The Justice Department and the Securities and Exchange Commission bounced back in 2022 to restore their records for aggressive FCPA enforcement.  At the same time, DOJ announced significant new compliance program expectations, and appeared ready to press forward with a number of FCPA resolutions.

The Numbers

For the year, DOJ totaled five corporate resolutions, two separate declinations under its Corporate Enforcement Policy, and approximately 24 individual criminal prosecutions (depending on how you define FCPA criminal prosecution). DOJ closed out 2022 with two major FCPA enforcement actions – the ABB and Honeywell cases.  DOJ resumed its assignment of corporate monitors by requiring independent compliance monitors in the Stericycle (2-year) and Glencore (3-year) cases.

Two existing corporate monitorships were extended for one additional year in 2022 – Ericsson and Russian cellular company Mobile Telesystems.

The SEC had a respectable year in FCPA enforcement bringing a total of eight corporate actions but no individual cases.

In sum, DOJ and the SEC collected nearly $1.4 billion in penalties and fines, a respectable number and a significant increase over 2021.  The largest FCPA enforcement year, as measured in penalties, continues to be 2020, when it resolved the multi-billion Goldman Sachs case for the Malaysia 1 MDB scandal.

Highlights

DOJ’s year was capped by the Glencore prosecution, resulting in a $700 million fine for FCPA violations, $441 for commodity trading fraud, and appointment of a three-year compliance monitor.  Glencore stands as one of the top-10 FCPA enforcement actions with the $700 million fine.

ABB’s $315 million FCPA resolution stands out because of its status as a three-time FCPA loser.  However, ABB was able to earn this resolution only through extraordinary cooperation and remediation.  In the absence of this demonstrated commitment, ABB certainly faced a significantly higher penalty.

In the individual FCPA criminal enforcement arena, DOJ secured a hard-fought trial victory convicting Roger Ng for his role in the Goldman Sachs 1 MDB scandal.  After a three-month trial, Ng was convicted despite the government’s reliance on a difficult cooperating witness in the case. 

DOJ’s aggressive focus remains on individual enforcement.  DOJ continues to bring a flurry of cases, including foreign officials involved in the receipt of bribes.  DOJ routinely charges FCPA offenders with money laundering violations, which carry a maximum penalty of 20 years’ incarceration.  The bulk of the individual criminal cases has been generated from active prior investigations involving PDVSA, Odebrecht, Sgt. Marine and Vitol. 

This year also included DOJ’s roll out of its chief compliance officer certification requirement, which was met with a lukewarm reaction from the compliance community for fear it will be abused to target CCOs for future prosecutions.  The CCO certification requirement only requires a CCO to certify, in the last year of a DPA, that the company’s compliance program is “reasonably designed” to meet relevant standards.

Compliance Lessons

The top 3 areas underscored by FCPA enforcement did not surprise anyone – DOJ and the SEC continue to focus on — and cite deficiencies in — company commitment to a culture of ethics and compliance; third-party risks and monitoring; and financial controls, particularly with respect to contract-invoice-payment controls.

DOJ announced, with much fanfare, a new Corporate Enforcement Policy.  DOJ’s policy changes are significant and intended to elevate two significant issues – corporate compliance program fine-tuning of compliance incentives and disincentives, and preservation of communications data.  Along with these two issues, DOJ revised various aspects of the CEP in order to increase timely disclosure of evidence that can be used to prosecute individuals.

Most significantly, DOJ’s focus on incentives and disincentives will require corporations to examine their existing claw back and deferred compensation systems to ensure that robust policies are crafted and enforced against corporate actors who engage in misconduct or fail to exercise proper supervision of employees.  DOJ is pushing companies to craft new strategies in this area as a means to target punishment against individual wrongdoers as opposed to corporate shareholders.

DOJ is expected to announce new and significant guidance in this area  — so stay tuned!!