FCPA Enforcement: Where Have All the Enforcement Actions Gone?

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

Sometimes the tea leaves are wrong; sometimes the prognosticators do not know what they are talking about, and sometimes nothing has changed.

So, folks in the FCPA world are asking, where are all the FCPA enforcement cases? Sure, we have had some big cases come down this year: Alcoa, Marubeni and Hewlett-Packard.

But the list of ongoing investigations and expected settlements, which usually are preceded by corporate disclosures of reserves for payment of fines and penalties, is growing longer and days are slipping into months, and months into years.

For example, we have been hearing about Avon for months. You remember the case where Avon tried to negotiate in public by offering to settle for $15 million, only to be woken up to the realities of FCPA leverage and restating the reserve to around $120 million.

Every month or so everyone in the FCPA paparazzi claims that Avon is about to be settled and an announcement is forthcoming.

We have a lot of major investigations that are still under investigation: Wal-Mart, Microsoft, GSK, News Corporation, SBM Offshore and, of course, Alstom.

The fact is that FCPA investigations take time – years usually – to reach a resolution. Part of the reason for that is the time it takes to investigate activities around the globe, present the findings to the government, have the government review and conduct its own investigation, then review and evaluate remediation efforts and finally negotiate an appropriate resolution. It is a labor-intensive and lengthy process that has grown in complexity.

The Justice Department and the SEC have devoted increasing resources to FCPA enforcement, leveraging U.S. Attorneys’ resources in the field and expanding numbers assigned at the DOJ and SEC. At the same time, the government is dedicating more resources to ongoing litigation against individuals.

Contrary to the views of the FCPA paparazzi, the ebb and flow of investigations does not reflect any changes in policies or practices. The list of investigation steps outlined above omitted another time-consuming step – securing DOJ and SEC management/high-up approvals.  That can take weeks and possibly more depending on the contentious nature of the negotiations and possible individual prosecutions that may be related (e.g. Avon and Wal-Mart investigations).

Humans are always looking for explanations for events or trends that sometimes have no explanation. Not that FCPA enforcement patterns are as important as some of the bigger life questions we all deal with, but FCPA enforcement actions have a natural flow to them – sometimes they go up and sometimes they go down, depending on the flow of case work.

It is hard to refrain from looking for the next trend or the next big change in policy or practice. One thing I have learned in practicing law in Washington D.C. for over 30 years: the government will always let you know what they are going to do and then they will go out and do it.

That same rule applies to FCPA enforcement – there will be an end to these investigations, new ones will get started, and then we will start waiting for them to be resolved. Unlike Dickens’ famous novel Bleak House, these FCPA actions will be resolved before we reach the end of the book.