US Department of Justice (“DOJ”) and US Securities and Exchange Commission (“SEC”) Close 2013 and Start 2014 with High-Profile Cases
In 2013, the DOJ and SEC continued their ongoing aggressive fight against corruption, with FCPA-related fines and penalties totaling over $730 million (compared to just $260 million in 2012), including two of the top ten largest settlements in FCPA history. The regulators also continued to target individuals, as 13 defendants pled guilty or were convicted of FCPArelated charges. The 2013 corporate settlements reached by the SEC are available at: http://www.sec.gov/ spotlight/fcpa/fcpa-cases.shtml. The DOJ’s list of enforcement cases for 2013 is available at http://www.justice.gov/ criminal/fraud/fcpa/cases/2013.html. Key themes to draw out include:
- The broad scope of industries represented in enforcement cases. Settlements were reached with companies from a variety of sectors, including energy, mining, technology and innovation, manufacturing and consumer products.
- Companies headquartered outside of the United States continue to be on the US regulators’ radars. Out of the 12 FCPA enforcement cases brought by the US regulators in 2013, four are headquartered in Europe and two are headquartered in China.
- The geographical spread of government officials involved in the underlying conduct remains widespread, including Europe, Asia, Africa and South America.
- The level of fines imposed continue to be eye-catching. In 2013, fines imposed by US regulators on two European-headquartered businesses for FCPA violation totaled in excess of US$150 million and just short of US$400 million.
Already in 2014, the regulators have shown their willingness and desire to impose heavy fines against companies and charge individuals. In early January, the regulators entered into a settlement that resulted in the fifth largest FCPA enforcement action in history, with fines and penalties totalling $384 million. And on 6 January 2014, the DOJ unsealed charges against two former co-CEOs and the former General Counsel of PetroTiger Ltd, a Colombian based oilfield services company. The documents indicate that in November 2013, the former general counsel pled guilty to one count of conspiracy to violate the FCPA and to commit wire fraud, while criminal complaints were filed against the former co-CEOs, charging each with six counts including, conspiracy to commit wire fraud, conspiracy to violate the FCPA, three substantive violations of the FCPA, and conspiracy to commit money laundering.1 Both were arrested in November 2013. The three individuals allegedly arranged for approximately $333,500 in bribes to secure a $39.6 million contract. The defendants allegedly sought to conceal the payments by making them to the official’s wife in exchange for “consulting services” that were not actually performed.
Recent statement by DOJ and SEC regulators indicate that these enforcement actions will continue in 2014. In a November 2013 speech, Andrew Ceresney, Co-Director of the SEC Division of Enforcement, focused on four main prongs of SEC enforcement efforts: (1) creation of a compliance culture within companies; (2) international collaboration; (3) focus on individuals; and (4) voluntary cooperation with companies. In particular, Mr. Ceresney noted that in 2013, the SEC, DOJ, and the US Federal Bureau of Investigation (“FBI”) hosted a first of its kind Foreign Bribery and Corruption Training Conference. Representatives from over 50 law enforcement and regulatory agencies from 30 different countries attended the conference during which the attendees shared information on enforcement and investigatory techniques, all with the goal of enhancing the enforcement of the FCPA and other international anti-corruption laws. He also stated that the SEC would continue to aggressively pursue individuals to serve as a deterrent against future misconduct. James Cole, the Deputy Attorney General at the DOJ, also recently spoke on FCPA enforcement and highlighted similar themes. With respect to international cooperation, Mr. Cole noted that in recent high-profile settlements, France, Germany and Indonesia cooperated with US regulators and to gather and share key information and that the DOJ and FBI have been conducting “one-on-one” training sessions with international regulators.