After years of explosive growth in the number of Foreign Corrupt Practices Act enforcement actions, the pace looks to have fallen off in the first half of 2011. But don't expect the slowdown to last.
The Department of Justice on Wednesday announced a non-prosecution agreement with Florida-based Armor Holdings Inc. in which the company admitted to funneling bribes to a United Nations official to secure contracts to supply body armor to U.N. peacekeepers. As part of the agreement, Armor will pay more than $10 million in fines to the DOJ and $5.7 million in disgorgement and penalties to the SEC. A former Armor Holdings employee, Richard Bistrong, pleaded guilty in 2009 to related charges.
The bribery scheme predates Armor Holding's 2007 sale to London-based BAE Systems Plc. BAE Systems faced its own bribery scandal, paying almost $450 million in fines and penalties to British and U.S. regulators in 2010 to resolve foreign bribery allegations spanning the Atlantic.
Counsel for Armor Holdings, Wilmer Cutler Pickering Hale and Dorr partner Roger Witten, declined to comment. A spokesperson for BAE Systems did not return a call seeking comment.
Also on Wednesday, the DOJ indicted a different Florida company, Cinergy Telecommunications, and three of its employees, in an ongoing bribery case against Miami-based telecom companies charged with making $1 million in illegal payments to Haitian government officials. Two defendants in a related case are scheduled to be tried this week in Miami federal court.
The announcements suggest this year's lull in new enforcement actions is coming to an end. As of June 30, the DOJ brought just 8 actions and the SEC brought just 9, compared to 48 and 26, respectively, in all of 2010, according to Gibson Dunn & Crutcher's newly released midyear FCPA update. (Read the report here.)
The report attributes the decline to a lack of DOJ resources in recent months, as prosecutors focused on a rare blitz of FCPA jury trials (with mixed success, as we reported here and the Blog of Legal Times reported here).
"With teams of DOJ prosecutors tied up for more than 50 courtroom days in the bi-coastal FCPA trials of eight defendants during the first half of 2011, it is little wonder that enforcement actions have been initiated during the past six months at a slower pace than the regulators had set in recent years," the Gibson Dunn lawyers wrote. "Few predict, however, that the surge of FCPA enforcement activity is now subsiding, and we are not among them."
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.
