2. FCPA ENFORCEMENT STATISTICS & SIGNIFICANT 2016 CORPORATE ENFORCEMENT ACTIONS
4. 2016 DEVELOPMENTS & TRENDS
8. A LOOK FORWARD: 2017 FCPA ENFORCEMENT PREDICTIONS
10. ABOUT BASS, BERRY & SIMS
1Introduction & Overview of 2016 Enforcement Statistics
U.S. Foreign Corrupt Practices Act (FCPA) enforcement has never been more aggressive or coordinated. Both in terms of settlement
amounts and number of enforcement actions, 2016 was a record-breaking year. It is no longer uncommon for companies to pay in
excess of $100 million in civil and criminal penalties to resolve FCPA actions. Statistics from 2016 include:
53 combined FCPA enforcement actions with U.S. enforcement agencies, which includes Department of Justice (DOJ) and U.S.
Securities and Exchange Commission (SEC) enforcement actions brought against corporations and individuals
27 corporations paid a total of $2.48 billion to resolve the enforcement actions
5 corporate fines were in excess of $100 million
27 individuals charged with FCPA-related offenses
10 individuals entered into criminal guilty pleas for violations of the FCPA
2 individuals were criminally charged with FCPA violations but have not yet resolved the charges
15 individuals settled civil FCPA charges brought by the SEC
12 companies received declinations
5 companies received formal declinations of prosecution, which were published by the DOJ or SEC (2 of these companies
received â€œdeclinations with disgorgement,â€ a type of FCPA resolution never seen before passage of the DOJâ€™s pilot program)
7 companies disclosed in public filings they received declinations from the DOJ, the SEC or both agencies
2 FCPA: 2016 Year in Review & 2017 Enforcement Predictions
Corporate Settlement Amounts from 2012 to 2016
Year Number of Corporate
Aggregate Settlement Amount
2016 27 $2.48 billion
2015 11 $133 million
2014 10 $1.56 billion
2013 12 $731.1 million
2012 12 $259.4 million
FOUR LARGEST RESOLUTIONS IN 2016 (IN CHRONOLOGICAL ORDER)
â€¢ VimpelCom. In February 2016, Dutch telecommunications company VimpelCom Ltd. entered into a $795 million global
foreign bribery resolution with U.S. and Dutch regulators. The company was accused of having paid more than $114 million to a
government official in Uzbekistan, falsely recording the bribes on its books and records, and laundering payments through bank
accounts around the world. The settlement included a U.S. criminal fine of more than $230 million and $375 million in disgorgement
to the SEC and Dutch officials. The United States also pursued an additional $850 million forfeiture action for corrupt proceeds
derived from the alleged scheme. In prosecuting this case, the DOJ worked with and received assistance from law enforcement
authorities in the Netherlands, Sweden, Switzerland, Latvia, Belgium, France, Ireland, Luxembourg and the United Kingdom â€“ an
example of the increasing role cross-border cooperation is playing in anti-corruption enforcement.
â€¢ Och-Ziff. In September 2016, U.S. hedge fund Och-Ziff Capital Management Group agreed to pay a total $412 million to resolve
allegations that it had bribed government officials in the Democratic Republic of the Congo and Libya and had improperly recorded
the payments in its books and records. As a component of the resolution, the company agreed to retain a corporate compliance
monitor for three years and to continue cooperating with the U.S. investigation, including facilitating interviews of relevant
individuals. The companyâ€™s CEO also agreed to pay $2.2 million to resolve books and records SEC charges.
FCPA ENFORCEMENT STATISTICS & SIGNIFICANT 2016 CORPORATE ENFORCEMENT ACTIONS
3FCPA Enforcement Statistics & Summary of Largest 2016 Corporate Enforcement Actions
â€¢ Odebrecht / Braskem. In the largest-ever global anti-corruption resolution, in December 2016, Brazilian construction and
petrochemical giants Odebrecht S.A. and Braskem S.A. agreed to pay a combined penalty of $3.5 billion to U.S., Swiss and Brazilian
regulators. The fines were limited only by each companyâ€™s ability to pay. The scheme involved hundreds of millions of dollars in
improper payments to foreign government officials in exchange for preferential rates for purchasing raw materials, contracts, and
favorable legislation and government programs to reduce tax liabilities. The fines paid to the United States represented only a
small percentage of the overall amounts, with the bulk going instead to foreign authorities. The allocation of the assessed penalties
highlights the degree of international coordination involved in this settlement.
