Happy New Year!!  For FCPA enforcement, 2013 was a banner year.  It is hard to envision a more successful year for FCPA prosecutors.  The new year — 2014 — will continue with aggressive FCPA enforcement, prosecutions of individuals (retrospective and prospective cases, with some interesting twists along the way.  Each year is different in one way or another.

The year 2013 was incredibly successful for the Department of Justice and the SEC.  Whatever the numbers may reveal, the important point is that DOJ and the SEC rebounded strongly by prosecuting cases against a larger number of individuals, demonstrated its willingness to use proactive investigative techniques through the use of consensual recordings, and built strong cases with significant evidence of guilt.

It is hard to imagine that 2014 can be even a better year for the Department of Justice and the SEC.  Given the recent trends, and DOJ and SEC activities, I expect that 2014 will be as strong – if not stronger – than 2013.

On the corporate side, DOJ has a number of major cases on its plate, some of which are due to be resolved early in 2014.  In addition, I expect that DOJ will continue its practice of retrospective individual prosecutions based on cooperation from corporations which have previously settled enforcement actions.

DOJ also embraced a hybrid-monitor policy of imposing 18-month monitorships in appropriate cases.  DOJ’s flexibility on this issue has given them some breathing room to impose more stringent compliance requirements on companies.

Major Cases Due for Resolution

I expect four major corporate cases will be resolved in 2014:

1.  Avon: In the beginning of the year, I expect that Avon will finally resolve its case with DOJ and the SEC.  After spending millions on lawyers and consultants, Avon is in the end stages of negotiating a financial resolution.  While there was a leak of an offer to the SEC of $15 million which was rejected, I expect the settlement to come out much higher than Avon’s initial offer.

2.  Alstom:  The investigation of Alstom took some twists and turns last year with the prosecution of several individual executives for obstruction of justice.  The momentum behind the corporate investigation is significant and later in 2014 we could see a corporate settlement.

3.  Embraer:  The Embraer investigation has received significant publicity given Brazil’s recent initiation of an investigation against its home company.  While the investigation has moved relatively quickly, it is still hung up on some significant issues, but these could be resolved sooner rather than later, and possibly by the end of 2014.  The wild card in this estimate is the entry of Brazil as an investigator in the case and the impact that coordination with the US prosecutors could have on any resolution.

4.  Qualcomm- This investigation has focused on the hiring practices of Qualcomm in China relating to the hiring of relatives of Chinese foreign officials.  The investigation appears to be dragging on, but should be resolved sometime this year.  Qualcomm is likely to escape a large settlement given the limited scope of the investigation.

Major investigations against Wal-Mart and Microsoft will continue into 2015 and it is extremely unlikely that either of these major cases will be resolved in 2014.

Individual Prosecutions:

DOJ has not backed off on its desire to prosecute individuals.  DOJ is aiming at individual prosecutions to accompany as many corporate cases as possible — the Antitrust Division prosecutes, on average, threee individuals for every corporation which pleads guilty (or obtains leniency).  FCPA prosecutors are pushing the individual numbers up, and the SEC’s ability to bring civil cases against individuals is likely to increase risks for individual prosecutions.

In the immediate future, I would expect the following cases to lead to individual prosecutions:

1.  Weatherford – The factual description supporting Weatherfords’ guilty plea reads like a crime novel with its intrigue and sheer brazen commitment to bribery.  It is likely that these facts will warrant prosecution of individual executives akin to the BizJet case.

2.  Avon – One of the issues which may have been delaying Avon’s resolution was DOJ’s focus on prosecution of individual executives responsible for bribery.  A number of executives have been under scrutiny and it is likely that some will be charged, along with the corporate resolution.

3.  Bilfinger – Like the Weatherford case, the factual description supporting the guilty plea reads like a systemic commitment to bribery as a legitimate business strategy.  The likelihood of individual prosecutions is even greater given the prior prosecutions of co-conspirator executives.