Following a relative downtick of Foreign Corrupt Practices Act enforcement actions brought by the Department of Justice and Securities and Exchange Commission in 2012, the first half of 2013 saw criminal enforcement of the FCPA bounce back to the robust levels observed in past years.

According to a recap of FCPA enforcement activity by Gibson, Dunn & Crutcher, the first half of 2013 (through June 30) saw a combined 16 enforcement actions, with 12 brought by the Justice Department, and four brought by the SEC. In comparison, the entire year of 2012 saw 23 enforcement actions, with 11 brought by the Justice Department, and 12 brought by the SEC.

The uptick in enforcement actions is only expected to continue. “With approximately 60 devoted prosecutors and enforcement attorneys, whose efforts are frequently supplemented by their colleagues in the U.S. Attorneys' and regional enforcement offices across the country, the government's efforts to enforce the statute have never been stronger,” the alert's author, Gibson Dunn partner Joseph Warin, wrote.

The Gibson Dunn report details several developments in 2013 FCPA enforcement that best highlight the myriad of risks facing companies doing business internationally. Specifically, the last six months witnessed a series of judicial decisions that further define the FCPA's scope; a plethora of enforcement actions; and increasingly vigorous anti-corruption enforcement and legislative activities around the globe.

The Gibson Dunn report cited a list of companies that have resolved FCPA enforcement actions with the SEC and Justice Department in the second quarter of 2013. These companies include Koninklijke Philips Electronics, Parker Drilling Company, Ralph Lauren Corporation, and Total, S.A. 

Anti-Corruption Legislation

In addition to the United States, several other countries have stepped up their anti-corruption enforcement activities in recent months. In the United Kingdom, Warin wrote, “the single most significant regulatory development” of the first six months of 2013 occurred April 25, when the Crime and Courts Act received Royal Assent in the British Parliament, giving the U.K. Serious Fraud Office the ability to offer companies deferred prosecution agreements in exchange for cooperation.

On June 27, the U.K.'s Sentencing Council launched a 14-week public consultation on its proposed draft sentencing guidelines for fraud, bribery, and money laundering offenses, and for corporate offenders.  “The consultation gives the clearest indication to date as to the likely range of sentences for offenses under the Bribery Act,” Warin wrote.

The Gibson Dunn report also highlights several other countries that have stepped up their enforcement of anti-corruption efforts. These countries include the BRIC nations—Brazil, Russia, India, and China—as well as Russia, Germany, and more.

‘No Admit, No Deny'

For decades the SEC has given corporate defendants incentive to resolve enforcement charges by settling those charges without having to admit guilt. As Compliance Week previous reported, that policy could soon be coming to an end.

Ever since U.S. District Court Judge Jed Rakoff admonished the agency in three separate settlements, starting two years ago, the SEC has been forced to defend its “neither admit nor deny” language. In considering judicial approval of prior SEC settlements with Bank of America and Vitesse, Rakoff made clear that he disliked the SEC's practice of not requiring defendants to admit guilt. He further said that he would approach any future similar settlement agreements with substantial questions.

In November Rakoff rejected a proposed $285 million settlement between the SEC and Citigroup Global Markets over allegations that the bank's unit misled investors in collateralized debt obligations. Rakoff said the settlement did not meet the legal standard for judicial approval of being “fair, reasonable, adequate, or in the public interest,” because Citigroup's choice neither to admit nor deny the agency's charges “does not provide the court with a sufficient evidentiary basis to know whether the requested relief is justified.”

Both the SEC and Citigroup appealed the judgment, and are awaiting a response from the Second Circuit Court of Appeals.

“With the Citigroup appeal awaiting a decision by the Second Circuit and the new SEC policies still percolating,” Warin wrote, “this will be an area for corporations, executives, and their counsel to watch.”

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