Notably, at the time of the violations, the companies reportedly did not have in place an anti-corruption compliance program
or adequate internal controls. As part of the settlements, the firms either disciplined or terminated employees involved in the
misconduct, adopted heightened controls and anti-corruption protocols, and increased compliance resources and personnel.
They also agreed to retain an independent corporate compliance monitor for three years, to continue to cooperate with ongoing
investigations and to facilitate interviews with relevant individuals.
â€¢ Teva Pharmaceutical. In December 2016, Teva Pharmaceutical Industries, Ltd., the worldâ€™s largest manufacturer of generic drugs,
entered into a $519 million FCPA resolution. The settlement included $236 million in disgorgement, the second highest in FCPA
history. The conduct involved allegations that the company made improper payments to government officials in Russia and
Ukraine, and government doctors in Mexico, to increase drug sales and obtain requisite government approvals. U.S. regulators also
alleged that the company had intentionally failed to implement internal controls that may have prevented bribery. As with the other
major settlements in 2016, Teva committed to retain an independent corporate monitor for three years and to cooperate with the
governmentâ€™s ongoing investigation, including by facilitating interviews with relevant individuals.
Individuals also face potential criminal and civil exposure for FCPA violations. In 2016, 27 individuals were charged with FCPA-related
offenses. Ten individuals entered into criminal guilty pleas, two individuals were criminally charged but have not yet resolved the
charges and 15 individuals settled civil FCPA charges with the SEC. These numbers make clear that enforcement agencies continue to
focus on individual prosecutions for corporate wrongdoing.
4 FCPA: 2016 Year in Review & 2017 Enforcement Predictions
CORPORATE RESOLUTION PENALTIES ARE AT AN ALL-TIME HIGH
After a temporary lull in 2015, enforcement actions in 2016 resulted in record-breaking resolutions and penalties. In 2016, the DOJ and
SEC collected approximately $2.48 billion in settlement amounts in 53 combined FCPA enforcement actions, including DOJ and SEC
actions against corporations and individuals. In five of last yearâ€™s 27 corporate resolutions, corporate penalty amounts exceeded $100
million. As a point of comparison, in 2015, the DOJ and SEC collected approximately $133 million in settlement amounts in 20 combined
FCPA enforcement actions, resulting in 11 corporate resolutions.
DECLINATIONS OF PROSECUTION, THE FCPA PILOT PROGRAM AND ANTI-CORRUPTION COMPLIANCE PROGRAMS
Although 2016 was certainly a banner year in terms of enforcement actions, equally noteworthy was the uptick in the number of
declinations. In 2016, there were 12 declinations of prosecution in FCPA matters. The increase in declinations of prosecution can be
traced, at least in part, to the one-year â€œFCPA Pilot Programâ€ launched by the DOJ in April 2016.
The DOJ issued five published declinations under the Pilot Program last year, of which, two were â€œdeclinations with disgorgement,â€ a
new category of resolution. In addition to the five publicly released declination letters issued under the Pilot Program, the following
seven corporations disclosed they have received declination letters from either the DOJ, the SEC or both agencies: (1) Xylem Inc.,
(2) Key Energy Services, Inc., (3) Owens-Illinois Inc., (4) Cisco Systems Inc., (5) Harris Corporation, (6) GlaxoSmithKline plc, (7) Grifols
SA, (8) Quanta Services Inc. (9) and Fairmount Santrol Holdings Inc.1 To be clear, a declination of prosecution is not a finding by an en-
forcement agency that an FCPA violation did not occur. To the contrary, in the majority of cases, companies receiving declinations did
engage in conduct that could be a considered a violation of the FCPA. Oftentimes, it is the relative strength of an existing compliance
program that puts companies on the path to avoidance of prosecution.
Under the Pilot Program, companies that voluntarily self-disclose FCPA misconduct, fully cooperate and engage in appropriate
remediation, may be eligible for a declination of prosecution or, in the alternative, significant penalty and fine reductions. As noted,
in 2016, the DOJ has published five declinations of prosecution made pursuant to the Pilot Program: Nortek, Akamai Technologies,
Johnson Controls, NCH Corporation (NCH), and HMT LLC (HMT).2
In both the NCH and HMT declinations, the companies were required to disgorge improperly-obtained profits.3 A DOJ declination with
an accompanying disgorgement requirement constitutes a never-before-seen category of resolution.
