Recognizing the increasing number of multinational criminal and regulatory investigations, the United States Department of Justice has recently and repeatedly indicated a desire to resolve cases in ways that will prevent companies from being unfairly penalized by multiple countries. This is an encouraging development that companies will welcome as signaling greater fairness and transparency.
Most recently, in a May 24, 2017, speech delivered at an anti-corruption conference in Brazil, a high-ranking DOJ official discussed increasing U.S. cooperation with foreign governments on two initiatives: (1) the acquisition of evidence and (2) the global resolution of criminal cases. During the speech, DOJ Acting Principal Deputy Assistant Attorney General Trevor McFadden called both initiatives part of “developing” and “emerging” trends in white collar crime prosecutions.
On the first point, McFadden said that the DOJ’s investigations “almost always have an international nexus, often involving several different countries.” As a result, McFadden stated, the DOJ has an “everincreasing utilization” of evidence exchange with other countries. Over the last five years, according to McFadden, the number of requests for assistance in evidence gathering by foreign governments has increased by nearly 150 percent, while the DOJ’s requests to foreign governments for assistance has increased by 75 percent.
Notably, McFadden indicated that the requests for assistance themselves sometimes cause multiple countries to be interested in investigating the same conduct. McFadden said there “has been an increase in multi-jurisdictional prosecutions of criminal conduct,” which he said was “due in part to the significant assistance” the DOJ provides to other countries.
This is at least the second time in recent months that the DOJ has publicly linked the increase in international cooperation in the gathering of evidence to the opening of multijurisdictional investigations. In a March 10, 2017, speech to attendees of the American Bar Association National Institute on White Collar Crime in Miami, Acting Assistant Attorney General Kenneth Blanco stated that these evidence-gathering efforts have caused “an increase in multi-jurisdictional prosecutions of criminal conduct.” Using the same language as McFadden, Blanco called the increase in multinational investigations and prosecutions “an emerging trend.” Because foreign requests for assistance can trigger additional scrutiny by other countries, companies and their attorneys should consider whether any strategy in the early stages of an investigation would make it less likely for authorities to seek assistance from foreign authorities in gathering evidence. If such a strategy is successful, it could significantly limit companies’ exposure and costs.
Other recent news may cause further increases in the number of multijurisdictional investigations. Specifically, in his May 24 speech, McFadden announced that in the coming months the DOJ will detail a white collar prosecutor to work in the United Kingdom for the Financial Conduct Authority, which is a financial regulatory body that is somewhat similar to the U.S. Securities and Exchange Commission. This will be the first time that the DOJ will send one of its prosecutors to work for another county’s foreign regulatory agency on white collar issues. McFadden called this decision “part of our ongoing efforts to collaborate with our international partners in the fight against corruption and financial fraud.” Indeed, if embedding a prosecutor in the U.K.’s Financial Conduct Authority is successful, a logical next step will be for the DOJ to look to do so elsewhere as well.
Additionally, on June 8, 2017, 20 European Union member states agreed to form the European Public Prosecutor’s Office. The entity will begin to investigate crimes allegedly occurring across those member states in October 2017. Once established, there will certainly be multijurisdictional investigations and prosecutions that overlap between the European Public Prosecutor’s Office and the DOJ.
The good news for companies that find themselves to be subjects of these increasing multinational investigations is that the DOJ now recognizes a need for global resolutions. Not only can global resolutions help avoid penalties that amount to double-counting of fines, but they also may provide needed closure as a whole for companies that are the subjects of the investigation. In their speeches, McFadden and Blanco, using the exact same words, stated that the goal of these global resolutions is to ensure that companies “are not unfairly penalized for the same conduct by multiple” countries and agencies. The fact that the two DOJ officials used the same language in speeches first to an audience of white collar defense attorneys and then to a group attending an anti-corruption conference in a foreign country indicates that the DOJ is motivated to find ways of globally resolving multijurisdictional investigations and is attempting to persuade other nations to enter into these resolutions as well.
The DOJ’s statements about global resolutions are encouraging. In the past, the DOJ has been receptive to these arguments, but results have been mixed and the calculations are not always transparent. The comments by DOJ leadership at least reflect a sensitivity to the issue of unfair penalties at the highest levels, and can now be used in negotiations. Indeed, a recent global resolution is consistent with the DOJ’s comments. In a Foreign Corrupt Practices Act investigation that resolved in January 2017, RollsRoyce PLC agreed to be fined $195 million as part of an $800 million global settlement that included the United Kingdom and Brazil. In the press release announcing news of the resolution, the DOJ explained that Rolls-Royce would not be obligated to pay all $195 million, but instead would credit the company with $25 million that Rolls-Royce had agreed to pay Brazil in an overlapping facet of the investigations. This resolution provides a road map for how to negotiate global settlements so companies do not pay twice for the same conduct. It appears the `DOJ will be satisfied if it can include all of the fines to be paid for overlapping conduct in its global resolutions, yet credit companies with the amounts they have paid or will pay to foreign governments for that conduct.