Arent Fox FCPA Study Reveals C-Suite Increasingly at Risk

Special Report Examines Every Individual Charged with Civil and Criminal FCPA Violations During Last 13 Years
NEW YORK – The US Department of Justice remained busy in its first year of the Trump Administration, charging 20 individuals with violations under the US Foreign Corrupt Practices Act — the second highest year of individual prosecutions since 1977.

That finding is part of a new report published by Arent Fox LLP, whose Government Enforcement & White Collar and Business Compliance & Integrity Monitorships teams advise some of the world’s largest and most profitable companies on government investigations, compliance, and white collar litigation.

“Our study shows the federal government is continuing to intensify its FCPA focus on individuals — not just through policy memoranda and press releases but through actual investigations and enforcement actions,” said Partner M. Scott Peeler, co-leader of the Government Enforcement & White Collar group. “Our study looks at more than 13 years of data and shows where the risks are highest, for whom, and under what circumstances. The risks for the C-Suite are real, and armed with our study, key corporate stakeholders can mitigate risk for their companies and themselves through meaningful compliance initiatives.”

Arent Fox’s 2018 edition of the C-Suite at Risk, A Study of Individual Liability Under the FCPA examines every individual charged with a civil or criminal violation of the FCPA since 2005 and analyzes data surrounding tactical information such as the charged individual’s position, region where the alleged misconduct took place, amount of alleged improper payment(s), and the impact the individual's knowledge and activity had on the type of action filed.

A few of the critical findings include:

  • More than 50 percent of all individuals charged with an FCPA violation were their corporation’s CEO, president, vice-president, or director.
  • The most civil and/or criminal charges arose from bribes occurring in Latin America, Asia, and Africa.
  • Almost all bribes occurring in China, Mexico, and Venezuela resulted in criminal charges.
  • More than one in 10 individuals were charged criminally, even when they only had a general suspicion that bribes could be occurring without any direct confirmation or involvement themselves.

“As a former prosecutor, this report underscores a critical point for companies and executives: at the first sign of wrongdoing a thorough, independent investigation needs to begin immediately,” said Partner Robert L. Capers, co-leader of Arent Fox’s Government Enforcement & White Collar practice and the former United States Attorney for the Eastern District of New York. “It is imperative for executives to define their culture before it defines them. This can be done most effectively through a targeted, risk-based, and meaningful compliance program.” Last week, Mr. Capers was appointed by New York Police Commissioner James O’Neill to serve on an Independent External Panel of respected law enforcement professionals to review the New York Police Department’s internal disciplinary process, practices, and policies.

“Enforcement agencies have encouraged a risk-based approach to compliance for years,” added Mr. Peeler. “While the risk to individuals is real, and companies should act accordingly.”

The report has several other major findings including that over half of all individuals charged worked in the oil/extraction, telecommunications, energy, healthcare/medical devices, and financial services industries.

The Big Takeaways

  • Despite The Change In Administration, The Focus On Individual Prosecutions Continues. With the formalization of the “FCPA Corporate Enforcement Policy,” it’s fair to presume companies will be forced to disclose individual “wrongdoers” now more than ever.
  • C-Suite Beware. While always a clear target, the C-Suite has been and will continue to be in the DOJ’s and SEC’s crosshairs. Remember, over half of all individuals charged since 2005 were the CEO, president, vice president, or managing director/director of their organization.
  • Location, Location, Location. The past seven years reveal that bribes paid in Latin America (especially Argentina, Venezuela, and Mexico) are leading to more FCPA cases against individuals than other parts of the world. While meaningful compliance efforts should be strengthened globally, companies doing business in Central and South America would be well-served to pay special attention to our closest neighbors.
  • Money Matters. The higher the value of the bribes, the more likely it is an individual will be charged – and charged criminally.
  • See Something, Say Something. Doing nothing – even when you only have a general suspicion of bribery – is risky. Thirteen percent of such individuals were charged criminally.

Download the complete 2018 C-Suite at Risk study here.

Arent Fox is the only law firm to carry out multiple compliance monitorships for the World Bank and is routinely selected for monitorships by the Department of Justice and the New York State Department of Financial Services. In 2016, DFS selected Mr. Peeler to serve as the Independent Consultant for Crédit Agricole, one of the world’s largest financial institutions.

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