The FCPA Year in Review is the annual report from Stanford University’s FCPA Clearinghouse that provides an overview of trends and statistics related to the previous year’s FCPA enforcement activity in the United States of the Foreign Corrupt Practices Act (“FCPA”). According to the 2021 FCPA Year in Review, the first year of the Biden administration and the second year of the global pandemic, there was a significant decline in numerous indicators related to the FCPA enforcement actions and investigations in the United States.
In this sense, the report emphasizes, for example, that the number of FCPA enforcement actions declined precipitously, dropping to its lowest level in a decade. The American enforcement agencies, the Securities and Exchange Commission (“SEC”) and the U.S. Department of Justice (“DoJ”), filed 18 FCPA enforcement actions in 2021, which is significantly below the 39 enforcement actions filed in 2020 and the last ten-year annual average of 36 actions. It is important to point out that the highest mark over the past ten years is 58 actions in 2016.
Along with the downturn in enforcement activity, there was also a steep decrease in the total corporate sanctions imposed by U.S. regulators. In 2021, the DoJ and SEC imposed just under $360 million in FCPA-related sanctions, a 94% decrease from 2020 and the third lowest in a decade. From this total, $299 million were levied against The Credit Suisse Group AG which accounted for over 83 percent of the total sanctions imposed in 2021.
Regarding the geographic distribution of the bribery schemes, the 18 FCPA actions filed in 2021 were connected with nine common bribery schemes, two located in Brazil and the remaining located in seven distinct foreign countries. Brazil moved up from second place in 2020 to first place as the country most frequently implicated in FCPA-related bribery schemes resulting in enforcement actions. When analyzing regional rankings for 2021, Latin America accounted for over 50 percent of the bribery schemes (5), followed by Asia (2), the Middle East (1), and Africa (1).
In 2021, at least five companies disclosed that SEC and DoJ had resolved investigations into potential FCPA violations by the companies. The SEC resolved two (Deutsche Bank AG and Amec Foster Wheeler plc) and DoJ resolved one (Amec Foster Wheeler plc) publicly disclosed investigations by enforcement action. Additionally, the SEC closed at least four investigations (BRF S.A., Avianca Holdings S.A., Pactiv Evergreen Inc., and Baker Hughes Company) without pursuing any further action and the DoJ concluded three investigations (BRF S.A., Pactiv Evergreen Inc., and Baker Hughes Company). Moreover, the SEC filed enforcement actions against WPP plc and both the SEC and the DoJ filed enforcement actions against Credit Suisse and, but those companies do not appear to have publicly disclosed the investigation.
Another important aspect in 2021 were the policy changes announced by Deputy Attorney General Lisa Monaco, in October 2021, in order to tougher corporate criminal enforcement. In sum, the main changes were: (i) companies will need to identify all individuals involved in the misconduct (and not only those substantially involved) and provide all non-privileged information about their involvement to prosecutors in order to be eligible for cooperation credit; (ii) there is no presumption against the imposition of a corporate compliance monitor and DoJ prosecutors are free to require it when they determine it is appropriate to do so in order to satisfy corporate resolutions; (iii) in order to determine the more adequate form of resolution, DoJ will consider all prior civil, criminal and regulatory offenses committed by a company, including conduct sanctioned by other agencies, both foreign and domestic. Moreover, Monaco stated that the DoJ would aggressively pursue companies that avail themselves of the leniency only to continue committing crimes, pointing that serious consequences would be imposed on companies for violating the terms of such agreements.
The FCPA Year in Review also reminded the recent adoption by the OECD (Organization for Economic Cooperation and Development) of a new anti-bribery recommendation, released on November 26, 2021, to combat bribery of foreign officials in international business transactions. The purpose of the new recommendation is to strengthen enforcement measures for further combating foreign bribery. The new Recommendation focus in encouraging government agencies to consider companies’ compliance programs in their decisions to grant public advantages, such as public subsidies, licenses, public procurement contracts, and others. Furthermore, the new Recommendation encourages member countries “to direct coordination in concurrent or parallel investigations and prosecutions” and “to pay due attention to the risk of prosecuting the same person in different jurisdictions for the same criminal conduct.”
Finally, representing an important progress in the enforcement of the FCPA in 2021, it is highlighted the Biden administration’s National Security Study Memorandum from June 3, 2021 as a major FCPA development in 2021. The memorandum requested federal departments and agencies to conduct an interagency review process to identify and seek to rectify persistent gaps in the fight against corruption.
Based on the findings of this review, on December 6, 2021 Biden Administration released a United States Strategy on Countering Corruption, which is divided into five pillars: (i) “modernizing, coordinating, and resourcing U.S. Government efforts to fight corruption”; (ii) “curbing illicit finance”; (iii) “holding corrupt actors accountable”; (iv) “preserving and strengthening the multilateral anti-corruption architecture”; (v) “improving diplomatic engagement and leveraging foreign assistance resources to achieve anti-corruption policy goals”. Beyond that, each pillar was divided into strategic objectives to be reached. Annual reports will be issued by federal departments and agencies on progress made in achieving stated goals.
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