This article was republished with permission from Michael Volkov’s blog, Corruption, Crime & Compliance.

The recent Louis Berger International FCPA settlement highlighted once again the serious consequences from systemic bribery violations, the ease with which bribery schemes can be carried out and the risks facing all global companies, especially those involved in high-risk industries like construction.

Berger agreed to pay $17 million to settle the case and to a three-year corporate monitor. Interestingly, at the same time the company’s case was settled, the DOJ announced the guilty pleas of two former Berger executives who are scheduled to be sentenced in November 2015.

The Berger settlement raises several interesting issues.

Same-Time Individual Prosecutions: After reviewing the facts, there is no question that these two actors deserved prosecution. The DOJ had substantial evidence from a large number of witnesses who were willing to testify against the executives, along with extensive email evidence corroborating the evidence and demonstrating their attempts to cover up the bribery scheme.

Individual FCPA Prosecutions: The contemporaneous prosecution of two former Berger former executives raises a real question about DOJ handling of other FCPA criminal prosecutions against individuals. The guilty pleas of these two individuals shows that the DOJ is more committed to contemporaneous guilty pleas of individuals at the same time as the resolution of corporate cases.

This new trend stands in stark contrast to the DOJ settlement of corporate cases and subsequent prosecution of individuals. For example, the DOJ settled the Avon case without resolving the individual criminal cases. If the DOJ declined to prosecute the Avon individuals whose conduct was equal to or worse than the two Berger executives, the DOJ’s disparate treatment of these individuals raises a question as to its prosecutorial discretion.

The DOJ has been criticized for failing to prosecute individuals and the Berger case shows the DOJ operating efficiently to bring related criminal prosecutions against individuals simultaneously with the resolution of the corporate case. If this approach is new, the DOJ will have trouble explaining why it did not commit itself to such a strategy earlier.

Fine of $17 Million: Under the settlement calculation, Berger’s fine range was $17 to $34 million. Based on its cooperation, the DOJ signed off on the $17 million settlement, but did not give Berger any discount for cooperation.

Its reason for not giving a discount reflects several considerations:

First, the circumstances surrounding Berger’s “voluntary” disclosure were somewhat ambiguous. The DOJ first notified Berger of potential False Claims Act violations. Berger launched an internal investigation, during which Berger discovered FCPA violations. Berger then disclosed these FCPA violations to the DOJ.

Second, Berger’s conduct involved approximately $3.9 million in bribes and involved several high-ranking executives who actively sought to cover up the bribery scheme.

The nature and amount of such evidence may have pushed the DOJ to take a more aggressive stance on the resolution, the discount and the terms of settlement.

Balancing these considerations, the DOJ came out at $17 million. If Berger had discovered the FCPA violations itself and voluntarily disclosed the matter to the DOJ independent of the False Claims Act issue, Berger might have earned around a 25 percent discount from $17 million.

Return of the Corporate Monitor: The DOJ has not imposed a three-year corporate monitor since 2013 in the Weatherford case. Looking at the Berger settlement, it is hard to understand why a three-year corporate monitor was imposed, especially in comparison to other settlements where the DOJ settled for a hybrid monitor: 18 months under monitoring and 18 months of self-reporting. Again, given the facts and the cover up, the DOJ may have felt that Berger had been given enough positive benefits for its remediation and cooperation.

Corporate Compliance Insights is a wholly owned subsidiary of Conselium Executive Search, the global leader in compliance search.  
Michael Volkov

Michael Volkov

Michael-Volkov-leclairryanMichael Volkov is the CEO of The Volkov Law Group LLC, where he provides compliance, internal investigation and white collar defense services.  He can be reached at mvolkov@volkovlaw.com.  His practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters. He is a former federal prosecutor with almost 30 years of experience in a variety of government positions and private practice.

Michael maintains a well-known blog: Corruption Crime & Compliance which is frequently cited by anti-corruption professionals and professionals in the compliance industry.Michael has extensive experience representing clients on matters involving the Foreign Corrupt Practices Act, the UK Bribery Act, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and regulatory enforcement issues.

Michael has assisted clients with design and implementation of compliance programs to reduce risk and respond to global and US enforcement programs.

Michael has built a strong reputation for his practical and comprehensive compliance strategies.Michael served for more than 17 years as a federal prosecutor in the U.S. Attorney’s Office in the District of Columbia; for 5 years as the Chief Crime and Terrorism Counsel for the Senate Judiciary Committee, and Chief Crime, Terrorism and Homeland Security Counsel for the Senate and House Judiciary Committees; and as a Trial Attorney in the Antitrust Division of the U.S. Department of Justice.

Michael also has extensive trial experience and has been lead attorney in more than 75 jury trials, including some lasting more than six months. His clients have included corporations, officers, directors and professionals in, internal investigations and criminal and civil trials. He has handled a number of high-profile criminal cases involving a wide‐range of issues, including the FCPA and compliance matters, environmental crimes, and antitrust cartel investigations in countries all around the world.

Representative Engagements

  • Successfully represented three officers of a multinational company in two separate criminal antitrust investigations involving a criminal antitrust investigation in the District of Columbia and the Southern District of New York.
  • Defended pharmaceutical company before the Food and Drug Administration and Senate Finance Committee relating to application for approval of generic drug.
  • Conducted internal investigation which exonerated company against allegations of false statements in submissions to the FDA and against improper conduct alleged by Senate Finance Committee.
  • Represented company before the US State Department on alleged violations of ITAR which lead to voluntary disclosure and imposition of no civil or criminal penalties.
  • Advised several multinational companies on compliance with anti‐corruption laws, and design and implementation of anti‐corruption and anti‐money laundering compliance programs.
  • Advised hospitals, pharmaceutical companies and medical device companies on compliance issues relating to Stark law and Anti‐Kickback law and regulations.
  • Conducted due diligence investigations for large multinational companies for anti‐corruption compliance of: potential third party agents, joint venture partners and acquisition targets in Europe, Africa, Asia and Latin America.
  • Represented individual in white collar fraud case in Alexandria, Virginia and secured dismissal of criminal charges and expungement of criminal record.
  • Represented company before Congress and Executive Branch in effort to modify Justice Department regulations concerning use of federal funds.
  • Advised and assisted World Bank in review of global corruption policies, enforcement programs and corruption investigations and prosecutions.

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