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2020 FCPA Review: Another Record Year for Enforcement (Part I of IV)

The Justice Department and the Securities and Exchange Commission had another record year of enforcement.  In fact, the last four years of FCPA enforcement included two years of record enforcement – 2019 and 2020.  After those two years, 2016, 2014, 2010 were larger enforcement years (as measured by total fines) than 2017 and 2018, the first two years of FCPA enforcement under the Trump Administration.

DOJ reached FCPA settlements with 8 corporate defendants: Goldman Sachs, Airbus SE, Novartis/Alcon, Herbalife, J&F Investimentos, Sargeant Marine, Beam Suntory, Vitol Trading.  DOJ issued one declination—World Acceptance.

In total, DOJ collected $374 billion.

DOJ indicted 22 individuals in FCPA-related cases, a decline from the record years of 2018 and 2019.

The SEC reached FCPA settlements with 8 corporations and 3 individuals: Alexion. Novartis/Alcon, Goldman Sachs, Herbalife, ENI, J&F Investimentos, Cardinal Health and World Acceptance.  The Batista Brothers from J&F Investimentos each settled SEC charges for $550k.  A former Goldman Sachs officer has been charged in a civil complaint for corruption charges involving Ghanaian foreign officials.

The CFTC settled its first enforcement case against Vitol Trading for $28.7 million.

The total of SEC and CFTC enforcement was $1.34 billion.

No FCPA enforcement actions resulted in the appointment of an independent corporate monitor.

The Goldman Sachs Blockbuster

DOJ and SEC’s year rested on the blockbuster enforcement action against Goldman Sachs for its massive bribery scheme in Malaysia involving the 1MDB fund.  The total recovery from the Goldman Sachs was nearly $4 billion — $2.9 billion for DOJ and $1.06 billion for the SEC. 

The Goldman Sachs case sits atop the FCPA top-10 list, far eclipsing Ericsson’s 2019 settlement for $1 billion.  Goldman Sachs is the most important FCPA prosecution because it struck at the heart of the purpose of the FCPA – prosecuting bribery schemes that have a disastrous impact on a developing economy.  DOJ and the SEC should be commended for this important case.

Criminal Prosecutions

DOJ’s ability to pursue criminal prosecutions was hampered by COVID-19 because of inability to access grand juries and disruptions to federal court operations around the country.  But for the pandemic, DOJ would likely have exceeded its record 2019 year of 34 indictments or pleas.

Despite the pandemic, however, DOJ secured a trial conviction against Donnville Innis, a Barbados government official.  In almost every indictment, DOJ coupled FCPA charges with anti-money laundering criminal charges, which carry a much more severe penalty.  DOJ also continued to indict foreign government officials on AML charges since such officials are not subject to FCPA charges. 

The focus of criminal charges continue to be officials linked to PDVSA, Petroecuador, Alstom and Odebrecht.  DOJ also indicted three defendants from an international adoption agency ifor FCPA charges. 

Division of Enforcement Labor

Over the last few years, a working division between DOJ and the SEC has become apparent.  DOJ focuses its efforts on large corporate prosecutions along with individuals associated with corrupt organizations (e.g., PDVSA, Odebrecht).  The SEC may participate in a large case investigation but tend to include “smaller” cases under $100k as well. 

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