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Global Anti-Corruption Enforcement and Emerging Practical Issues

global4As global enforcement becomes a reality, companies face a unique set of risks which can be mind-numbing in complications.  With the long-arm reach of the FCPA, UK Bribery Act and other anti-corruption laws, more enforcement actions are focusing on extraterritorial conduct.  Even more complicating is the fact that such conduct is falling under the jurisdiction of multiple companies.

This is not something new.  Global antitrust enforcement is more mature than anti-corruption enforcement and companies which engage in global cartels are having to negotiate resolutions with multiple jurisdictions.  Anti-corruption enforcement is a new subject for such enforcement and many issues have been addressed in the antitrust enforcement area.

One example of an issue certain to be at issue is the coordination of FCPA and UK Bribery Act investigations.  While the Serious Fraud Office has been unable to launch many enforcement actions under the UK Bribery Act, the day will certainly come when aggressive enforcement will occur.

To align themselves on one important issue, the United Kingdom recently authorized the use of Deferred Prosecution Agreements (“DPAs”) in UK Bribery Act cases.  The new DPA program authorizes the resolution by DPA of allegations of liability under Section 7 of the Bribery Act for the failure of a company (called a “corporate” under the Bribery Act) to prevent bribery rather than a corporate guilty plea.imagesCAF4L1PX

In order to earn a DPA, companies will have to pay a financial penalty; pay compensation; and cooperate with law enforcement in other prosecutions, including prosecutions of individuals.  If the company violates the terms of the DPA, the SFO could choose to resume its prosecution of the company.

There are significant differences between the SFO program and the US Department of Justice’s use of DPAs.  Under the UK program, companies with inadequate compliance programs would be ineligible for a DPA.  In addition, companies are required to notify the SFO in writing of a potential violation which could constitute a written admission.

Most significantly, under the UK program, the SFO will require companies to waive the attorney-client privilege and any other protections by producing documents such as witness statements and internal legal reports.  In the United States, prosecutors cannot demand nor reward waiver of such privileges.  Companies are wary of waiving such a imagesCA814HTSprivilege in the United States because, once waived, it is waived as to all third parties in related civil proceedings.

This difference may create difficult cooperation issues for companies being investigated in the US and the UK.  If the UK is taking the lead on an investigation, companies will have to consider the waiver issue as it impacts its potential liability in the US.

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  1. December 16, 2013

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