DOJ Officials Stress Continuing Focus on FCPA Enforcement

March 10, 2008

On Friday March 7, two top officials from the Department of Justice (“DOJ”) discussed their continuing focus on enforcement of the Foreign Corrupt Practices Act (“FCPA”), describing expanded investigatory resources and an increasing sophistication with FCPA investigations and prosecutions among various federal law enforcement bodies. Assistant Attorney General Alice Fisher, the head of the DOJ’s Criminal Division, and Mark Mendelsohn, Deputy Chief of the DOJ’s Fraud Division who is in charge of all international corruption investigations, made their comments during a panel discussion at a meeting of the American Bar Association. The panel was discussing the current state of the FCPA as the act celebrates its thirtieth anniversary.

Among many key points made by the panel were that both the DOJ and the SEC (which has jurisdiction over “issuers” under the FCPA’s books and records accounting provisions) have been and remain willing to pursue cases where the corrupt payments are low dollar volume (as little as a few thousand dollars over several years), and that even companies with a small ownership interest in a foreign entity (e.g., a hedge fund that owns five percent of a foreign company), or with relatively minor and far-removed foreign operations (e.g., a fifth-tier subsidiary) have obligations to conduct thorough due diligence before investing overseas and must respond to red flags in those international operations or risk scrutiny from federal officials.

Ms. Fisher and Mr. Mendelsohn stressed that while the DOJ remains steadfastly opposed to granting up-front immunity for companies choosing to voluntarily disclose suspected FCPA violations, voluntary disclosure will in all instances result in a tangible benefit to the company. Although they did not provide hard statistics on the number of FCPA investigations where the DOJ and/or SEC had declined to pursue the case, they noted that there were “dozens” of such instances where the declination was directly attributable to the fact that the company voluntarily disclosed the matter, conducted a thorough internal investigation, and engaged federal officials in resolving the issues.

Ms. Fisher and Mr. Mendelsohn strongly reinforced previous statements made by Ms. Fisher expressing the DOJ’s intent to make FCPA enforcement a key focus area for the department. Among the items discussed were current efforts to expand investigatory resources within the DOJ, FBI and other federal law enforcement agencies, including to provide specialized training on international corruption for federal prosecutors and agents. They also noted increasingly vigorous pursuit of FCPA investigations by United States Attorneys’ offices throughout the country. In addition, they described recent interactions with foreign government officials that they intend to continue and expand in order to open new fronts in the fight against international corruption.

Statistics presented by Mr. Mendelsohn demonstrated the dramatic rise in FCPA investigations and prosecutions over the last ten years, with particularly notable growth in the last few years. The number of active investigations and prosecutions in 2008 showed that this growth trend is unlikely to abate in the near future.

Friday’s comments by Ms. Fisher, Mr. Mendelsohn and the rest of the panel caution all companies engaged in or considering international operations or investments to establish vigorous FCPA compliance regimes, and to maintain vigilance in overseeing the international aspects of their business. McGuireWoods’ Government Investigations group has extensive experience in FCPA-related matters, from the creation of compliance regimes and the conduct of FCPA audits, to FCPA-related internal investigations and the defense of federal criminal investigations. For more information about McGuireWoods’ capabilities and resources in this and other areas of compliance, white collar criminal defense and government investigations, please contact our attorneys.