FCPA Digest Reports Increased Prosecutions of Individuals, Emphasis on Industry Compliance

NEW YORK, March 29 /PRNewswire/ -- Just when it looked as if prosecutions in 2009 under the US Foreign Corrupt Practices Act (FCPA) were focused more on individuals and the levying of smaller fines, the government has come out of the box in 2010 with aggressive, highly visible prosecutions, according to global law firm Shearman & Sterling's semiannual report, "Recent Trends and Patterns in FCPA Enforcement."

The report is part of Shearman & Sterling's renowned FCPA Digest which, for the first time, is now available as an online, searchable database: http://fcpa.shearman.com. The new "Digest 2.0" will allow users to identify enforcement actions by a number of risk-based criteria, including geography, industry sector, and types of intermediaries and then generate a personalized "mini-Digest" for their own use. In addition, users will be able to access the original source documents relating to the enforcement actions, including indictments, deferred prosecution agreements and other relevant pleadings.    

"In some ways 2009 can be viewed as the calm before the FCPA storm," says Philip Urofsky, a Washington-based partner at Shearman & Sterling and head of the firm's FCPA and Global Anti-Corruption Practice. "Unlike the prosecutions of Siemens and Halliburton/KBR in late 2008 and early 2009, which resulted in record-breaking penalties of $1.5 billion and $600 million, respectively, many of the corporate cases brought in 2009 involved smaller companies and smaller fines."

"But," he adds, "in recent weeks and months, BAE ($400 million), Technip ($400 million), Daimler ($200 million), Alcatel-Lucent ($200 million) and, most recently, ENI ($330 million) all announced that they had settled or were close to settling long-running FCPA investigations with the Department of Justice and the Securities and Exchange Commission. And a number of other companies have announced that they will complete their negotiations with the DOJ and SEC in the near future."

"These prosecutions suggest that the Obama Administration intends to continue to put the pressure on foreign companies and foreign governments to honor their commitments under the OECD Convention and, in the interim, to fill the gap left by lax foreign enforcement through aggressive use of U.S. jurisdiction," Urofsky adds. In addition, he noted, senior DOJ and SEC officials have promised a robust program of enforcement, including proactive initiatives focusing on specific business sectors, particularly the pharmaceutical industry.

From a numbers standpoint, FCPA prosecutions of individuals went up dramatically in 2009 – from 16 in 2008 to 42 in 2009. Corporate matters were down – from 18 matters initiated in 2008 to just 13 in 2009.

"Over the years, since the law's inception in 1977, FCPA prosecutions have increased pretty consistently, with 2007 being a watershed year with particularly high activity," explains Danforth Newcomb, the New York-based founder of Shearman & Sterling's FCPA practice. "While we're not at the 2007 activity levels in terms of the overall number of corporate prosecutions, companies shouldn't be lulled into a false sense of security that the government is any less interested in or committed to combating anti-corruption. Indeed, the use of aggressive investigatory tactics such as an undercover 'sting' operation and simultaneous arrests and search warrants in the law enforcement supply case demonstrates that the government has both the will and the resources to use prosecutions to punish wrong-doers and to deter others from following suit."  

Among the key findings in this semi-annual update to the firm's FCPA Digest:

• The DOJ's announced intention of focusing on individuals as well as corporations has clearly been manifested in the indictment of eight executives of Control Components and the undercover sting against 22 individuals in the military and law enforcement supply industry.
• Existing enforcement initiatives concerning specific industries or types of conduct continue to bear fruit, while the U.S. authorities have announced their intention to commence additional such initiatives, particularly with respect to the pharmaceutical industry.
• The risk of investigations and prosecutions in some OECD countries continues to rise, and the U.S. approach to encouraging voluntary disclosures and permitting private internal investigations is beginning to take hold overseas.
• Foreign corporations remain squarely in U.S. enforcement authorities' sights, with the U.S. authorities apparently pushing and prodding their foreign counterparts to be more active or see their companies prosecuted in the United States.
• The SEC is increasingly and vocally focusing on the role of the finance department in FCPA compliance.

Another new development, Urofsky says, is that the US government is now looking at both sides of anti-corruption – both the giver and receiver of a bribe.

"The US government has always possessed the power to charge American companies and individuals with FCPA violations for giving bribes to foreign officials," Urofsky says. "But now the government is seeking ways to hold the foreign officials accountable under US law."

Shearman & Sterling's updated Recent Trends and Patterns in FCPA Enforcement report provides insightful analysis and serves as an executive summary to the firm's FCPA Digest, a compendium of cases and review releases relating to bribes of foreign officials under the FCPA. The Digest, which is updated regularly, is considered the authoritative source on all FCPA-related proceedings.

ABOUT SHEARMAN & STERLING

Shearman & Sterling LLP is a global law firm with approximately 900 lawyers in 19 offices in 12 countries around the world. The firm is a leader in mergers and acquisitions, capital markets, project development and finance, complex business litigation and international arbitration, asset management and tax.  

ABOUT SHEARMAN & STERLING'S FCPA DIGEST

Shearman & Sterling LLP is considered a leader in FCPA matters. The firm's FCPA Digest includes proceedings related to bribes to foreign officials under the Foreign Corrupt Practices Act of 1977, including those related to foreign bribery criminal prosecution, DOJ foreign bribery civil actions, SEC actions, DOJ opinion releases, ongoing FCPA investigations and pre-FCPA prosecutions. It also provides updated information on the enforcement activity under the FCPA anti-bribery provisions. The FCPA Digest has been called "the definitive catalog of FCPA prosecutions, enforcement actions and investigations" by the FCPA Blog. The Trends and Patterns report and the full FCPA Digest are available at www.shearman.com. 

ABOUT SHEARMAN & STERLING'S NEW WEB SITE: http://fcpa.shearman.com

Shearman & Sterling's new FCPA web site, http://fcpa.shearman.com, allows users to  quickly learn enforcement trends by retrieving in-depth, original source materials and summaries based on category type, location, fines imposed, as well as numerous other searchable criteria. Users will be kept current with new summaries published as the latest developments are announced.

SOURCE Shearman & Sterling LLP