Predictions for Anti-Corruption Enforcement for 2016
In all honesty, if I were betting on my predictions, I would be broke. If I were setting the line on the Super Bowl, I am sure I would go bankrupt in paying off bets. With such confidence, you may want to just click to the new blog post on my colleague Tom Fox’s excellent blog (here) or Matt Ellis’ excellent blog (here), or many of my other favorites listed below.
But I am game for another round of predictions for 2016.
Wherefore Art Thou Justice Department: The past year underscored the importance that political appointments can have on DOJ activities. Sally Yates, Leslie Caldwell, and Andrew Weissman have been at the center of FCPA enforcement. Whatever their intentions or objectives, they have slowed the FCPA enforcement wheel to refocus the enforcement program. What comes out remains to be seen, but one thing is for sure – Hui Chen, the new DOJ Compliance Counsel, will bring a more accurate and focused inquiry to company compliance programs. DOJ has an opportunity to reset the table on compliance issues and priorities. I expect DOJ will do exactly that – stay tuned.
SEC – Steady As She Goes: The SEC has come out of this past year with consistency and production, especially in stark contrast to the Justice Department. I expect the SEC to continue its steady course of FCPA enforcement actions with related settlements and individual prosecutions.
The Force Awakens – The UK Bribery Act: This year we will see more UK Bribery Act enforcement actions or deferred prosecutions. Perhaps one of the most significant developments at the end of 2015 was the Standard Bank DPA and the Sweet enforcement action. Going back to 2011, I consistently predicted the UK Bribery Act would take years to become a real enforcement risk – those days may now be coming as companies face more scrutiny by the SFO.
Yates and Individuals: While we may not see any significant uptick in prosecutions of individuals for FCPA violations, there may be some notable prosecutions – perhaps the Avon executives responsible for obstruction of justice will be charged for their blatant acts of cover up. It may take several years before we will see some significant changes in this area with more individuals being prosecuted for FCPA crimes.
As we turn to the status of major ongoing FCPA investigations, this year should result in the conclusion of some big corporate investigations. The resolution of these cases, however, may be complicated by the impact of the Yates Memorandum since prosecutors will be required to explain reasons for not prosecuting otherwise culpable individuals. It is too early to tell how big an impact this will have as DOJ decides exactly how to implement the Yates Memorandum. Nonetheless, here is my list of candidates for resolution in 2016.
- Embraer: This lengthy investigation is becoming another in the long line of endless cases, dragging on forever. It should have been resolved last year and now has to be number one for resolution this year. The only plausible explanation for this continuing delay was the late entry of the Brazilian prosecutors into this action and resulting delay while law enforcement agencies coordinate a resolution.
- Microsoft: This sprawling investigation, originally focused on China, has apparently spread to other countries. In this era of big firm internal investigations, Microsoft has been the subject of a slow and glacially paced internal investigation. If global warming is real, which most of us know to be true, I would expect this glacier to be resolved later this year.
- Wal-Mart: In the battle of dueling press reports and leaks, who should you trust — the New York Times for its original expose on Wal-Mart’s Mexican bribery scheme involving lawyers and millions of dollars in bribes, or the Wall Street Journal’s report on the failure of the internal investigation to uncover any significant bribery. The Wall Street Journal article looks like it was written by Wal-Mart’s defense counsel as part of a submission to the Justice Department, so I take it with a grain of salt. In the end, this massive case and important enforcement action will stretch into 2017.
- Cisco: This case started as apparently minor bribery problems in Russia but has grown in intensity. Cisco is a strong competitor in the high-tech business but it is being drained through public reputational damage as this FCPA case stretches on. Cisco has to push for outside counsel to resolve this case this year.
- Hoskins Trial: DOJ has an important criminal trial coming up with the lone remaining Alstom executive set for trial. The case may be delayed if DOJ appeals the trial judge’s ruling on the aiding and abetting theory of liability under the FCPA. Assuming it is not appealed or the judge grants reconsideration of her decision, DOJ is likely to secure a victory in this trial given the strength of its evidence.