FCPA Enforcement Trends for Boards and Management to Follow in 2024

Amid the continued focus on FCPA enforcement, John Davis explains the priorities and evolving practices of US companies

In 2024, the US Foreign Corrupt Practices Act (FCPA) and related laws will continue to present significant risks that require the attention of senior management and boards. Here are six key trends to watch.

1. Case numbers are down, but enforcement is a priority
Although the number of reported corporate FCPA actions over the past several years has been lower than pre-pandemic levels, the US Department of Justice (DoJ) and the SEC will continue to focus on FCPA enforcement. Recent texts and lawsuits.

The Latest notification SAP has entered into a deferred prosecution agreement (DPA) and a cease and desist order, agreeing to pay more than $220 million to settle the DoJ and SEC proceedings., Shows agencies are active in the area. Like all entities that settle FCPA cases under current enforcement policies, SAP will incur ongoing costs related to cooperating in related investigations and compliance reporting obligations during the three-year period of the DPA. More resolutions are expected in 2024.

Even the DoJ It continues to prioritize Cases against delinquent executives and officials take longer to work their way through the U.S. court system, but often result in prison terms and substantial fines and forfeitures for defendants.

2. Court Decisions May Force the DoJ and SEC to Change Their Enforcement Practices and Interpretations of Key FCPA Provisions
FCPA cases against companies are almost always settled through instruments such as DPAs, and such settlements are usually approved by the courts. However, given the stakes for individuals accused of FCPA and related crimes, individual defendants sometimes choose to go to trial. Such trials are an important source of precedent for court rulings in the FCPA space, and some defendants have been successful in the past against the DoJ or the SEC.

Individual trials occurring in 2024 may set new precedents that affect the DoJ's and SEC's definitive interpretations of key legal elements of the FCPA and related statutes, such as what counts as a 'foreign official' under the Act. A U.S. Supreme Court ruling this year could force the SEC away from its broader use of intra-administrative measures — including FCPA cases — that require more court involvement and more time to conclude.

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3. Enforcers will use increasingly sophisticated data analytics tools to widen investigations and conduct industry sweeps.
The DoJ and SEC have emphasized the development and increasing use of their own data analytics systems to identify and pursue FCPA and related investigations. For example, a Speech In late November 2023, Assistant Attorney General Nicole Argentieri noted that the DoJ had 'improved our ability to use and analyze available data – both public and non-public'. [and that] [t]His approach has already produced successful FCPA investigations and prosecutions.'

Although the DoJ acknowledges that the available tools are Not 'cutting edge' And in need of more resources from Congress, the department's special data analysis team is developing new avenues for potential prosecution outside of traditional methods, such as company disclosures. By 2024, data analytics may fuel an already evident renewed interest by agencies in conducting sector and industry sweeps, as happened recently in FCPA investigations involving commodity trading companies and the healthcare industry, for example.

The DoJ also expects companies to use their own data to assess potential corruption risks and identify weaknesses in their compliance programs and related internal controls. Current of DoJ guidelines 'Evaluation of Corporate Compliance Programs' emphasizes the importance of data analytics, for example, risk assessment, management of third party risks and effectiveness of reporting mechanisms.

In his November speech, Argentieri said in 2024 and beyond, 'if misconduct occurs, our attorneys are going to ask what the company did to analyze or monitor its own data — a potential resolution at the time of the misconduct and as we consider it.'

4. Corruption investigations will continue to involve many fronts in many countries
Following a trend from the past few years, FCPA cases in 2024 will involve cooperation by the DoJ and SEC with enforcement agencies in other countries. The two US agencies will continue to expand their mutual legal assistance network with enforcers in other countries. For example, recently the DoJ declared Its International Anti-Corporate Bribery (ICAB) initiative is designed to 'facilitate cooperation and information sharing' among multinational corporations and 'determine how we can augment and assist foreign authorities in parallel investigations.'

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Cases in 2023 will include formal cooperation with Colombian and South African authorities for the first time, and continued cooperation with traditional partners in jurisdictions such as the UK, Switzerland and Brazil. ICAB will expand this growing list in 2024.

Coordination between different authorities in different countries can be challenging, particularly with less experience in investigative techniques or operating under different legal concepts of procedure and defendants' rights. For example, other countries' different laws on data privacy, national security-based restrictions on sharing information with other governments (such as China), and attorney-client privilege protections can create significant additional legal risks and costs and must be considered. Planning the company's inquiry responses. By 2024, any self-disclosure calculus must cover multiple jurisdictions.

In a related vein, authorities in other countries can continue to prosecute large corporations and reap substantial fines even where US agencies are not involved.

DoJ

5. FCPA enforcers will investigate companies dealing with corruption risks related to M&A activity
In 2024, DOJ will collect data on its recently announced outcome Mergers and Acquisitions Safe Harbor PolicyIt is designed to encourage companies to self-disclose potential misconduct discovered during M&A-related due diligence.

The safe harbor establishes a presumption of impairment for companies that correct the misconduct within six months of closing (regardless of whether the misconduct was discovered or after the acquisition) and within one year of the transaction date. to close Many other considerations may affect the reporting timeline and the final outcome of any self-report. In addition to safe harbor analysis, information on merger and divestment activity may be input used by the DoJ's and SEC's data analysis units.

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Whether or not companies choose to use the M&A safe harbor in specific circumstances, the DoJ's focus is on prioritizing the M&A function for compliance risk management in 2024. Senior DoJ officials'[c]If an acquiring company wants to effectively de-risk a transaction, the deal must have a prominent place at the table.

In fact, incorporating the compliance function beginning in the deal-planning stages allows compliance staff to efficiently identify and address risks as the transaction evolves and moves forward—including risks that may change the contract structure or price. Many companies do not follow this practice, however, because it does not consider the risks and opportunities that may arise when due diligence uncovers potential misconduct.

6. National security considerations will continue to influence anti-corruption enforcement
Starting in 2021, the current administration is making the fight against foreign corruption a priority National security interest. In 2024, this continued focus will have multiple effects on enforcement priorities. The DoJ is specific was invited Companies must assess risks through a national security lens and take concrete steps to address such risks, including 'exiting, if necessary, markets that pose undue risk'.

The DoJ and other agencies, such as the US Treasury's Office of Foreign Assets Control, actively pursue investigations at the intersection of corruption and national security issues. Examples include cases involving links between corruption and terrorism; using targeted economic sanctions and asset forfeitures to combat corruption related to Russian oligarchs and their global interests; Money laundering cases against corrupt Latin American officials are seen as undermining the rule of law; and under sanctions and visa restrictions Global Magnitsky Sanctions Project.

This national security focus will contribute to continued scrutiny of corporate activities in China, a country that has been heavily involved in FCPA-related litigation since 2010 for a variety of reasons, including the prevalence of state-owned enterprises in its economy.

John Davies is a member of the firm, FCPA and international anti-corruption practice lead with Miller & Chevalier

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