Risk of Forum Shopping Rising in Bribery Crackdown: Lawyer

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By Che Odom

Nov. 18 — As cooperation on anti-corruption enforcement increases among countries, so does the ability of regulators to “forum shop,” which complicates matters for companies, Randy Stevens, a compliance attorney and vice president of NAVEX Global, said Nov. 17.

The Securities and Exchange Commission and Department of Justice “are really touting the cooperation they are receiving from foreign governments, sharing information and providing access to data,” Stevens, who advises large companies on compliance programs, said during a webinar.

“So that opens up the potential for some forum shopping” where regulators may coordinate among themselves as to when and how to enforce their anticorruption laws against alleged wrongdoers, he said.

The risk of international forum shopping is increasing as more countries, such as Brazil, China and Russia, have enacted or enhanced their anti-bribery laws, Steven said. New regulation and cooperation among countries has led to more enforcement actions, making compliance programs ever more important, he continued.

“In some events, you are going to have more than one country's anti-corruption/bribery law being violated,” Stevens said, adding that companies may need to defend against multiple, parallel actions and grapple with the potential for conflicting decisions among jurisdictions.

“We don't have reason to expect that we won't see more of that in the coming year,” he said.

Increased Resources 

Regulators in the U.S. plan to beef up their enforcement efforts, Stevens said.

The SEC's financial year 2016 budget request calls for 93 additional positions in the enforcement division to support its three core functions: intelligence analysis, investigation and litigation.

“It will use the resources to expand data analytics and increase staff for the pursuit of thousands of tips,” Stevens said. “In addition, the FBI's international corruption unit tripled in size from 10 to 30 in 2015, with three dedicated squads to combat and investigate foreign corruption”.

Pay Attention to Yates Memo

The “Yates Memo,” released Sept. 9 and authored by Deputy Attorney General Sally Quillian Yates, describes the Justice Department's new policy of not giving credit to companies for cooperating with investigations unless they identify individual wrongdoers, “no matter where they sit within the company”. 

This is a game-changer, of sorts, for compliance programs, Stevens said. The general counsel must make the education of corporate executives on the risks of individual liability and prosecution a priority, he said. In addition, companies should review their internal controls and mine exit interviews and help lines for hints of potential problems.

“This year looks like another banner year for the Office of the Whistleblower,” he said, predicting that tips to the agency will not only increase in number, but also improve in quality.

All of this, including the Nov. 3 appointment of Hui Chen as the DOJ's new compliance counsel, should impress upon all companies with international dealings to readdress their compliance programs in earnest, Stevens said.

To contact the reporter on this story: Che Odom at codom@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com

NAVEX Globals' 2015 Ethics & Compliance Virtual Conference will be made available at http://www.navexglobal.com/events.