FCPA Enforcement Was Down in 2012, Big Moves on the Horizon in 2013
Could there be one more reason to like the U.S. governments latest guidance on antibribery enforcement? In the same year the Department of Justice and Securities and Exchange Commission produced guidance on the Foreign Corrupt Practices Act, 2012 also saw a slow-down in FCPA enforcement actionsaccording to some year-end tallies from law firms.
It was in some ways a quieter year on the corporate front, says Shearman & Sterling partner Philip Urofsky, whose firm published its Recent Trends and Patterns in FCPA Enforcement. By Shearmans tally, the DOJ and SEC combined brought 12 enforcement actions against corporations in 2012slightly down from previous years, which have seen annual totals averaging fourteen cases per year since 2007. (Their count is solely of corporations, not individuals, and the firm aggregates cases against the same corporate family.)
Gibson Dunn employs a different methodology to track enforcement actions, but showed the same trend in its 2012 Year-End FCPA Update: 12 actions by the SEC and 11 actions by the DOJ in 2012, compared to 48 actions by both agencies in 2011, and 74 actions by both agencies in 2010.
Chalk the change up to other priorities on prosecutors to-do listsnamely trials of individuals charged with FCPA violations, and writing the 120-page guidance [PDF] on the statute.
If you think of those two, theyre huge undertakings, says Gibson Dunn partner F. Joseph Warin, who chairs the firms litigation department in the Washington D.C. office. Replete with more than 400 endnotes, the guidance, he notes, is not something one knocks out on the weekend.
Trials, such as those against former executives of the California-based valve company Control Components Inc., also absorb manpower. On the DOJ side, they were very much occupied with trials, says Urofsky, a former DOJ prosecutor. Other things may have been put on the back burner while these were being dealt with.
But there does appear to be a pipeline of corporate matters for regulators to deal with in 2013. Although the pace was slightly down [in 2012], a substantial number of companies have announced new investigations during the past year, and some have publicly announced reserves for enforcement fines, suggesting that they are close to a settlement, the Shearman report states.
The government charged only five individuals with FCPA violations in 2012, compared to double-digit figures in prior years. But Urofsky notes how several recent corporate settlements fairly carefully described executives by title. So in 2013, I think well see executives at a mid-to-senior level who will be charged as an outgrowth of existing corporate cases, he says.
While the DOJ and the SEC made many of their enforcement views known in the recent guidance, the courts will continue to weigh in as individual matters are litigated.
Trials are where developments take place, says Urofsky. In 2011 and 2012, the Justice Department wrestled with pre-trial issues before the courtsthough they scored a victory on the issue of how to define an instrumentality under the FCPA. I think theyre fairly satisfied with a factual test, Urofsky says. None of the courts narrowed the scope down.
Heading into 2013, its the SEC that has the heavier court docket. The SEC is beginning to see issues litigated, says Warin. He points to one of his cases, SEC v. Ruehlen et al., in which U.S. District Judge Keith Ellison of the Southern District of Texas issued a 61-page decision last month. That kind of jurisprudence has been scarce, historically, in the FCPA world.