US Enforcement Agencies Seek Increased International Collaboration on FCPA and Other Anticorruption Efforts

Shearman & Sterling's FCPA Digest notes impact of UK Bribery Act, other international efforts

Jul 18, 2011, 10:56 ET from Shearman & Sterling LLP

NEW YORK, July 18, 2011 /PRNewswire/ -- While Foreign Corrupt Practices Act (FCPA) prosecutions in the United States continued apace, the first half of 2011 showed some signs that judicial decisions and congressional scrutiny were leading to more – or, in some cases, less – clarity concerning the scope of the statute and the government's enforcement policy, according to global law firm Shearman & Sterling's semiannual report, "Recent Trends and Patterns in FCPA Enforcement," part of the firm's widely distributed FCPA Digest.

Although the US government continues to collect record and headline-making fines in some FCPA prosecutions, the average corporate penalty continues to be relatively moderate, the analysis found. At the same time, overseas developments, particularly the coming into force of the UK Bribery Act, demonstrated the possible globalization of anti-corruption enforcement efforts.

The "Trends and Patterns" report is part of Shearman & Sterling's renowned FCPA Digest, which is also available as an online, searchable database at Users can access the on-line database 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 can access the original source documents relating to the enforcement actions, including indictments, deferred prosecution agreements and other relevant pleadings.

According to Shearman & Sterling's new analysis, to date in 2011, US enforcement authorities have pursued 9 actions, including deferred prosecutions, against corporate groups, making these enforcement authorities on track to match last year's 21 actions.

At the same time, international activity has picked up. The biggest development thus far in 2011 was the long-delayed implementation on July 1 of the UK Bribery Act, which moved the UK closer to the US in having the tools to aggressively pursue anticorruption violators, while Russia and China both passed overseas bribery laws.  However, actions speak louder than words, and it was notable that Korea and Canada both announced their first substantive prosecutions under their OECD laws .

"This is a promising sign," explains Philip Urofsky, a Washington-based partner at Shearman & Sterling and head of the firm's FCPA and Global Anti-Corruption Practice. "The activity so far in 2011 suggests that US enforcement agencies are no longer going it alone in pursuit of anticorruption violations. This more unified global approach could lead to increased international collaboration and, in the end, a more unified approach to prosecution."

"To some extent," he adds, "the US government explicitly targeted companies in countries that are not perceived as being sufficiently rigorous in enforcing their transnational bribery laws and in doing so have stretched for jurisdiction over such companies. This reflects the authorities' frustration with the lack of effective enforcement of the OECD laws by a number of the leading trading countries."

While the total number of FCPA prosecutions remains high, the first six months of 2011 were marked by very limited new prosecutions of individuals. In contrast to 2009's high-water number of individuals charged -- 42 -- and last year's less but still significant number of 17 individuals charged, the authorities have thus far charged in 2011 only one individual, Paul Jennings, a former executive of Innospec, a UK company that settled FCPA charges in 2010.

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

* There are some indications that the FCPA may be growing beyond its original focus on bribery of foreign officials by US companies and, after the US signed the OECD Convention in 1997, by their overseas competitors.  The current enforcement focus on Chinese companies with allegedly fraudulent financial disclosures has expanded to include allegations that these companies may have engaged in improper transactions with Chinese officials. "This is a very interesting development," Urofsky says. "It suggests an expansion of the FCPA's traditional focus to now include domestic corruption, i.e., bribery of Chinese officials by Chinese nationals working for a Chinese company." The sole link here to the US would be that the company has accessed the US capital markets and was thus an issuer under the US securities laws, including the FCPA.

* In the eleven corporate cases thus far in 2011, the US authorities have imposed fines, penalties and disgorgement amounting to $333,343,429. Of this amount, approximately 65% is attributable to the one case alone, and 76% to four cases.   However, if the high and low outliers are excluded, the average fine in FCPA corporate cases in the first half of 2011 has been no more than $13 million.

* The courts have been asked to rule on when – or even if – a government-owned company is an "instrumentality" of a foreign government. Defendants have been unsuccessful in breaching the government's position here, but in at least one of these cases the issue is now teed up directly for an appeal to higher courts.

* On June 22, 2011, the SEC released the final version of the Dodd-Frank whistleblower regulations, to go into effect on August 12, 2011. As contemplated in the Dodd-Frank Act itself, these regulations provide monetary incentives to individuals who report potential violations of federal securities laws, including the FCPA. Because the Dodd-Frank Act amends the securities laws, these incentives only apply when the whistleblower provides information against an issuer. However, given the high priority afforded FCPA enforcement actions by the SEC's Division of Enforcement, these regulations could significantly increase the flow of information to the SEC and result in more civil – and criminal – enforcement actions.

"There are always a number of ways to analyze these findings," says Dan Newcomb, the New York-based founder of Shearman & Sterling's FCPA practice. "For years, there has been a big debate on the statistics and the validity – or lack thereof – of the government's interpretation and application of the statute. What we have seen in the first six months of 2011 are actual court decisions, trials, congressional hearings, possible additional industry sweeps, interesting developments in litigation and new foreign legislation. For those advocating increased attention to anticorruption, these are steps in the right direction."



Shearman & Sterling LLP is a global law firm with approximately 900 lawyers in 20 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.


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


Shearman & Sterling's new FCPA web site,, 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.

Ron Brandsdorfer (Shearman & Sterling), 212-848-5081/
Hanna Stewart Lamb (Edelman), 212-704-8186/  

SOURCE Shearman & Sterling LLP