Anti-Corruption Year in Review 2011

March 6, 2012

The Foreign Corrupt Practices Act (FCPA) continued to be a hotbed of activity in 2011.  Although aggregate fines fell precipitously between 2010 ($1.8 billion) and 2011 ($508.6 million), that decline was more a reflection of the anomalies of 2010 than of 2011.  2011 saw significant enforcement activity against both corporations and individuals, as well as the development of substantive legal issues that will likely have lasting effects on FCPA law and practice.

Enforcement agencies continued the trend of targeting individuals in 2011.  While 16 companies were targeted in 2011, 19 different individuals were the targets of new FCPA enforcement actions.

Judicial decisions—either interlocutory rulings or trial results—were the “wild card” of 2011.  Several cases featured challenges to the definition of “foreign official,” specifically whether the FCPA’s scope encompasses officers and employees of state-owned enterprises (SOEs).  While the decisions, which are described in detail below, did not per se exclude SOEs from the definition of “foreign official,” they did indicate that an officer or employee of an SOE should not automatically be defined as a “foreign official” without further analysis.

Finally, the most notable FCPA issue of 2011 was the government’s difficulty obtaining (or in the case of Lindsey Manufacturing, preserving) FCPA convictions.  The government went to trial three times in FCPA related cases in 2011—two trials in the Shot Show cases as well as in Lindsey Manufacturing—without being able to secure a convictionAdditionally, in early 2012, the government was unsuccessful in its trial of the O’Shea caseHowever, the government was able to secure one conviction in 2011 in the Haiti Teleco case.

Along with heightened World Bank enforcement, 2011 also saw the entry into force of several new legislative initiatives, including the Dodd-Frank Whistleblower Regulations, the UK Bribery Act and significant amendments to China’s PRC Criminal Code.  How these additions will affect anti-corruption enforcement is a question that remains to be answered.

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