Shorter FCPA Investigations Could Be Good News for Companies

Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...

By Liz Crampton

Justice Department efforts to speed up anti-bribery probes are an encouraging sign for companies looking to reach resolutions with the government quickly.

Trevor McFadden, acting principal deputy assistant attorney general of the criminal division, said at a conference that he hopes future Foreign Corrupt Practices Act investigations will “be measured in months, not years” as the DOJ makes “a concerted effort to move corporate investigations expeditiously.”

First Comments

McFadden’s April 18 comments were the first from a top government official since President Donald Trump took office that laid out a specific agenda for enforcing the FCPA, which is jointly overseen by the Justice Department and Securities and Exchange Commission.“Any initiative by the government that seeks to shorten the timelines of investigations I think is going to be welcomed by the business community,” Michael Diamant, a partner at Gibson, Dunn & Crutcher LLP, told Bloomberg BNA. “I think that the goal would serve both the interests of the government and the interests of corporations,” he added.

Different Approach?

Diamant said he would be surprised if the Justice Department “took a wildly different approach to cases.”

“What they’re probably talking about is seeking to more quickly assess the core facts of cases in determining whether it’s a case that merits an enforcement action,” he said.

The U.S. Chamber Institute for Legal Reform, part of the U.S. Chamber of Commerce, is “encouraged that the DOJ appears to be looking at this issue,” according to a statement provided to Bloomberg BNA from Executive Vice President Harold Kim.

FCPA probes are burdensome and costly for companies under investigation, Tom Fox, an FCPA compliance attorney, told Bloomberg BNA. It’s not unusual for investigations to take four to six years, Fox said. “That’s a lot of time to leave a company in limbo,” he said.

‘Trade-off’

But companies face a “trade-off” with a quicker timeline because “it puts more pressure on corporate compliance programs to get it right,” Fox said. “Businesses must do a more robust, quick and efficient investigation.”

“There’s no sort of cookie cutter approach here,” he said. “Certainly cases can languish for years, go on for five or six years.” Cases that are declined, or don’t result in an enforcement action, can take just several months, he said.

Roberto Braceras, a white collar crime attorney at Goodwin Procter LLP, said he’s “wary” of the government speeding up investigations because the DOJ often runs into challenges that add time, such as collecting documents and interviewing witnesses in different countries.

“Even the best intentions to accelerate investigations can run up short,” said Braceras, who worked as a prosecutor in the DOJ’s criminal division. “But it’s still good news that they are at least acknowledging the need to shorten the process.”

What Could Change

The Department of Justice has always emphasized how complicated and labor intensive these cases are, so the question is what could be trimmed, Alexandra Wrage, president of TRACE, an organization that consults with companies on anti-bribery compliance, told Bloomberg BNA.

Wrage said the DOJ could shrink the window for companies to voluntarily self-disclose conduct or settle investigations quicker, which would involve making the settlement more attractive to companies so that they don’t drag out negotiations. The Justice Department could also narrow the scope of its investigations, Wrage said.

Braceras said the Justice Department could scale back requirements to produce “every document” as part of an effort to “avoid mission creep.”

“They start investigating one questionable payment in Latin America, and the next thing you know they’re investigating payments out in the Far East,” he said.

Cooperation From Companies

Attorney General Jeff Sessions said in a speech April 24 the DOJ will “strongly enforce the FCPA and other anti-corruption laws.”

McFadden, speaking at another conference April 20, rejected speculation that the Trump administration might take a lax approach to white collar crime. Enforcement of the FCPA is “as alive as ever” and the division is “engaged in combating crime in all its forms and no matter what color collar its perpetrators wear,” he said.

McFadden said the DOJ will continue to emphasize companies cooperating with investigations. The Justice Department has long encouraged companies to work with government officials to resolve illegal conduct.

“The Fraud Section and FCPA Unit’s aims are not to prosecute every company we can or break our own records for the largest fines or longest prison sentences,” McFadden said. Instead, the DOJ’s goal is for companies and individuals to voluntarily comply with the law, he said.

“The pragmatic, business-friendly argument is often more powerful than the fear of prosecution,” Wrage said. “If you can win over the business community with the message that transparency will reduce uncertainty and delays and result in a fairer process, the business team’s goals will be aligned with the company’s.”

“While a bribe might win a single transaction, opaque markets are ultimately far more expensive, and far riskier, to operate in,” she said.

To contact the reporter on this story: Liz Crampton in Washington at lcrampton@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

For More Information

Michael Diamant is a co-author of Bloomberg BNA Securities Practice Portfolio Series No. 285, The U.S. Foreign Corrupt Practices Act: Enforcement and Compliance.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.