FCPA

Shearman & Sterling’s Recent Trends and Patterns in the Enforcement of the Foreign Corrupt Practices Act (FCPA) FCPA Digest

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INTRODUCTION: RECENT TRENDS AND PATTERNS IN FCPA ENFORCEMENT FCPA DIGEST January 2021 1 In 2020, the overall number of FCPA related corporate enforcement actions dropped somewhat from recent years, with only eighteen actions brought by the DOJ and SEC. The number of individual enforcement actions dropped as well, with only sixteen individuals charged or indictments unsealed in 2020. As a benchmark, U.S. officials brought twenty-five corporate enforcement actions in 2019 and also charged (or unsealed charges against) thirty-seven individuals. This year provides a minor departure from past enforcement trends, with a slow start to the year due of course to the novel coronavirus outbreak, which disrupted business as usual. Of note, even while the number of enforcement actions lags slightly behind recent trends, two settlements, which had global penalties of nearly $4 billion and $3.2 billion, respectively (allocated among a number of domestic and foreign enforcement authorities), brought yearly aggregate corporate penalties to a new record high. As with last year, the cases this year tended to be highly concentrated—with those two settlements (discussed in greater detail below) accounting for 87 percent of the year's aggregate global corporate penalties of $8.24 billion. Significantly, the 2020 aggregate is more than double the next highest yearly amount assessed in 2016 ($3.5 billion)—a strong end to a busy decade of FCPA enforcement. Since the declaration of a national emergency in mid- March in response to the COVID-19 outbreak in the U.S. and the ensuing shuttering of normal governmental activity, the DOJ has only brought enforcement actions against eleven individuals in four separate cases (Parris et al., Sargeant et al., Aguilar, and Kang). In that same time period, the SEC only filed one complaint against an individual. Whether FCPA enforcement actions against individuals resume their normal frequency in 2021 remains to be seen; it is possible, of course, that restricted access to grand juries and other difficulties may mean there is a pipeline of prepared indictments and charges waiting to be filed in the new year. As we explain in this year-end Trends & Patterns, among the highlights from 2020 were: • eighteen corporate enforcement actions, with total sanctions of approximately $8.24 billion, making 2020 a record-shattering year in terms of the amount of FCPA enforcement penalties. Although the total penalties in 2020 were significantly higher than previous years ($2.91 billion in 2018 and $2.90 billion in 2019), the penalties were unevenly spread across enforcement actions; • an average corporate sanction of $110 million (excluding outliers), which is higher than the average from recent years; and a median corporate sanction of $106 million, which is also significantly higher compared to recent years; • as in 2019, the aggregate amount of foreign government recoveries in FCPA enforcement actions ($4.75 billion) exceeds the amount assessed by the U.S. government ($3.41 billion); this year, FCPA enforcement penalties are shared by authorities in the United Kingdom, France, Singapore, Hong Kong, Malaysia, and Brazil; • the first update to the FCPA Resource Guide and the first DOJ Opinion Procedure Release in the last six years; • the growing coordination between the FCPA enforcement agencies and other U.S. government entities, including OFAC and the CFTC; • record rewards under the SEC whistleblower program and significant whistleblower reforms under the recently passed 2020 National Defense Authorization Act. The National Defense Authorization Act also includes (1) corporate transparency reforms aimed at eliminating the use of anonymous shell companies and (2) explicit statutory authority for the SEC's disgorgement powers; and • in the U.K., after a slow start in the first half of the year, the Serious Fraud Office secured a number of bribery- related outcomes, including a DPA against Airline Services Limited and convictions against a number of individuals arising from the Unaoil investigation. However, despite some notable successes in the past six months, the SFO remains under pressure to increase the number of outcomes it delivers.

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