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FCPA Enforcement 2011: Fireworks or a Dud?

Happy 4th to Everyone!!

We are half way through 2011.  For FCPA followers, the question is whether this year will be another year of enforcement “fireworks” or a “dud”?

There are some trends which cannot be ignored.

1.  The Justice Department is working on the biggest FCPA case ever!!  The case will make Siemens look like a misdemeanor.

2.  The Justice Department is using a wiretap to conduct an FCPA enforcement action (odds are 75-25 on this one).

3.  Criminal fines are being imposed at a rate below 2010.  So far this year, there are have been two significant enforcement actions — JPG and J&J, which were in the top-10 of all time.  In 2010, eight of the ten criminal settlements made it on the top-10 list of all time — that is not going to happen this year.

4.  Justice Department enforcement resources are being used for criminal trials.  Unlike past years, criminal defendants are going to trial — Lindsey Manufacturing, Shot Show sting, ABB, CCI and others are choosing to go to trial and DOJ prosecutors are being assigned to handle these trails.  Of course, they are being supplemented with US Attorney resources in each case, DOJ prosecutors are still being stretched to handle more.

5.  The voluntary disclosure process is being supplemented with whistleblower complaints and SEC targeting techniques.    While everyone has written ad naseum about the SEC whistleblower program, there has been little evidence yet that such program is bearing fruit.  Voluntary disclosures and continuing matters are the primary source of investigations and prosecutions.

6  Congressional reform is a new and dynamic fore in the FCPA enforcement arena.  The Justice Department better pay heed to this new force or there is likely to be some significant changes in the enforcement area.  So far, the Justice Department has revealed only its “tin ear” approach to engaging with Congress.

7.  Health care enforcement will probably be the story of the second half of 2011 given the recent disclosures, the ongoing settlement discussions, and the fertile area for enforcement in this industry.

8.  The UK Bribery Act will be a follow-on enforcement actor for the remainder of 2011 joining the US and other jurisdictions in multi-jurisdictional enforcement.  Until the SFO develops its own enforcement record, policies and practices, the SFO will be a follow on prosecutor.

This is my reading of trends.  I will keep you posted. 

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