2018 FCPA Predictions (Part II of II)
I always take a deep breath when starting this posting – not that I am the kiss of death, but sometimes my predictions come true and most times they do not. But with that caveat, I am brave enough to venture into 2018 and offer some predictions.
First, and this may not be so surprising, individual FCPA criminal prosecutions will continue to increase. In fact, I will go out on a limb and predict that in 2018 there will be at least 25 individual criminal prosecutions, approximately double the number in 2017. What is not clear is whether the Justice Department will bring criminal cases against individuals based on cooperation from companies that settled FCPA cases in 2016 and 2017, akin to the Rolls Royce case. I do not expect the Justice Department to go very far back in time to identify culpable individuals for prosecution. However, I predict that the Justice Department will bring more individual cases at the same time or close to the time when corporations enter into FCPA settlements.
Second, the Serious Fraud Office will continue to coordinate closely with the Justice Department on corporate investigations and individual criminal prosecutions. The SFO brought several criminal cases against individuals arising from the Rolls Royce investigation, and the SFO and the Justice Department will continue to carve defendants to each other in joint investigations.
Third, the Justice Department will bring more FCPA cases that include Title III wiretaps. The Joseph Batiste case is the first criminal prosecution that relied on Title III wiretaps, and I expect there will be more.
Fourth, the number of companies taking advantage of the declination-disgorgement reward will increase as a result of the new FCPA Corporate Enforcement Policy. The Justice Department’s new policy will encourage companies who experience FCPA violations to voluntarily disclose, cooperate and remediate in hopes of earning a declination. Companies that risk falling into one of the aggravating factors may hold back from a voluntary disclosure depending on the specific circumstances surrounding the aggravating factor, despite the benefit of a 50 percent reduction in the fine from the low end of the US Sentencing Guideline range and escaping the appointment of corporate monitor.
Fifth, the Justice Department only appointed one two-year corporate monitor this year, and I do not expect new monitors to be appointed except in extraordinary circumstances. The Telia and SBM Offshore cases did not include a corporate monitor, and they are lucky to have dodged that bullet.
As to particular corporate investigations and cases, I expect that 2018 will bring an end to some long-pending investigations:
Wal-Mart: This is an easy prediction given the recent reports indicating that a final resolution may finally be reached, although the final penalty amount appears to be less than $250 million. A final settlement will probably be announced in the first quarter of 2018.
Panasonic Avionics: This appears to be a blockbuster case with potential violations stretching across Asia and the Middle East. The amount of the fine could be high, and individual criminal prosecutions could follow, given this year’s announcement that senior executives departed the company.
Microsoft: This enforcement investigation has been under the radar for years and there is little public information on the status of the investigation and possible resolution. Whenever it ends, the amount is sure to be large given the nature and extent of the violations, and the breadth of risks involved in Microsoft’s distribution chain in Asia and other high-risk countries.
Juniper Networks: This enforcement action has been close to resolution for years but has been delayed while the company continues to negotiate a final resolution. This case should finish up toward the middle to low range of FCPA resolutions.