2016 DEVELOPMENTS & TRENDS
1 See The FCPA Blog post â€œThe 2016 FCPA Enforcement Indexâ€ (Jan. 3, 2017) (â€œThe FCPA Blog 2016 Enforcement Indexâ€), available at http://www.fcpablog.com/blog/2017/1/3/the-2016-fcpa-enforcement-index.html.
2 DOJ Declination Letter to Nortek, Inc. (June 7, 2016) (Nortek Declination Letter), available at https://www.justice.gov/criminal-fraud/file/865406/download; DOJ Declination Letter to Akamai Technologies, Inc. (June 7, 2016) (Akamai Declination Letter), available at https://www.justice.gov/criminal-fraud/file/865411/download; DOJ Declination Letter to Johnson Controls (June 21, 2016) (Johnson Controls Declination Letter), available at https://www.justice.gov/criminal-fraud/file/874566/ download; DOJ Declination Letter to HMT, LLC (Sept. 29, 2016) (HMT Declination Letter), available at https://www.justice.gov/criminal-fraud/file/899116/download; and DOJ Declination Letter to NCH Corporation (Sept. 29, 2016) (NCH Declination Letter), available at https://www.justice.gov/criminal-fraud/file/899121/download.
3 It is not uncommon for DOJ to publish a declination of prosecution accompanied by a parallel SEC enforcement action requiring disgorgement of ill-gotten profits. NCH and HMT, however, are privately-held companies not subject to the SECâ€™s FCPA jurisdiction. That DOJ required these companies to disgorge profits â€“ and admit to a set of facts contemplating violations of the FCPA â€“ make these declinations noteworthy.
52016 Developments & Trends
As mentioned above, seven declinations of prosecution apparently arose outside the
Pilot Program. Like those issued under the parameters of the Pilot Program, these
declinations reaffirmed what government enforcers look for in deciding whether or
not to charge a company. A robust pre-existing anti-corruption compliance program,
remediation and disclosure can pay dividends for a company in the form of a
declination or reduced penalties. These declinations together with the addition of
Hui Chen, the DOJâ€™s first dedicated compliance counsel, signal enforcement agenciesâ€™
heightened expectations regarding a companyâ€™s pre-existing compliance programs:
paper-based, one-size-fits-all programs are no longer sufficient.
For example, both the DOJ (November 2015) and SEC (September 2016) declined to
prosecute the Harris Corporation for FCPA violations related to the payment of $1
million in bribes to Chinese health officials by one of its employees, Jun Ping Zhang, who
was individually prosecuted for FCPA violations. In determining not to bring charges
against the company, the government expressly took into account the strength of Harrisâ€™ anti-corruption compliance program stat-
ing: â€œ[t]he SEC determined not to bring charges against Harris, taking into consideration the companyâ€™s efforts at self-policing that
led to the discovery of Pingâ€™s misconduct shortly after the acquisition, prompt self-reporting, thorough remediation, and exemplary
cooperation with the SECâ€™s investigation.â€4 Notably, what the government highlighted was not the strength of the companyâ€™s policies
and procedures or other paper-based elements of Harrisâ€™ program, but rather the mechanisms it had in place to detect and respond
to potential violations â€“ â€œthe companyâ€™s efforts at self-policingâ€ and â€œthorough remediationâ€ â€“ of misconduct when it did occur.5 In so
doing, the government has demonstrated the tangible, financial and reputational benefit to companies with an effective compliance
Unlike Harris and other companies that earned declinations in 2016, LATAM Airlines Group S.A. (LATAM), a Chilean commercial airline
company, failed to properly remediate its compliance problem prior to being investigated, which resulted in a settlement payment of
more than $22 million to the DOJ and SEC in July 2016, including a $12.75 million criminal penalty. According to the DOJ, even though
LATAM cooperated with the DOJ investigation, the company paid a penalty within the U.S. Sentencing Guidelines range instead of
receiving a discount off the bottom of the range.
The DOJ stated:
LATAM failed to discipline in any way the employees responsible for the criminal conduct, including at least one high-level
company executive, and thus the ability of the compliance program to be effective in practice is compromised.6
The conduct at LATAM involved a sham agreement for consulting services. The agent performed no work and instead funneled the
money to labor union officials in exchange for lower wages and to not enforce a costly labor rule against the company.7
These cases indicate that cooperation, alone, may not result in settlement discounts or a declination of prosecution for a company
facing investigation where the underlying facts indicate the company did not properly identify and remediate its compliance problems.
