With these words Charles Duross, Deputy Chief, Fraud Section, Criminal Division, Department of Justice – the country’s lead criminal prosecutor of FCPA – so began his comments at the recent American Bar Association White Collar Crime annual conference in San Diego, California.
Duross characterized 2010 as “transformative” for the following reasons:
Fraud Section Changes. Duross highlighted two significant changes at the Fraud Section in 2010. First, Mark Mendelsohn, Duross’ predecessor and the man who many believe brought FCPA enforcement back from the dead, left the DOJ in 2010. Second, the Fraud Section brought in numerous prosecutors with significant trial experience. These new attorneys will allow the DOJ to continue its aggressive 2011 trial schedule.
Statistics. Duross also touted the DOJ’s 2010 statistical successes. For example, in 2010, according to Duross, the DOJ brought the most enforcement actions ever and total monetary penalties eclipsed all previous years. Duross further stated that 2010 will not be an anomaly and that “robust enforcement will continue.”
Landmark Cases. Duross discussed the “landmark” cases the DOJ brought in 2010. Specifically, he cited, Daimler, BAE, Innospec, and Snamprogetti among others brought against foreign issuers. Duross also represented the DOJ successfully charged a variety of FCPA-related crimes (e.g., aiding and abetting, conspiracy) in 2010. 2011 will likely see more of the same.
Industry-wide Investigations. Duross commented on prominence of industry-wide investigations in 2010. Such investigations, according to Duross, allow the DOJ to use the knowledge it gains from one company or individual in a specific industry, business model or geography, and apply it to others similarly situated. Such investigations, Duross stated, “are not one offs. They are opportunities to build multiple cases.” Such investigations will continue in 2011, according to Duross.
Extraditions. Duross commented on the “successful” extraditions of several individuals, including Ousama Naaman, Wojciech Chodan, and Flavio Ricotti, in 2010.
Access to Information. Duross commented the Fraud Section improved transparency in FCPA resolutions in 2010 and will continue to do so in 2011. Duross cited making documents available more quickly on the Fraud Section website in 2010, and, possibly, revising the “Lay Persons Guide to the FCPA” and more clearly describing when and where “meaningful credit” will be given to a company in 2011 as efforts to increase access to valuable information.
Monitors. Duross represented in 2010 the Fraud Section continued to increase its “understanding and appreciation” for when and what type of corporate monitor may be needed given the facts and circumstances of a particular case. Specifically, Duross cited the Technip, BAE, Snamprogetti and Panalpina cases, where non-U.S. monitors were selected (Technip and BAE) or no monitors were required (Snamprogetti and Panalpina).
Business Combinations and Successor Liability. Duross commented that in some instances where the DOJ could have prosecuted in 2010, it did not. Specifically, he cited the SEC-only enforcement action against General Electric as such an instance. Notwithstanding the DOJ’s decision not to prosecute GE, enforcement actions arising out of business combinations and based on successor liability occurred in 2010 (e.g., Latin Node) and will “continue to give rise to FCPA cases”.
In concluding his remarks, Duross stated 2011 will be another “transformative year” for the following reasons:
Trials. As noted above, the Fraud Section’s 15 dedicated FCPA prosecutors, coupled with approximately 80 Assistant U.S. Attorneys in the country’s federal districts, will continue to try multiple cases.
International Enforcement. The Royal Canadian Mounted Police now have a dedicated group of agents to investigate Canada’s FCPA equivalent, the Bribery Act will (eventually) enter into force in the U.K., and the OECD will continue to press for prosecutions of bribery in 2011, according to Duross.
The Dodd Frank Act. Duross mentioned, almost in passing, the Dodd Frank Act, and did not address specific provisions of the Act. However, it is reasonable to believe the natural resource reporting requirements and whistleblower incentives will impact FCPA enforcement in the coming year(s).
DOJ Asset Seizure and Money Laundering Section Collaboration. Duross represented AFMLS now has a subsection dedicated to addressing the issues of foreign corruption proceeds and the individuals that reap such illegal benefits. The ongoing Haiti Telecom prosecution exemplifies the intersection of FCPA prosecutions (for those who fall under the FCPA’s jurisdiction) and money laundering prosecutions (for those who do not, such as purported foreign officials).
In subsequent posts we will discuss the comments of additional conference speakers, including those of additional Government officials.
Finally, we would like to mention that neither Robert Khuzami, Director, Division of Enforcement, SEC, or Cheryl Scarboro, Chief, FCPA Unit, Division of Enforcement, SEC, attended the Conference. Reportedly, budget constraints prohibited the SEC’s most senior FCPA authorities from attending. Their presence and thoughtful comments were missed. We hope they will be able to attend in 2012.