2011 Saw Aggressive FCPA Enforcement by Feds

The United States Justice Department (DOJ) and the Securities and Exchange Commission (SEC) sent a loud, clear message to U.S. companies in 2011: Get your ethical house in order or face enforcement action under the Foreign Corrupt Practices Act.

Federal prosecutors are ramping up FCPA litigation, trying 48 FCPA cases in 2011. In 2010, 74 cases were tried, but many of those arose from a single enforcement operation. The 2011 numbers represent the second highest level of enforcement activity in the 34 years that the Act has been law. To achieve these numbers, the DOJ is partnering with other federal agencies, including the FBI and Immigration and Customs Enforcement.

One enforcement trend is the targeting of individuals. In a recent money-laundering case, a telecommunications executive was sentenced to 15 years — the longest prison term dealt to an individual in any FCPA case to date. Several other cases were filed against individuals; and some of them were filed years after prosecutors settled with the individuals' employers.

Another enforcement trend involves enterprises that acquire companies whose employees have engaged in unethical conduct. Parent companies that don't clean house may find themselves defending FCPA litigation based on successor liability. In 2008, the DOJ issued guidance for companies to help them understand both pre-acquisition and post-sale requirements.

The SEC and DOJ initiated a near-record 48 FCPA enforcement actions in 2011. Given these agencies' aggressive enforcement stance against both businesses and individuals, it's more important than ever for companies to offer FCPA training to its employees. Companies ignore DOJ's and SEC's bold message regarding FCPA enforcement at their own peril.  

Categories: International Compliance
Tags: fcpa, foreign corrupt practices act, FCPA training