In 2016, the DOJ and SEC continued to hold individuals accountable for FCPA violations. These decisions to bring enforcement actions
against individuals, can, in part, be attributed to the Yates Memorandum. On September 9, 2015, former Deputy Attorney General Sally
Yates issued a memorandum to all DOJ offices and U.S. Attorneyâ€™s Offices, which provided a directive to DOJ attorneys, among other
things, to require corporations provide facts regarding culpable individuals in order to receive any cooperation credit.8
In 2016, 15 individuals settled civil FCPA charges (compared to two in 2015 and six in 2014), 10 individuals pleaded guilty to FCPA criminal
charges (compared to four in 2015 and six in 2014), two individuals were indicted for FCPA criminal charges but have not entered a plea
4 See SEC Administrative Proceeding File No. 3-17535 (Sept. 12, 2016), available at https://www.sec.gov/litigation/admin/2016/34-78825-s.pdf.
6 DOJ press release announcing LATAM FCPA settlement (July 25, 2016), available at https://www.justice.gov/opa/pr/latam-airlines-group-resolves-foreign-corrupt- practices-act-investigation-and-agrees-pay-1275.
8 A copy of the Yates Memorandum is available at http://www.justice.gov/dag/file/769036/download.
A robust pre-existing
disclosure can pay
dividends for a company in
the form of a declination
or reduced penalties.
6 FCPA: 2016 Year in Review & 2017 Enforcement Predictions
agreement (compared to two in 2015 and six in 2014), and two individuals were sentenced (compared to eight in 2015 and one in 2014).9
Moreover, by our estimates, in 2016, there were six corporate resolutions with related individual resolutions in 2016 (compared to two
per year in 2014 and 2015).10
Despite the relative uptick in individual enforcement, we are still far from a landscape in which all â€“ or almost all â€“ corporate resolutions
have accompanying individual prosecutions, something many commentators predicted following the issuance of the Yates
Memorandum. In fact, many of the corporate enforcement actions of 2016 did not include accompanying individual prosecutions.
INCREASED MULTI-JURISDICTIONAL COOPERATION AND ENFORCEMENT
This year was marked by increased multi-jurisdictional cooperation
and enforcement in anti-corruption. For example, just in prosecuting the four
record-breaking settlements previously discussed, U.S. regulators cooperated with law
enforcement authorities from, at a minimum of, Belgium, Brazil, France, Ireland, Latvia,
the Netherlands, Luxembourg, Switzerland and the United Kingdom.11
Perhaps the most striking multi-jurisdictional enforcement trend in 2016 was the
increased focus on â€œgeographic sweeps.â€ While the type of industries and violations
involved varied wildly, last yearâ€™s enforcement actions consistently focused on
particular geographies â€“ most notably China, followed by Latin America, Russia and
India. More than half of 2016â€™s corporate FCPA resolutions alleged misconduct involving China. The U.S. regulatorsâ€™ proclivity for
prosecuting Chinese corruption is nothing new, but the marked improvement in their ability to collect and exploit evidence from within
that countryâ€™s borders is. In light of the number of pending FCPA prosecutions involving China, we do not anticipate this trend to slow
Likewise, the continued proliferation of foreign anti-corruption laws and international investigatory bodies, such as the International
Foreign Bribery Taskforce (a consortium of U.S., Canadian, Australian and British anti-corruption law enforcement agencies), ensures
that multi-jurisdictional information sharing, investigations and prosecutions will continue to some degree into 2017 and beyond. An
effective response to this trend (as with the others discussed here) requires global companies subject to the FCPA to not only create and
implement robust anti-corruption policies and procedures, but to constantly monitor their effectiveness and fully investigate discovered
CONTINUING EXPANSIVE DEFINITION OF â€œFOREIGN GOVERNMENT OFFICIALâ€
The enforcement actions arising out of multinationalsâ€™ pharmaceutical operations in China continue to demonstrate an expansive
interpretation of what constitutes a â€œforeign government official.â€ This trend carries a particular significance to foreign pharmaceutical
companies operating in China, as many hospitals in China qualify as state-owned enterprises (SOEs) for FCPA purposes. As
such, the DOJ and SEC consider healthcare professionals (HCPs), such as doctors and other hospital staff, who are employees of
state-owned hospitals in China, to be â€œforeign officialsâ€ under the FCPA. In 2016, the SEC brought charges against four pharmaceutical
companies involving improper payments to HCPs in China: (1) SciClone Pharmaceuticals, Inc. (SciClone); (2) GlaxoSmithKline plc (GSK); (3)
AstraZeneca PLC (AstraZeneca); (4) and Novartis AG (Novartis). Each of these actions relied on an expansive definition of foreign
government official as a predicate to the U.S.â€™s assertion of FCPA jurisdiction.
