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ANTI-CORRUPTION ENFORCEMENT
UNITED STATES Per TI ... In the period 2018–2021, the United States opened 48 investigations, commenced 163 cases and concluded 145 cases with sanctions. Original article: Peter Burgess COMMENTARY Peter Burgess | ||
UNITED STATES
Active enforcement
9.8% of global exports
Investigations and cases ... In the period 2018–2021, the United States opened 48 investigations, commenced 163 cases and concluded 145 cases with sanctions.592
Weaknesses in legal framework and enforcement system
Some of the main weaknesses include the lack of a
central national register of companies and trusts;
insufficient whistleblower protection; and the
exception for facilitation payments.
The US does not have a centralised national register
of company information, let alone a centralised
database of corporate beneficial ownership
information. It also lacks a central register of
beneficial ownership of trusts.593 For beneficial
ownership data, US authorities must rely on a
patchwork of sources: state company registries,
financial institutions, the SEC, the Internal Revenue
Service and the SAM database. Access to some of
these sources requires a subpoena, and there is no
guarantee that the data reflect the true beneficial
owner(s) of a particular company.
Legal protections for whistleblowers have loopholes
and the agencies responsible for enforcing them
often lack the staffing, resources or even desire to
do so. Moreover, there have been widespread
allegations of retaliation and reprisal against
whistleblowers and only a small fraction of
whistleblowers who file retaliation claims ultimately
prevail through the legal process.594 Further, the
processing of rewards to individuals who blow the
whistle on foreign bribery and other corporate
wrongdoing is slow, even though the law provides
that they may be rewarded with a percentage of any
funds recovered by the government.595
The FCPA contains an exception for facilitation
(“grease”) payments to foreign officials. This
exception is defined and interpreted narrowly, and
is not believed to be a hindrance to US enforcement
efforts.596 On the other hand, the exception gives
official approval to one form of corruption and,
according to some commentators, is invariably
misused in practice.597
Recent developments
The year 2020 set records for FCPA enforcement
penalties, although the number of case resolutions
was down in both 2020 and 2021 and the penalties
declined significantly in 2021, especially against
corporations. The US Department of Justice (DoJ)
announced eight corporate resolutions in 2020, four
against foreign companies, and assessed US$2.1
billion in penalties, while the SEC resolved eight
enforcement actions amounting to US$683 million
in penalties. In 2021, there were two FCPA corporate
resolutions against foreign companies (one British
and one German) assessing US$87.2 million in
penalties, while the SEC resolved four enforcement
actions against companies, with US$171.7 million in
penalties.
Commentators have noted that prosecutors from
the DoJ’s FCPA Unit have increasingly charged nonFCPA crimes such as money laundering, mail and
wire fraud, Travel Act violations, tax violations, and
even false statements, in addition to or instead of
FCPA charges.598 The most common of these FCPArelated charges are under money-laundering
statutes, which are often used to charge foreign
public officials together with the person making a
corrupt payment under the FCPA.
