2008 marked another banner year for Foreign Corrupt Practices Act enforcement, and with roughly 100 open investigations in the pipeline, 2009 is likely to be just as busy for enforcers of the anti-bribery statute.

That’s according to a review of FCPA enforcement actions by the law firm Gibson Dunn & Crutcher, which reports a combined 33 enforcement actions brought by the Department of Justice and Securities and Exchange Commission for 2008, second only to the 38 actions brought in 2007.

The alert notes that Mark Mendelsohn, Deputy Chief of the Fraud Section in the DoJ’s Criminal Division, confirmed recently that there are approximately 100 companies that are the subject of open FCPA investigations. “With so many active matters in the pipeline, we expect that U.S. enforcement agencies will continue their aggressive pursuit of companies and executives suspected of international bribery for the foreseeable future,” writes GDC Partner and Former Federal Prosecutor F. Joseph Warin.

The 2008 Year-End FCPA Update identifies the top five trends in FCPA enforcement:

Escalating corporate financial penalties;

Increasing focus on individual prosecutions;

Internationalization of foreign anti-corruption enforcement;

DoJ“s coupling of FCPA prosecutions with other charges; and

Continuing upswing in FCPA litigation.

Thanks to the massive Siemens resolution, 2008 “dwarfs all other years combined” in fines and disgorgement. The Dec. 15, 2008, resolution eclipsed by nearly twenty times the previous record for the largest FCPA settlement set by Baker Hughes in 2007 of approximately $44.1 million. Siemens and its subsidiaries agreed to pay a total criminal fine of $450 million to the DoJ and to disgorge $350 million in illicit profits to the SEC. And, as the alert points out, Siemens’s settlement figures could have been much higher. For example, the DoJ’s sentencing guideline calculation called for a criminal fine of between $1.35 and $2.7 billion. “Clearly, the DoJ and the SEC gave Siemens significant credit for its remediation efforts and for the substantial settlements it paid abroad,” GDC notes.

While the FCPA is “commonly perceived...to be a statute of predominantly corporate enforcement,” GDC reports that 60 percent of the FCPA defendants in 2008 were individuals.

And as evidence of the internationalization of foreign anti-corruption enforcement, GDC notes that the DoJ sent out at least 45 letters rogatory invoking Mutual Legal Assistance Treaties in 2008; prosecutors also took at least 16 international trips and the DoJ is involved in at least 23 multi-jurisdictional investigations.

“Not only have anti-corruption prosecutors from around the globe been assisting U.S. authorities, they are now beginning to increase their own enforcement efforts,” GDC says. While it remains to be seen what the increased anti-corruption enforcement abroad will mean for companies under investigation by the DoJ and the SEC, Warin writes, “International coordination and non-U.S. enforcement will be a hugely important part of the global fight against corruption in 2009 and beyond.”

While the DoJ has long charged FCPA defendants with other crimes incidental to the improper payments (e.g., wire fraud, mail fraud, money laundering, etc.), 2008 saw the DoJ join FCPA charges with prosecutions for violations of federal statutes that have distinct patterns of conduct and criminal elements “in a way that it has seldom done before,” the alert notes.

In December 2008, the DoJ’s Antitrust and Criminal Divisions announced the first-ever joint FCPA/antitrust prosecution against Misao Hioki, the former General Manager of Bridgestone Corporation’s Japanese marine hose business. In another case involving alleged violations of both the FCPA and of a distinct criminal regime, Shu Quan-Sheng, a renowned physicist and naturalized U.S. citizen who was born in China, pled guilty to two counts of exporting defense services and articles to China without a license in violation of the Arms Export Control Act and one count of offering bribes to Chinese government officials in violation of the FCPA.

Although there is no private right of action under the FCPA, GDC notes that “enterprising plaintiffs’ lawyers have been creative in parlaying alleged FCPA violations into alleged violations of securities laws that do allow for private redress.” As a result ... FCPA investigations have increasingly spurred a variety of collateral civil suits, including securities fraud actions, shareholder derivative suits, and lawsuits initiated by foreign governments or business partners. Accordingly, GDC notes, “companies can no longer assume that making peace with the DoJ and the SEC will end the pain associated with their alleged FCPA violations.” To date, the most common type of collateral civil litigation has come in the form of securities fraud class actions or derivative shareholder suits against publicly traded corporations.

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