In 2012, DOJ and the SEC brought 25 new Foreign Corrupt Practices Act (“FCPA”) enforcement actions, a significant decrease from the number of FCPA enforcement actions brought in 2011 (45) and the prolific 2010 (71). However, there is no reason to suspect that DOJ and the SEC are losing their zeal for enforcement. Rather, it is likely that DOJ and the SEC are juggling the approximately 150 open investigations and were distracted by the drafting of their comprehensive FCPA Resource Guide, which was released in November 2012, as well as several trials.
Many trends from 2011 continued into 2012, including DOJ’s and the SEC’s willingness to reward companies for their swift voluntary disclosure and ongoing cooperation. In at least one significant case (U.S. v. Peterson), DOJ and the SEC declined to bring an enforcement action against the individual defendant’s corporate employer, financial services giant Morgan Stanley, noting Morgan Stanley’s rigorous FCPA compliance program, voluntary disclosure, and cooperation. In addition, the trend away from using independent compliance monitors/“consultants,” in favor of self-monitoring and periodic self-reporting, continued. DOJ’s and the SEC’s targeting of the health care and life sciences industries continued to bear fruit. Indeed, more than half of DOJ’s FCPA enforcement actions this year were brought against medical device manufacturers and/or pharmaceutical companies.
On the trial front, the government continued to experience significant setbacks. In early 2012, the government dismissed the charges against the remaining SHOT Show defendants, with the judge noting that the dismissal closed a “long and sad chapter of white collar criminal enforcement.” In May, the government dropped its appeal in Lindsey Manufacturing, in which Venable LLP’s Jan Handzlik was counsel to Lindsey Manufacturing and Dr. Keith Lindsey. The District Court had previously dismissed the convictions for prosecutorial misconduct.
FCPA legislative reform efforts seemed to fade away in 2012, with the issuance of DOJ’s and the SEC’s highly-anticipated “FCPA Guidance” in November. The Guidance, while not providing much that is new, nevertheless sheds light on DOJ’s and the SEC’s enforcement priorities and is a comprehensive and helpful reference manual for the FCPA. Meanwhile, the implementation of the Dodd-Frank Whistleblower Provisions, which monetarily reward those who provide information that results in a successful enforcement action, are poised to impact the enforcement landscape. Approximately 4% of the 3,001 tips received through the Dodd-Frank Whistleblower Program during its first year were FCPA-related.
In 2012, countries other than the United States continued to be active in policing global corruption. July 2012 marked the one-year anniversary of the U.K. Bribery Act taking effect. Countries like China and India have passed (or are considering) new measures to strengthen their anti-bribery prohibitions. And some European nations, including France and Germany, have ramped up their prosecutions of individuals and corporations for foreign bribery. All this adds an additional layer of complexity to anti-corruption compliance for multi-national corporations.
At the same time, some trends from 2011 ebbed in 2012—most notably, the trend of bringing FCPA enforcement actions against individuals. In 2012, only five people were criminally or civilly charged with FCPA violations, compared to 20 people in 2011, and 18 in 2010. It will be interesting to see whether this is a permanent decline, given the difficulties at least DOJ has encountered in its prosecution of individuals.
To view and download Venable's FCPA Snapshot - 2012 in its entirety, please CLICK HERE. If you have any questions concerning the Snapshot or the FCPA, please contact the authors or other attorneys in Venable’s Foreign Corrupt Practices Act and Anti-Corruption Group.