Overview
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2017 began with a flurry of enforcement actions in the first weeks of January, including some major resolutions that broke new ground in international anti-corruption enforcement. The most notable was a much-needed “win” for the UK Serious Fraud Office (SFO), which entered into a deferred prosecution agreement with Rolls-Royce plc as part of an $800 million coordinated set of resolutions with US, UK, and Brazilian authorities. Rolls-Royce’s global settlement in early January 2017 was the most recent in a series of important parallel and coordinated investigations that in 2016 culminated in enforcement actions against Veon (formerly known as VimpelCom) (US and Dutch authorities) and Odebrecht and Braskem (US, Brazilian, and Swiss authorities), as described in our 2016 FCPA Year in Review.
Since the administration changed over on January 20, 2017, however, no further corporate US Foreign Corrupt Practices Act (FCPA) resolutions were announced until the June 2017 declination issued to Linde Gas North America LLC and Linde North America Inc. While questions have been raised about the Trump administration’s commitment to continued enforcement of the FCPA, the inaction likely at least in part reflects delays in key appointments within the US Department of Justice (DOJ) and Securities and Exchange Commission (SEC). Although President Trump has expressed public skepticism about the law in the past, senior political appointees such as Attorney General Sessions have stated that the DOJ would continue to enforce the FCPA “as appropriate based on the facts and circumstances of each case.” Delays in the nomination and confirmation of key political appointees at the DOJ and continued departures from the Fraud Section have almost certainly contributed to the slowdown. At the SEC, the turnover includes the chair of the agency (Jay Clayton is now confirmed), the head of the Enforcement Division (Stephanie Avakian and Steven Peikin have recently been named co-Directors of Enforcement), and the head of the FCPA Unit.
In the meantime, a number of companies have disclosed new investigations during the first and second quarters of 2017, and Acting Assistant Attorney General Kenneth Blanco announced in March 2017 that the DOJ would be continuing to apply the DOJ Pilot Program after it was originally set to expire in April 2017. Although the DOJ has not offered further guidance regarding the anticipated direction of the Pilot Program, it was used as the basis for the only corporate resolution concluded since President Trump was inaugurated.
We expect that, once key enforcement posts are filled, the announcement of additional FCPA enforcement actions will resume, in relation to both existing and new matters, though the level of enforcement and types of matters that will be brought remain to be seen. We will continue to closely monitor changes in enforcement priorities and policies, and any additional enforcement actions released by the relevant agencies, as the year unfolds.
In the meantime, the end of the Supreme Court’s term saw the issuance of a unanimous decision in the Kokesh case ruling that SEC disgorgement was a penalty, and therefore subject to the five-year statute of limitations. This decision has potentially significant implications for the SEC’s enforcement program more broadly, which has relied heavily on disgorgement in recent years.
Outside the United States, the first half of 2017 has seen an important ruling on legal privilege by the UK courts, presenting significant challenges for cross-border UK/US investigations, as well as continued anti-corruption legal, policy, and enforcement developments in Europe – including in the UK, France, the Netherlands, and Spain – and an ongoing enforcement push by Chinese and Brazilian authorities. As cooperation among national enforcement authorities continues to expand, multinational companies are likely to face a growing number of cross-border investigations of transnational bribery.
