Anti-Corruption Litigation: Fcpa Defense and Bribery Investigation

The FCPA anti-bribery provision prohibits payments to a foreign government official to obtain or retain business. Facilitating payments were once exempt but DOJ and SEC have narrowed that exception substantially. The books and records provision requires accurate internal controls. A concealed bribery payment is a dual violation.

FCPA counsel advises on the scope of the FCPA anti-bribery provision and its application to payments made through third parties and agents, advises on the books and records requirements and the internal controls compliance obligations applicable to SEC-reporting companies, and advises on the jurisdictional reach of FCPA enforcement to non-U.S. companies with sufficient U.S. nexus.

A bribery investigation opens as a corruption lawsuit from DOJ, SEC, or both. Anti-bribery litigation counsel must implement a litigation hold for the corruption investigation. The path depends on cooperation: criminal prosecution, deferred prosecution agreement, non-prosecution agreement, or declination.

Bribery defense lawyer counsel advises on the immediate response obligations triggered by a grand jury subpoena or DOJ/SEC inquiry in a bribery investigation, advises on the litigation hold requirements and document preservation obligations that attach at the moment the investigation begins, and advises on the voluntary disclosure decision and the strategic considerations that affect whether disclosure reduces or increases legal exposure.

Under respondeat superior, corporate criminal liability is established when an employee commits a crime within the scope of employment. Criminal fines are calculated under the alternative fines statute at twice the gross gain or loss from the conduct. A company facing corporate corruption defense must also analyze debarment risk alongside criminal exposure.

Corporate crime counsel advises on the respondeat superior analysis and the scope of corporate criminal liability for the bribery conduct of employees and agents, advises on the DOJ FCPA Corporate Enforcement Policy and the conditions that create a presumption of declination, and advises on the debarment risk analysis that must accompany the corporate corruption defense strategy.

The internal investigation in an anti-corruption case gathers facts, produces a factual record for government cooperation, and identifies individuals responsible for the conduct. The internal investigation must be conducted by independent outside counsel to maintain the integrity of the work product. The DOJ's Yates Memo requires companies seeking cooperation credit to identify all individuals substantially involved in the misconduct before the corporate investigation concludes.

Government and internal investigations counsel conducts the internal investigation into potential FCPA violations using independent outside counsel protocols that satisfy DOJ cooperation requirements, advises on the document production response to government requests while preserving legitimate privilege claims, and advises on the Yates Memo individual identification obligations that must be satisfied before cooperation credit can be claimed.

The SEC's anti-corruption enforcement authority derives from the FCPA books and records provisions, which apply to all issuers. The SEC pursues civil enforcement through disgorgement orders and civil penalties. Debarment from federal contracting is a separate administrative consequence handled by the relevant contracting agencies, not the SEC.

SEC enforcement counsel advises on the SEC anti-corruption enforcement process, challenges disgorgement calculations and civil penalty assessments in SEC anti-corruption enforcement actions, and advises on the parallel civil and criminal enforcement tracks that characterize major FCPA enforcement cases.

The SEC Whistleblower Program was created under the Dodd-Frank Act and operates under Section 21F of the Securities Exchange Act. A whistleblower whose tip produces an SEC anti-corruption action over $1 million receives 10 to 30 percent of the recovery. Retaliation against a whistleblower who reports anti-corruption concerns to the SEC is prohibited, and an employee who suffers retaliation has a private right of action for reinstatement, back pay, and attorney fees.

Whistleblower counsel advises companies on managing the risk of anti-corruption whistleblower complaints, advises on the retaliation prohibition under Section 21F of the Securities Exchange Act, and advises on the interaction between the internal investigation and the company's obligations when a whistleblower complaint is known or suspected.

Anti-corruption litigation in domestic cases is governed primarily by 18 U.S.C. Section 201, which prohibits offering anything of value to a federal official to influence an official act. An employment offer to a federal official in exchange for favorable regulatory treatment has been prosecuted as a Section 201 violation. A corruption lawsuit implicating a scheme executed through wire transfers or email is also a federal wire fraud case, and the DOJ uses the Hobbs Act and Travel Act to prosecute state and local corruption even without federal official involvement.

Public corruption counsel advises on the defense of domestic bribery charges under 18 U.S.C. Section 201, advises on the distinction between the bribery and gratuity provisions and the intent standards that govern each, and advises on the application of the Hobbs Act, Travel Act, and wire fraud statute to state and local corruption prosecutions that do not involve federal officials.

The most powerful mitigation tool in any FCPA enforcement action is a pre-existing, effective, and well-documented anti-corruption compliance program. The DOJ and SEC consider compliance program quality in deciding whether to prosecute and whether to require a corporate monitor. The DOJ FCPA Corporate Enforcement Policy specifies that a company with an effective compliance program that voluntarily discloses and cooperates will receive a significant penalty reduction and generally will not require a monitor.

Compliance program design counsel assesses the anti-corruption compliance program against DOJ and SEC standards, advises on the remediation steps required to satisfy government expectations in an active enforcement proceeding, and advises on the strategy for avoiding corporate monitor imposition through demonstrated good-faith remediation and effective compliance program implementation.