The SEC brought an administrative action against SciClone, a California-based pharmaceutical company, concerning its operations
in China where its sales employees in China are alleged to have provided vacations, gifts, meals, foreign language classes, and
entertainment to HCPs, who were employed by state-owned hospitals, in order to influence the number of SciClone products prescribed
9 DOJ Related Enforcement Actions Chronological List, available at https://www.justice.gov/criminal-fraud/chronological-list. See also, The FCPA Blog 2016 Enforcement Index; The FCPA Blog post, â€œThe 2015 FCPA Enforcement Index,â€ (Jan. 4, 2016) (â€œThe FCPA Blog 2015 Enforcement Indexâ€), available at http://www.fcpablog.com/ blog/2016/1/4/the-2015-fcpa-enforcement-index.html; and The FCPA Blog post, â€œThe 2014 FCPA Enforcement Index,â€ (Jan. 5, 2015) (â€œThe FCPA Blog 2014 Enforcement Indexâ€), available at http://www.fcpablog.com/blog/2015/1/5/the-2014-fcpa-enforcement-index.html.
10 See The FCPA Blog 2016 Enforcement Index, The FCPA Blog 2015 Enforcement Index and The FCPA Blog 2014 Enforcement Index.
11 See DOJ press release announcing VimpelCom global resolution (Feb. 18, 2016), available at https://www.justice.gov/opa/pr/vimpelcom-limited-and-unitel-llc-enter-global- foreign-bribery-resolution-more-795-million; DOJ press release announcing Odebrecht and Braskem global resolutions (Dec. 21, 2016), available at https://www.justice. gov/opa/pr/odebrecht-and-braskem-plead-guilty-and-agree-pay-least-35-billion-global-penalties-resolve.
More than half of 2016â€™s
72016 Developments & Trends
by the HCPs. On February 4, 2016, SciClone agreed to pay $12.8 million to the SEC to settle SECâ€™s allegations.12
The SEC brought similar allegations against Novartis, AstraZeneca and GSK. On March 23, 2016, Novartis paid $25 million to settle the
SECâ€™s allegations that its China-based subsidiaries provided money and gifts to HCPs to boost sales.13 On August 30, 2016, AstraZeneca,
a U.K.-based global biopharmaceutical company, agreed to pay $5.5 million, in part, to settle allegations that the sales staff provided
improper gifts and payments to HCPs, who were employed by various government entities in China, to increase sales of the companyâ€™s
products.14 Lastly, on September 30, 2016, GSK agreed to pay a $20 million civil penalty and agreed to provide status reports about
its remediation and compliance programs to the SEC for two years.15 The SEC alleged that GSK had engaged in a pay-to-prescribe
scheme by improperly providing cash, gifts, improper entertainment and shopping excursions to HCPs employed at Chinaâ€™s state health
12 In the Matter of SciClone Pharmaceuticals, Inc., The SECâ€™s Securities Exchange Act of 1934 Release No.77058, Accounting and Auditing Enforcement Release No. 3739, and Administrative Proceeding File No.3-17101, available at https://www.sec.gov/litigation/admin/2016/34-77058.pdf.
13 In the Matter of Novartis AG, The SECâ€™s Securities Exchange Act of 1934 Release No. 77431, Accounting and Auditing Enforcement Release No. 3759, and Administrative Proceeding File No. 3-17177, available at https://www.sec.gov/litigation/admin/2016/34-77431.pdf.
14 In the Matter of AstraZeneca PLC, The SECâ€™s Securities Exchange Act of 1934 Release No. 78730, Accounting and Auditing Enforcement Release No. 3798, and Administrative Proceeding File No. 3-17517, available at https://www.sec.gov/litigation/admin/2016/34-78730.pdf.
