The first undercover Foreign Corrupt Practices Act (FCPA) investigation in Department of Justice history culminated this week with the indictments of nearly two dozen corporate executives and employees and is a clear sign of the priority the federal government has placed on enforcing the FCPA. The FCPA prohibits U.S. companies from bribing foreign officials to obtain business.
Announced by the U.S. Department of Justice, the indictments were obtained after an investigation led by the Federal Bureau of Investigation (FBI) that included an undercover sting operation. It was the first time the federal government conducted a large operation by using undercover law enforcement agents. The arrests, according to DOJ's press release, represent "the largest single investigation and prosecution against individuals in the history of DOJ's FCPA enforcement."
Barnes & Thornburg LLP partner, Patrick M. Brady, who represents clients with FCPA issues and has conducted numerous FCPA investigations on behalf of U.S. companies, said that the latest news should be a wakeup call to multinational companies.
“With this Indictment, the Justice Department has sent a strong signal that individuals, not just corporations, are now targets and the government will use any and all means available to prosecute FCPA cases. In addition, the era of FCPA matters being solely those of self-disclosure is over. Clients must now face the reality of proactive investigations FCPA investigations in the U.S. while also considering enforcement actions under local corruption laws. Now more than ever, it is critical that global companies, both publicly and privately held, consider protecting themselves individually and their organizations from this type of exposure."
This week's indictments involved the arrests of 22 people from companies in the military and law enforcement products industry. The undercover scheme involved the defendants agreeing to pay a percentage of sales, or a "commission," to a minister of defense for a country in Africa in exchange for a $15 million deal to provide products to the country's presidential guard.