Dentons Undertakes A Review Of Some Of The 2017 Anti-Corruption Trends

FOCUS ON THE US

Anti-corruption enforcement in the United States has changed dramatically in the past year and its future remains unclear. What direction will Attorney General Jeff Sessions take the US Department of Justice (DOJ) on anti-corruption enforcement is the overarching question, but there are many more worth considering. Will Sessions' unnamed lieutenants continue the aggressive cooperation credit requirements outlined in the Yates Memorandum and administration of self-disclosures under the DOJ Foreign Corrupt Practice Act (FCPA) Pilot Program? Will there continue to be a growing number of books and records actions brought by the US Securities and Exchange Commission (SEC)? Finally, do the enormous settlements at the end of 2016 reflect a clearing of the enforcement pipeline, or are there a number of matters being worked up toward completion in 2017?

A new team takes over at DOJ and the SEC

First, it's worth noting that Senator Sessions' confirmation hearing testimony on January 10 and 11, 2017, may have answered one of the questions regarding whether he would continue current enforcement policies and strategies. Sessions' testimony was generally supportive of ongoing DOJ's efforts to hold individual wrongdoers accountable; however, his testimony did not provide specific support for ongoing FCPA enforcement strategies, and the DOJ policies targeting individual conduct that was laid out in the Yates Memorandum. It also bears mentioning that Senator Sessions is no stranger to the prosecution of bribery conduct. In his United States Senate Judiciary Committee Questionnaire responses, Senator Sessions highlighted a case that focused on bribery as one of the most significant litigated matters that he personally handled. Although United States v. William Broadus et al. did not involve the Foreign Corrupt Practices Act, it was described by Sessions as "the most significant corruption case involving the criminal justice system" in the district where he served first as Assistant United States Attorney and later as the United States Attorney.

Second, the Attorney General and the Trump administration will have to identify and win confirmation for several key FCPA enforcement leadership positions at the DOJ, including the Deputy Attorney General and the Assistant Attorney General responsible for the Criminal Division. The same will be true at the SEC, where the President has nominated Jay Clayton to succeed Mary Jo White as the SEC Chairman, but still needs to name a Head of Enforcement. Until we see which nominees successfully come through the confirmation process, it will be hard to predict which current policies and approaches will be adopted by the new administration. Clayton's past criticism of the enforcement of anti-bribery actions against US business organizations may result in the SEC reducing some of its recent high profile efforts to the DOJ. Given the relative successes of recent enforcement actions, it makes sense to assume those approaches will still be in place over the next year and to consider the legal risk they generate for global business operations until either organization announces a change in their anti-bribery laws.

The DOJ's Yates Memorandum changed the fundamentals for internal investigations

Given the mood and sentiment behind the 2016 national election, it seems unlikely that the incoming leadership team will drop the DOJ's attempt to generate greater individual accountability for violations of federal statutes through fairly new policies. In 2015, the publication of the Yates Memorandum ushered in a new era for how attorneys should successfully handle corporate internal investigations, including those where allegations of Foreign Corrupt Practices Act violations have been made. At the outset, the Yates Memorandum dramatically changed the way in which investigations are conducted by pressuring corporations and their counsel to prospectively assist with the effort to hold individual wrongdoers accountable. The most notable portion of the memorandum for legal counsel representing business organizations was the following: "[I]n order to qualify for any cooperation credit, corporations must provide to the Department all relevant facts relating to the individuals responsible for the misconduct." Now, in order to receive cooperation credit, companies have to disclose any employee wrongdoing regardless of status or title. This credit remains one of the key factors in the DOJ's charging decision and when relevant, the amount of monetary risk the organization faces to resolve its ongoing investigation.

The government's focus on individual prosecutions, and leveraging of corporate self-disclosures to get there, is not likely to dwindle in 2017. At the December 2016 International Conference on the Foreign Corrupt Practices Act, the DOJ Deputy Attorney General Yates and then-SEC Enforcement Director Andrew Ceresny both gave speeches that emphasized prosecuting individual wrongdoing and persuading companies to self-disclose. Yates noted that the DOJ is "pleased with what [they have] accomplished in focusing on individual actors and that "...we cannot forget that behind every bribe and illegal payment is one or more individuals who knew what they were doing was wrong and nonetheless broke the law.... As I've seen over and over again during my career, the best way to deter individual conduct is the threat of going to jail. That's what truly changes behavior."

As evidence of the SEC's commitment to hold individuals accountable, Ceresny highlighted its recent settlement with Och-Ziff Capital Management. The hedge fund agreed to pay close to US$413 million in fines to the SEC and the DOJ, while CEO Daniel Och agreed to pay US$2.2 million to the SECreportedly the largest SEC settlement amount by an individual in FCPA historyand CFO Joel M. Frank settled civil charges, with a penalty to be assessed at a future date. "This case sends the message loud and clear that CEOs will be held responsible if they do business with persons with close ties to government officials when due...