Foreign Corrupt Practices Act enforcement actions are off to a slow start this year, likely due to a greater emphasis being placed on FCPA declinations, according to recent analysis from law firm Miller & Chevalier.
Altogether, the Department of Justice and Securities and Exchange Commission resolved eight FCPA enforcement actions in 2015, thus far&mdas;five in the second quarter, and three in the first quarter—the lowest mid-year total in a decade, according to Miller & Chevalier’s analysis. “This slow-down seems to be attributable, in part, to a greater emphasis on declinations by the U.S. enforcement agencies,” the report stated.
The five resolved enforcement actions this quarter include two by the Securities and Exchange Commission and three by the Department of Justice. The three enforcement actions resolved in the first quarter were all brought by the SEC.
As FCPA actions have slowed down, enforcement agencies’ decisions not to pursue enforcement has increased, according to the Miller & Chevalier analysis. To date, nine declinations took place in the first half of 2015—a number that “already approaches the total number of known declinations for 2014 and is on pace to match or exceed every other year on record except 2013,” the report stated.
As Compliance Week previously reported, companies that have received FCPA-related declinations from the SEC and Justice Department this year are:
FCPA actions resolved by the Justice Department this year include a $7.1 million criminal penalty and non-prosecution agreement (NPA) reached with defense and government contracting company IAP Worldwide Services to resolve a government investigation into whether the company conspired to bribe Kuwaiti officials to secure a government contract.
The other two actions were a guilty plea by a former IAP vice president implicated in the underlying bribery, and the recent trial of PetroTiger’s former co-CEO Joseph Sigelman, who pled guilty to a reduced charge of conspiring to violate the FCPA in connection with the company’s bribery scandal in Colombia.
In comparison, the Justice Department resolved five FCPA corporate enforcement actions, and two against individuals through the first six months of 2014.
Newly disclosed FCPA investigations have also declined. According to Miller & Chevalier’s analysis, enforcement authorities have initiated just one FCPA investigation this past quarter, bringing the total to four in all. “While these totals appear low when compared against known investigative activity from recent years, it is too early to tell whether they suggest a decline in investigations initiated on the part of the agencies,” the report stated. Sometimes companies wait months, or even years, to publically disclose an FCPA investigation.
From a glass half-full perspective, the low number of FCPA investigations “might suggest that many companies have implemented stronger compliance mechanisms,” the report stated. More likely, however, is that companies are reluctant to disclose such investigations in the face of an ongoing internal investigation.
The report attributes a number of other reasons to the low number of FCPA cases. Among those reasons: the enforcement agencies may be initiating fewer cases than they have in years past; companies are being more selective in what they choose to voluntarily disclose to enforcement authorities; and/or companies are taking a more narrow view of what types of investigations are material enough to warrant reporting in a securities filing.