On April 30, 2019, Assistant Attorney General Brian Benczkowski announced an updated version of the Evaluation of Corporate Compliance Programs (the “Updated Guidance”). This Updated Guidance supersedes a document of the same name that the Fraud Section of DOJ’s Criminal Division published online in February 2017 without any formal announcement (the “2017 Guidance”). Although not breaking much new ground, we believe the Updated Guidance can serve as a valuable resource for those grappling with how best to design, implement, and monitor an effective corporate compliance program.
In contrast to the 2017 Guidance—which listed dozens of questions to consider in evaluating a compliance program without providing much context—the Updated Guidance employs a more holistic approach. It focuses on three fundamental questions drawn from the Justice Manual:
Is the corporation’s compliance program well designed?
The beginning of the year allows us to look back at recent developments in the white collar front involving Brazil and the United States, and prompts us to consider what to expect going forward, especially in light of the election of President Jair Bolsonaro and the appointment of former judge Sergio Moro as Minister of Justice.
Lava Jato, Carne Fraca, and Zelotes are among the Brazilian anti-corruption operations that have echoed in the United States over the last few years. Intensified cooperation between authorities in the two countries has fueled countless investigations, settlements, convictions, and related civil litigation. U.S. criminal enforcement also has reverberated in Brazil, with the FIFA prosecutions being perhaps the most headline-making example. Continue reading →
Among the flurry of resolutions in the final days of the Obama administration, two “repeat offenders” settled FCPA cases: Zimmer Biomet Holdings, Inc. (“Zimmer Biomet”) and Orthofix International N.V. (“Orthofix”). Zimmer Biomet and Orthofix are hardly the first such “repeat offenders.” In July 2016, Johnson Controls Inc. (“JCI”) settled an enforcement action involving activities of a Chinese subsidiary with the Securities and Exchange Commission (“SEC”), and the DOJ simultaneously “declined” to bring any charges. Each of these companies was a “repeat offender” in having previously settled FCPA-related allegations.
By analyzing and comparing these three recent resolutions, this Article highlights factors that may influence whether U.S. authorities bring follow-on FCPA enforcement actions and, if so, what penalties they seek to impose. As discussed below, companies are well advised to make concrete compliance enhancements in an effort to avoid recidivist status and the significant penalties that can accompany a second resolution. Continue reading →
Like many other complex corporate criminal matters, FCPA matters largely get resolved without meaningful judicial oversight. Although imperfect, such negotiated settlements do provide corporations with a greater degree of predictability and finality. In addition to a monetary penalty, these resolutions often involve the appointment of a compliance monitor, which occurred in more than half of the DOJ’s FCPA resolutions in 2016. The appointment of monitors has attracted controversy over the years, including that monitors are often seen as burdensome and expensive, have the practical effect of extending an investigation, and effectively outsource oversight to a third party. As with negotiated resolutions themselves, typically there has been little judicial involvement in the appointment or oversight of corporate monitors. Continue reading →
Long criticized for ineffective enforcement of their anti-corruption legislation, French authorities are taking steps to enhance their efforts. On November 8, 2016, France finally passed a “Proposed Law Regarding Transparency, the Fight Against Corruption and the Modernization of Economic Life,” known as the Loi Sapin II. The French Constitutional Council currently is examining the law, which is likely to be adopted before the end of the year in the form endorsed by the French National Assembly, subject to minor amendments. The Loi Sapin II provides for some significant changes in the current French anti-corruption legal and regulatory administrative structure, as well as some specific amendments to the general French criminal law and procedures. Continue reading →
On September 29, 2016, the U.S. Department of Justice (“DOJ”) issued two letters “closing its investigations” into alleged violations of the U.S. Foreign Corrupt Practices Act by HMT LLC, a Texas based manufacturer, supplier and servicer of above ground liquid storage tanks, (the “HMT Declination”) and NCH Corporation, a Texas based industrial supply and maintenance corporation (the “NCH Declination). Unlike in the three earlier “declinations” the DOJ issued since the start of its FCPA Enforcement “Pilot Program,” the companies here (HMT and NCH) are not issuers, so there were no parallel Securities and Exchange Commission (“SEC”) enforcement actions. Each declination also includes what are described as findings of the DOJ’s investigation underlying violations of the FCPA and a requirement that each company pay “disgorgement” to the U.S. Treasury. The HMT and NCH declinations therefore raise the question of whether and to what extent the Pilot Program, in addition to offering guidance on how to receive a declination, has altered the meaning of what a declination ordinarily will be. Specifically, under what circumstances can a company receive a declination without the DOJ publicizing its “findings” and the company paying disgorgement (i.e., a “clean” declination)? Continue reading →