15 In the Matter of GlaxoSmithKline plc, The SECâ€™s Securities Exchange Act of 1934 Release No. 79005, Accounting and Auditing Enforcement Release No. 3810, and Administrative Proceeding File No. 3-17606, available at https://www.sec.gov/litigation/admin/2016/34-79005.pdf. See SEC press release, â€œGlaxoSmithKline Pays $20 Million Penalty to Settle FCPA Violationsâ€ (Sept. 30, 2016), available at https://www.sec.gov/litigation/admin/2016/34-79005-s.pdf.
8 FCPA: 2016 Year in Review & 2017 Enforcement Predictions
17 On November 8, 2016, Franceâ€™s National Assembly adopted the Law on Transparency, the Fight Against Corruption and Modernization of Economic life (also known as â€œSapin IIâ€), a copy of the text is available at: http://www.assemblee-nationale.fr/14/ta/ta0830.asp.
18 See â€œAssistant Attorney General Leslie R. Caldwell Delivers Remarks Highlighting Foreign Corrupt Practices Act Enforcement at The George Washington University Law Schoolâ€, Justice News (Nov. 3, 2016), available at https://www.justice.gov/opa/speech/assistant-attorney-general-leslie-r-caldwell-delivers-remarks-highlighting-foreign (reporting that â€œanecdotally weâ€™ve seen an uptick in the number of companies coming in to voluntarily disclose potential FCPA violationsâ€).
19 See The FCPA Blog post â€œThe Corporate Investigations Listâ€ (Jan. 9, 2017), available at http://www.fcpablog.com/blog/2017/1/9/the-corporate-investigations-list- january-2017.html.
20 For example, even before his bid for the U.S. Presidency, Trump called the FCPA a â€œhorrible law [that] should be changedâ€ and its enforcement â€œabsolutely crazy.â€ See e.g., FCPA Professor blog post â€œTrump on the FCPAâ€ (Nov. 9, 2016), available at http://fcpaprofessor.com/trump-on-the-fcpa/ (citing Trumpâ€™s remarks on FCPA allegations against Wal-Mart during an interview with CNBC SquawkBox on May 15, 2015).
Looking into our crystal ball for the upcoming year, four key questions arise:
Will the larger international community continue to focus on anti-corruption enforcement actions?
Will the FCPA Pilot Program be extended?
Will we continue to see an aggressive stance from the DOJ and SEC?
Will Congress amend the FCPA?
On the international front, we would expect that U.S. regulators will continue to cooperate with their foreign counterparts on
anti-corruption enforcement, particularly in light of the recent implementation of numerous new foreign anti-corruption measures. In
November 2016, for example, France amended its anti-corruption laws to establish a new anti-corruption agency, expand prosecutorial
jurisdiction, require certain mandatory compliance programs, provide greater whistleblower protections and allow for deferred
prosecution agreements.17 Already in early 2017, the U.K. has announced its largest enforcement action under the 2010 Bribery Act, an
$800 million combined global resolution with Rolls Royce.
The DOJâ€™s FCPA Pilot Program is slated to come to an end on April 6, 2017. Nevertheless, in light of the number of settlements deriving
from voluntary self-disclosures in 2016,18 and the DOJâ€™s apparent enthusiasm for affording mitigation credit to cooperating companies,
we anticipate the Pilot Program to be extended â€“ perhaps with little change â€“ throughout 2017 and the coming years.
On the U.S. enforcement front, although it is impossible to reliably predict the long-term future of FCPA enforcement, statistics alone
suggest that 2016â€™s upward tick in enforcement will continue in 2017. By some estimates, U.S. enforcement agencies are currently
investigating nearly 200 companies for FCPA violations â€“ more than were reportedly under investigation at this time last year.19 Simply
looking at the pipeline of cases, we would expect that potential for aggressive FCPA enforcement will continue into 2017 and beyond.
Legal predictions would be incomplete without consideration of the potential impact of the new U.S. presidential administration.
