement actions. Eight of the ten are foreign companies. I have no specific knowledge suggesting that FCPA enforcement is used as a trade weapon, or that the DOJ and SEC prioritize enforcement against foreign companies. But the numbers speak for themselves.  Indeed, three of the largest settlements from this year — which account for the lion’s share of 2018’s fines and penalties — involved foreign business entities.

By my reckoning, 2018 has become the fifth biggest year ever in terms of FCPA fines and penalties. And it’s not even half-over. With the large number of ongoing investigations progressing through the system, and new investigations being disclosed each week, this year’s total fines and penalties are sure to increase.

Ultimately, I think too much has been made about the relatively low number of settlements last year. Too much emphasis was placed on the number of resolutions before January 20 and those coming afterwards. As I’ve said before, FCPA investigations proceed at their own pace. We must not forget that the DOJ and SEC are not private corporations trying to “make their numbers” by the end of a quarter or the end of the fiscal year. The number of resolved enforcement actions during a particular twelve-month period is simply not a useful barometer for whether the agencies have decided to de-emphasize FCPA enforcement.

I also believe too much has been said and written about then-private citizen Donald Trump’s comments about the FCPA in 2012. Simply search the Internet for the quote, and you’ll discover a veritable treasure-trove of articles recounting the fact that he called the FCPA a horrible law, together with legions of missives from the last year and a half trying to discern what his fleeting comments on a call to CNBC half a decade ago would mean for the federal enforcement apparatus. Never have so many written so much about so little.

Some may wish that they could put FCPA compliance on the back burner, relax their ethical strictures a bit, save money by cutting back on their compliance apparatuses and turn back the clock to those halcyon days before the early 2000s when the entirety of the FCPA bar wouldn’t fill the bar stools at Old Ebbitt Grill. Alas, dollar signs followed by long strings of numbers remind us that FCPA enforcement has remarkable staying power. 

Buckle up, folks. This ride doesn’t seem to be ending any time soon.


Bill Steinman, pictured above, is a Contributing Editor of the FCPA Blog. He’s the senior partner at Steinman & Rodgers LLP, a boutique law firm in Washington, D.C. specializing in international anti-corruption compliance and investigations.

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  1. HI Bill. As usual, I agree with what you say. However, even if we go back to the 1980's, the FCPA bar would have filled the stools at Old Ebbitt and we would have had a good time. The make-up was different because the Walter Surrey's, Dick Hibey, Jim Sharp, Homer Moyer, me etc. were more international transactional lawyers or white collar generalists than the current group. You would have been quite at home with the old guys. Keep up the good work.

    Ben Fishburne

  2. I agree, "This ride doesn't appear to be ending any time soon". Case in point, the recent trade disagreements and tariffs under a Section 232 "Security threat". Why do so many people assume the White House is off the rails on this? The U.S. led the world with the FCPA forty years ago, is it possible that in those years, friends, allies and trading partners took advantage of this unilateral disarmament in anti corruption to their own advantage and at the expense of the U.S.? If the Governments of America's friends,allies and trading partners contained significant amounts of corruption how could they be trusted? If they cannot be trusted is that not the definition of a security threat? These countries should clean up their own act, the U.S. should not have to do it for them. Sadly, it looks like the U.S. has to do the clean up. Pervasive and entrenched corruption can only occur when those in authority are negligent, willfully blind, or complicit in the corruption. Does anyone seriously think that terrorists do not have the resources or the brains to hire the top flight accountants and lawyers so that their funds can be channeled through shell companies located in secrecy havens? The U.S. showed the world real leadership forty years ago, here's hoping for a repeat of that leadership, although I expect it will not be easy or painless.

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