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The Top 10 FCPA Events In 2011

Just to join the bandwagon of end of the year retrospectives, I thought I would put together a top-10 list for FCPA events.  Many have called 2011 the year of the trial.  I am not sure that captures it all so accurately.  I think it is too narrow a perspective — how about  “The Year of Global Anti-Corruption Enforcement.”   In any event, whatever you may think, here are my top 10 events and/or trends.

1.  Globalization of Anti-Corruption Efforts — With the effective date of the UK Bribery Act and increased foreign enforcement, the trend is unmistakable — more countries are implementing new anti-corruption laws and more resources are being dedicated to enforcement.  The US is starting to coordinate and share more information with more countries — China being the most significant.  For global companies, enforcement and settlement of cases is more complicated by the growing network of international enforcement agencies, each of which is seeking its own pound of flesh in any settlement.

2. Annual Reduction in Criminal Fines — 2010 was a marker year with FCPA criminal fines totalling over $1.6 billion.  I expect the criminal fine amount to fall below $1 billion for 2011.  The reason for this is simple — FCPA staff attorney resources have been spending more time on trial matters and not moving disclosures and internal investigations as quickly as past years.  2012 should be different and  total fines should increase significantly over 2011.

3.  Increase in Individual Prosecutions — the Justice Department says what it means and means what it says — they have emphasized that more individuals will be prosecuted, especially those where companies have already cooperated and paid a fine.  That makes sense since they can turn around and use the company’s cooperation to prosecute the individuals.  This practice already has been followed by the Antitrust Division and the FCPA unit is moving closer to that model.

4.  DOJ Trial Miscues — while the Justice Department has had some major successes in the litigation front– Bourke, Carson and Noriega “foreign official” decisions, for the most part DOJ’s record has been mixed at best.  On the one hand, DOJ secured some record sentences in Miami for the Haiti Telco case, but they suffered some stinging setback in the Lindsey prosecutorial misconduct decision and the Shot Show sting mistrial.   The Justice Department is not used to suffering black-eyes like this and I expect there will be some shakeups in policies and procedures and possibly personnel.  

5.  FCPA Coordination with Antitrust Division — the Antitrust Division is very successful in securing corporate cooperation in criminal investigations.  The leniency program is incredibly successful.  FCPA attorneys and Antitrust Division attorneys have been effectively sharing information and leads from one case into another – leading to multiple investigations.  When the Antitrust Division initiates a criminal inquiry in an industry, companies have to assess their own culpability in criminal antitrust and corruption issues.

6.  The FCPA Cottage Industry — with increasing enforcement, the “gadfly” industry of commentators (like myself), hucksters, purveyors, and salespeople continues to grow.  This trend shows no signs of slowing down.  No insults are intended to all my com-padres and confederates but we know what we are doing and why we are doing it. 

7.  Congressional Oversight — the business community has effectively raised enforcement concerns on Capitol Hill.  The effort has gained some traction in sparking more focused debate but so far there has been little legislative action. 

8.  Importance of Focus on Proactive Compliance — the compliance industry is hot, not just in anti-corruption but across all industries where the government has ramped up enforcement.  As a practicing attorney for 30 years come 2012, I have never seen a level of enforcement, use of aggressive enforcement tactics and novel prosecution theories like is occurring right now.   

9.  Lack of Corporate Governance Reform — with the aggressive enforcement environment, I expected some novel developments in corporate governance.  I am still waiting for that to happen.  Moving corporate governance practices is like turning around a huge battleship.  It takes time and lots of effort.  I am not sure it will ever happen.  There are volumes written on this subject but for some reason companies are slow to act. 

10. The Rising Importance of Chief Compliance Officers — the focus is now on every Chief Compliance Officer.  They are the agents of change and the hope for the future.  Companies that move quickly to embolden and support CCOs will be the winners.  Companies that stick to the old tired model of a General Counsel who occasionally consults the CCO will be left behind.

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