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“Resources Reflect Policy” and Other Observations

Michael Volkov discusses themes emerging in the DOJ’s and SEC’s enforcement of FCPA violations thus far in 2018.

There are two distinct themes in FCPA enforcement: The first is consistency (i.e., that some enforcement actions are relatively consistent across the board), and, in the last five to 10 years, the FCPA caseload has been fairly steady; the second is variability, meaning that new policies have an impact on FCPA enforcement. Some minor and some major. All of this may be another in my series of profound grasps of the obvious.

While many have criticized the Justice Department and the SEC over their FCPA enforcement practices, a closer look shows that the most significant impact continues to be allocation of resources. The DOJ and SEC have devoted significant resources to increase the number of attorneys assigned to the FCPA Units of the DOJ and SEC, including leveraging attorneys in U.S. Attorneys’ Offices and SEC attorneys in SEC field offices. The dedication of three FBI squads has an impact as well.

When the government allocates personnel, the attorneys and agents are expected to perform – to open investigations and prosecute cases. Case numbers ebb and flow each year; some years have more and some fewer. Significantly, the number of cases brought each calendar year really does not reflect the amount of work completed by the DOJ and SEC – the investigations continue at their own pace and are not tied to any calendar-year requirements (except when we observed the completion of a number of cases at the end of the Obama Administration).

To make myself clear, there has been no significant change in FCPA enforcement during the Trump administration or, to say it another way, resources always reflect policy. The current administration is no different than any other when it comes to FCPA enforcement. If changes were to occur, the administration would have to reallocate resources or make a significant policy shift, which no one expects to occur. So, call it what you will, FCPA enforcement is here to stay for the foreseeable future.

A second observation relates to the assignment of corporate monitors in FCPA cases. In 2016, FCPA enforcement hit a highwater mark and corporate monitors were assigned in eight separate cases. This year, we have only had one corporate monitor assigned, which was in the Panasonic enforcement action. To replace this requirement, the DOJ and SEC have pushed specific periodic review and reporting requirements. Whether this is a good or a bad idea depends on how much scrutiny the DOJ and SEC devote to review of the report. If such reports are not carefully reviewed and questioned, the self-reporting requirement is unlikely to have any significant impact; on the other hand, if the DOJ reviews and questions the company’s report, the DOJ and SEC can advance corporate accountability.

Another important area is the impact of the Yates Memorandum. There is no question that the DOJ’s commitment to the Yates Memorandum has increased overall its enforcement against individual actors, particularly in the auto safety and emissions fraud prosecutions. In the FCPA enforcement area, we have seen a “new” trend in the use of non-FCPA charges, such as money laundering, against recipients of foreign bribes. As for “traditional” FCPA prosecutions of individuals, so far, six individuals have been charged in 2018.

Finally (and perhaps most significantly), the DOJ and SEC have raised their expectations with regard to corporate remediation efforts as part of an overall FCPA settlement. The DOJ and SEC hold companies accountable for imposing strict and aggressive discipline of officers and employees responsible for misconduct, stretching to supervisors who failed to hold employees accountable or who otherwise failed to investigate potential misconduct by staff members. Companies have to exercise a robust disciplinary response, including senior officers, or face the prospect of negligible credit for remediation. Even those companies that have designed and implemented effective ethics and compliance programs may earn negligible credit if they do not exact proper disciplinary actions against employees who engage in misconduct.

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


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 [email protected].  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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