Tuesday, July 6, 2010

Coverage From The Conference Circuit

The end of June was a busy time on the FCPA conference circuit with events taking place around the world.

Wrage Blog (see here) has a summary of certain events, including comments by Hank Walther, the Assistant Chief DOJ Fraud Section, at an event hosted by Ethical Corporation (see here).

As noted in the post, with official FCPA guidance "pretty sparse," reading the "tea leaves" from comments made by government enforcement attorneys at conferences "become more important." It all seems like a rather odd way for a law to develop and for enforcement theories and priorities to be disclosed, but such is the current state of affairs.

Among the "tea leaves" discussed in the Wrage Blog post:

"The 'Siemens Phenomena' is here to stay. That is, the DOJ will continue to pursue large cases where the alleged misconduct spans multiple continents. [Walther] noted that the Siemens case, with its billion-dollar-plus settlement, was not an outlier. [Walther] pointed to other recent eye-catching settlements: BAE ($400 million), Daimler ($93 million criminal penalty) and KBR ($402 million)."

[Comment: why does the DOJ continue to trumpet the BAE case as an FCPA case when it (or others in government) did not have the gumption to actually charge BAE with FCPA violations despite allegations which seem to support such a charge?]

"...the DOJ’s interest in pursuing marquee names does not mean private companies are off the hook. Per [Walther], the DOJ still likes the smaller cases. Although the public company prosecutions grab the headlines, [Walther] was quick to note that more private companies have been prosecuted under the FCPA than public companies."

"Individuals remain squarely in the DOJ’s cross hairs. [Walther] pointed out that, even as recently as four or five years ago, the DOJ rarely charged individuals with FCPA violations. What has changed? First, an apparent public policy shift at the DOJ has occurred. The DOJ has come to realize that 'it can’t build an enforcement regime on criminal fines alone.' That is, if bribery convictions only impact corporate coffers, then paying bribes just becomes a cost of doing business. If, instead, the specter of jail time is factored into the cost-benefit analysis, then the calculus changes dramatically. Second, the DOJ has become more adept at gathering evidence in FCPA cases."

For additional coverage on the DOJ's focus on individuals, see this article from Aruna Viswanatha at Main Justice. Of particular interest, the Main Justice article quotes Walther as saying that "a fine-only enforcement policy allows companies to calculate such settlements as the cost of doing business."

That fine-only FCPA enforcement actions (particularly those that leave the company in a "net positive" position after the improper payments) and FCPA enforcement actions that allow the company to escape the "most fitting" charges and penalties do not deter is precisely one of the points I made in these prior posts (see here and here) challenging Mark Mendelsohn and William Jacobson's (both former DOJ FCPA enforcement attorneys) defense of the Siemens enforcement action.

For coverage of another recent event (The Marcus Evans 4th FCPA & Anti-Corruption Compliance Conference) see this piece from Joe Palazzolo at Main Justice regarding how the FBI anti-corruption unit is expanding and being more aggressive.

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