In June 2021, President Biden issued a National
Security Study Memorandum identifying efforts to
counter corruption as a “core United States national
security interest.”599 The memorandum outlined
plans to curb foreign corruption by increasing anticorruption programming and resources in the
federal government.600 In 2021, the Deputy Attorney
General Lisa O. Monaco announced a DoJ
modification of certain corporate criminal
enforcement policies.601 She also highlighted the
DoJ’s increasing scrutiny of companies that have
received pre-trial diversion, such as deferred or nonprosecution agreements.602 Finally, the Biden
administration issued the US Strategy on Countering
Corruption on 6 December 2021.603 In terms of
resources, Monaco also announced that the DoJ is
“surg[ing] resources” for corporate enforcement.604
The National Defence Authorisation Act (NDAA) that
passed in January 2021 includes provisions that
expand the SEC’s statutory authority to seek
disgorgement in cases filed in federal court, in
response to recent Supreme Court decisions in
Kokesh v SEC605 and Liu v SEC,
606 both of which
narrowed the scope of the SEC’s disgorgement
power. The NDAA also extends the statute of
limitations from five to ten years for SEC
enforcement actions based on scienter-based
claims.607
The NDAA also includes the Anti-Money Laundering
Act of 2020, which enacted the most consequential
set of anti-money laundering reforms since the
passage of the USA Patriot Act in 2001. The
requirements, which include beneficial ownership
reporting requirements to limit the practice of using
shell companies to launder ill-gotten gains, apply to
certain US entities and foreign entities registered to
do business in the United States, and the
Department of Treasury’s Financial Crimes
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Enforcement Network (FinCEN) is tasked with
maintaining a beneficial ownership registry of such
reported information, which will be available for use
by law enforcement agencies. The NDAA also
expands the DoJ’s authority to subpoena foreign
banks with US-based correspondent banking
accounts.608
In 2021, FCPA-specific whistleblower tips to the SEC
were up by 24%.609
Transparency of enforcement
information
The DoJ publishes partial FCPA criminal
enforcement statistics in its annual publication “The
Fraud Section Year in Review”.610 The statistics do
not include data on investigations,611 nor do they
identify the number of enforcement actions
resulting in DPAs, non-prosecution agreements or
acquittals. The SEC publishes a list of enforcement
actions by calendar year.612 The US government
does not publish statistics on mutual legal
assistance (MLA) requests received and made.613
US trial and appellate court pleadings, decisions and
transcripts can be obtained for a fee at the Public
Access to Court Electronic Records (PACER) online
repository.614 The DoJ and the SEC maintain
centralised FCPA information web portals that list
cases where charges have been filed and public
cases that have been resolved.615 They also provide
enforcement-related news,616 explain the law and
link to the text of the statute.617 Both agencies
publicly announce the filing of new enforcement
cases and resolutions of closed cases, posting
summaries and legal documents on the internet.
Victims’ compensation
The United States does not commonly seek
restitution for the victims of foreign bribery in
enforcement actions under the Foreign Corrupt
Practices Act (FCPA). Of an estimated 500 FCPA
cases, only a handful of settlements or judgements
involving foreign bribery have resulted in restitution,
with small awards made to the affected state.618
The legal framework for victims’ compensation at
federal level consists of the 1982 Victims and
Witness Protection Act, the 1996 Mandatory Victim
Restitution Act and the 2004 Crime Victims Act.619 As
pointed out in a 2016 article, these three pieces of
legislation do not cover an FCPA violation, but they
do cover conspiracy and most FCPA prosecutions
include a conspiracy charge.620 Under the federal
code of criminal procedure the term “victim” means
a person directly and proximately harmed as a
result of the commission of an offence for which
restitution may be ordered and “[t]he court may
also order restitution in any criminal case to the
extent agreed to by the parties in a plea
agreement.”621
If restitution is ordered, it is usually in cases
involving individual, not corporate, defendants,
when there are other criminal violations, such as
embezzlement and fraud.622 However, there have
been at least three FCPA cases in which a corporate
defendant was ordered to provide compensation, as
well as two cases involving individuals.623 This issue
received renewed attention in September 2019 in
the Och-Ziff case, in which the company entered
into a deferred prosecution agreement with the DoJ
in connection with a bribery scheme involving
officials in the Democratic Republic of Congo and
Libya.624 In late 2020, Och-Ziff was ordered to pay
more than US$137 million in restitution to
investors.625
In January 2021, the Internal Revenue Service issued
a finalised rule setting out a multi-factored inquiry
to determine whether an amount paid in
disgorgement or forfeiture is tax deductible as
restitution or remediation.626
Recommendations
+ Enhance transparency and accountability by
publicly reporting in a centralised location
statistics detailing the number of investigations
commenced, ongoing and concluded without
enforcement action.
+ The DoJ and the SEC should also analyse the
deterrent effect of non-prosecution and deferred
prosecution agreements and the number of
referrals provided to and received from other
countries.
+ Introduce a central public register of beneficial
ownership.
+ Establish and implement guidelines for
restitution and compensation to victims in
foreign bribery cases, including for indirect or
diffuse harm.
+ Strengthen whistleblower protections and
establish a track record for compensating
whistleblowers.
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