Though a reliable prediction on how a Trump administration may impact anti-corruption enforcement cannot be made, President Trump
has made statements suggesting he is no fan of the FCPA.20 Jay Clayton, a Sullivan & Cromwell partner and Trumpâ€™s selection to chair
the SEC, seems to share President Trumpâ€™s views regarding the FCPA. Though Clayton is not the first Wall Street attorney to head
the SEC, he replaces Mary Jo White, who had pushed for greater FCPA enforcement and was known for her no-nonsense approach to
holding firms accountable. Clayton, who focuses his legal practice on mergers and acquisitions and capital markets offerings, chaired
the drafting committee for a 2011 paper titled: â€œThe FCPA and its Impact on International Business Transactions â€“ Should Anything
A LOOK FORWARD: 2017 FCPA ENFORCEMENT PREDICTIONS
9A Look Forward: 2017 FCPA Enforcement Predictions
be Done to Minimize the Consequences of the U.S.â€™s Unique Position on Combating Offshore Corruption?â€ The paper argued that the FCPA puts companies subject to its jurisdiction at a competitive disadvantage. The report suggested that the United States could:
â€œ(1) dial back the scope of FCPA enforcement with respect to companies and focus more on individuals engaged in foreign corruption;
(2) encourage other countries to do the same; and (3) agree with other countries to cooperate on international matters such as
information sharing, investigations, and extradition.â€21
As we have explored throughout this update, the United States has already taken several important steps down the path proposed by
Claytonâ€™s report, including engaging in widespread international cooperation and focusing on prosecuting individual wrongdoers. We
have not, however, seen a corresponding reduction in prosecutions against companies, as the report suggested. Separately, since the
publication of the 2011 report, numerous foreign countries have in fact ramped up their own anti-bribery legislation and enforcement
Potential policy shifts notwithstanding, in 2017 and beyond, we fully expect aggressive global anti-corruption enforcement to continue.
For one thing, during Senator Jeff Sessionsâ€™ confirmation hearings, he stated that, if confirmed as U.S. Attorney General, he will enforce
the FCPA â€œas appropriate based on the facts and circumstances of each case.â€ In any event, companies should remain cognizant of the
investigative efforts and collected records already within the possession of the DOJ, the SEC and regulators abroad. Companies must
continue to protect themselves from risk of corruption-related investigations and prosecutions. Proactively creating and maintaining
an anti-corruption compliance program should be viewed as the best defense, which leads us to our last prediction.
Finally, do not be surprised to see one or more proposed legislative amendments, including an adoption of the good faith compliance
or â€œadequate proceduresâ€ defense that already exists in the U.K. Bribery Act. Other amendments may seek to clarify the definition
of â€œforeign officialâ€ or establish a de minimis exception for minimal transfers. Closing line addition end of paragraph four on page 10: January 2017 was the busiest January of all time for FCPA corporate resolutions â€“ and one of the busiest months ever. Six companies
paid more than $250 million to the DOJ and SEC.
One thing is certain: not all compliance programs are created equal. A one-size-fits-all approach to anti-corruption compliance never
works. Companies must create and implement flexible programs that are tailored to the specific needs of the organization and that
account for the companyâ€™s unique risk indicators. As the recent declinations of prosecution in the United States demonstrate, investing
in an anti-corruption compliance program can pay dividends if and when a company becomes the target of an investigation.
21 A copy of the paper by New York Bar Association is available at: https://www.sullcrom.com/siteFiles/Publications/Clayton_FCPA_Impacton_International_Business_ Dec_2011.pdf; see also FCPA Professor blog post â€œTrumpâ€™s Pick for SEC Chairman Has an Informed and Sophisticated Understanding of FCPA Issuesâ€ (Jan. 4, 2017), available at http://fcpaprofessor.com/trumps-pick-sec-chairman-informed-sophisticated-understanding-fcpa-issues/.
10 FCPA: 2016 Year in Review & 2017 Enforcement Predictions
ABOUT BASS, BERRY & SIMS
The Bass, Berry & Simsâ€™ Foreign Corrupt Practices Act (FCPA) practice group has substantial experience in compliance, anti-corruption
and compliance matters across the globe. As global anti-corruption counsel to Fortune 500 companies and public, private and nonprofit
entities, our team has deeply rooted experience in more than 40 countries across a breadth of industries including manufacturing,
medical devices, healthcare, healthcare information technology, logistics, media, technology and retail.
Our Washington, D.C.-based team members have strong relationships and regular interactions with enforcement agencies, uniquely
positioning them to stay abreast of the compliance risks morphed by the ever-evolving global economy. The FCPA practice group has a
proven track record of successfully representing companies and individuals internationally in FCPA-related matters, including internal
and government investigations, enforcement actions, anti-corruption risk assessments and the design and implementation of cost-ef-
fective compliance programs.
For more information, please visit our website.
John E. Kelly Co-Chair of Foreign Corrupt Practices Act Group, Member
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