Compliance and enforcement issues pertaining to the Foreign Corrupt Practices Act have been in the news this past year, particularly with the sensational revelation of the government's investigation of Wal-Mart's operations in Mexico. In an advanced FCPA panel discussion this morning during the Hispanic National Bar Association's Corporate Counsel Conference in Atlanta, current and former DOJ enforcement counsel dispelled any doubts that DOJ is keeping a close eye on FCPA compliance in the Caribbean and Latin America.
In a panel moderated by my fellow Partner and Colleague, Mauro Wolfe entitled, "Foreign Corrupt Practices Act: What You Need to Know About SEC and DOJ Enforcement," considerable time was devoted to the issue of whether DOJ "targets" industries or geographic regions. In response, DOJ's FCPA Assistant Chief James Kuokios replied with a definite "no", but former Deputy Assistant A.G. for the Criminal Division Greg Andres disagreed. Why the different responses? The answer lies in the panel's follow-up discussion.
DOJ's Kuokios explained that the government "follows the evidence and that it often naturally takes us to a particular region." He added that "areas with large natural resource deposits or infrastructure needs often have state-owned agencies and companies create 'touch points' with government officials" to do business in those markets. Individuals and companies subject to US jurisdiction may have to deal with state officials in these "risk areas" who may expect a bribe. Mr. Kuokios was quite candid in saying that while he cannot discuss particulars, he has "a lot of cases in the hopper" pertaining to Latin America.
Mr. Andres took a different, not completely inconsistent, view that the government "targets" regions intentionally but that the reason is because the evidence drives them to particular high risk regions and countries and that it is "smart enforcement" for the government to do so. The drive for US companies to succeed and expand into new markets, including Latin America and the Caribbean, raises the risk that bribery may be involved. The panelists gave an example in the government's "sweep" of pharmaceuticals in Asia. The evidence of potential wrongdoing led DOJ to particular pharmas working with the same entities (typically vendors or intermediaries) and it was natural for the government to ask other pharmas in the region if they had similar contacts with those interested entities. Mr. Kuokios described it as "using information [evidence] in a targeted fashion."
Regardless of how one looks at the question of whether the government intentionally "targets" a region or industry one thing is clear from this morning's panel: US companies with operations in Latin America or the Caribbean are on notice that DOJ has an eye on and are now pursuing active investigations in the region.
As Latin America and the Caribbean grow in economic power and business flourishes with the United States and the United Kingdom, the anti-corruption laws of both countries will need to be considered by companies for the foreseeable future.