“We are in a new era of FCPA enforcement”Assistant AG Lanny Breuer declared in remarks at a conference on Tuesday. The Department of Justice is stepping up FCPA enforcement, which is good for business, despite the contention of some critics.
Increased enforcement is reflected in by a few basic statistics. In 2004 Mr. Breuer noted, the Department of Justice charged two individuals under the Foreign Corrupt Practices Act and collected about $11 million in criminal fines. In 2005, five individuals were charged and about $16.5 million in criminal fines were collected. In contrast, in 2009 over 50 individuals were charged and nearly $2 billion in criminal fines were collected. Presently, 35 defendants are awaiting trial on FCPA charges.
Another indication of the stepped-up enforcement effort is the ability of DOJ to conduct industry wide investigations. The point is illustrated by the recent cases against freight forwarding company Panalpina World Transport, its U.S. subsidiary and five oil and gas service companies and their subsidiaries (here). This stems from the fact that one way which corporations secure cooperation credit is by furnishing the government with information about competitors and clients. The Panalpina investigation began in 2006, based on information DOJ obtained from the firm’s customers.
Meaningful cooperation credit is available for companies that assist the government’s investigative efforts, Mr. Breuer stressed in an often repeated theme. The results in the Panalpina cases illustrate the range of options available to the government. There, one company obtained a non-prosecution agreement while others entered into deferred prosecution agreements.
Cooperation requires extensive effort, however. As an example of what it means to “really cooperate,” the Assistant AG cited the efforts of Panalpina. There, the company conducted investigations in “46 jurisdictions, hired an outside audit firm to perform forensic analysis, and promptly reported the results of its internal investigation in over 60 meetings and calls with the Department and the SEC. In part, because of its extensive cooperation, we entered into a deferred prosecution agreement with the Panalpina parent company.”
Mr. Breuer concluded with three points of advice for business organizations. First, check your compliance programs and make sure they are effective. Second, if they are lacking take the necessary steps to correct them. Third, if wrong doing is discovered, self-report. The results will be significantly different if the company self-reports, rather than having DOJ discover the conduct.