What the FBI Brings to an FCPA Investigation

Many of the agencies that investigate Foreign Corrupt Practices Act violations are the ones you don’t hear about. They stand off to the side from the Justice Department, discreetly watching corporations, waiting to leap on the next FCPA violator that crosses their path.

The most notorious of these agencies is the Federal Bureau of Investigation—the Justice Department’s extended enforcement arm. “The FBI historically has been the Department of Justice’s primary law enforcement partner on FCPA cases,” says James Koukios, former senior deputy chief of the Fraud Section at Justice and now a partner at law firm Morrison Foerster. “If an FCPA investigation needs a law enforcement agency partner, the FBI will be brought into the majority of them.”

Although both agencies technically report into the attorney general, they are not really the same. The FBI plays a far more aggressive role in FCPA investigations than is allowed by Justice Department investigators. For example, the FBI can conduct court-authorized wiretaps, surveillance, and undercover operations, as well as interview informants and sources who may have information about bribery allegations.

“In an undercover capacity, they can play the role of co-conspirators,” says John Chesley, a partner at law firm Gibson Dunn. “Those are all things the Justice Department is not able to do, especially in an undercover capacity.”

By employing these types of covert investigative tactics, the FBI is able to catch fraudulent and corrupt activity as it occurs; the Justice Department investigators typically look for evidence after-the-fact, Chesley says. Justice Department prosecutors are able to examine evidence like e-mails and bank records, “but by then, the activity has already happened,” he says.

Although reports of potential FCPA violations come to the Justice Department in a variety of ways, suspicious activity reports (SARs) often provide fodder for the FBI to launch an FCPA investigation, Koukios says. “So the agents can proactively look through those and look for indications of bribery to start an investigation,” he says.

What’s more, the FBI announced in March that it launched three new corruption squads—based in New York, Los Angeles, and Washington, D.C.—dedicated to investigating foreign bribery incidents, “which makes it a lot easier to cover a broader array of cases,” Chesley says.

“Tools the FBI has used for decades in more conventional, domestic criminal investigations, they’re bringing to bear on the international realm in FCPA investigations.”
Nathan Garrett, Former Prosecutor, FBI

That’s likely to lead to more active FCPA investigations. More resources and dedicated squads will only solidify the FBI’s role as the Justice Department’s primary law enforcement agency in FCPA cases, Koukios says.

Several characteristics distinguish FCPA cases from other types of investigations. First, they tend to be initiated by prosecutors, where many other types of probes tend to be started by an investigative agency and then get referred to a prosecutor’s office, Koukios says. (Under Justice Department policy, all FCPA cases must begin with the Criminal Division’s Fraud Section.)

What also makes FCPA cases “somewhat unique” is the international component, Chesley says. “By definition, you’re dealing with foreign officials,” he says. “That’s frankly what makes the cases more complex than your average white-collar case. A lot of the evidence is going to be located abroad.”

Partnerships with overseas law enforcement counterparts—facilitated by a network of legal attaché offices in more than 60 overseas offices—are an important part of the FBI’s investigative arsenal. “They have a foothold in the ground in a lot of the countries where evidence exists and where some of the investigation will need to take place,” Chesley says.

So when an investigation happens in any jurisdiction where the FBI has a presence, agents can use its relationship with local law enforcement. “That’s a huge advantage for the Department and for the SEC as they seek to enhance and increase these prosecutions of FCPA, leveraging and utilizing sources of the FBI in these vastly broad geographic areas,” says Nathan Garrett, former prosecutor and special agent with the FBI, now an attorney with law firm Graves Garrett.

The $108 million FCPA settlement that Hewlett-Packard reached with the government in 2014 is an example of just how long the FBI’s enforcement arm is. The agents who worked on that case came from offices in Washington, New York, Mexico City, Moscow, Berlin, and Warsaw.

“This case demonstrates the FBI’s ability to successfully coordinate with our foreign law enforcement partners to investigate and bring to justice corporations that choose to do business through bribery and off-the-book dealings,” Assistant Director in Charge Valerie Parlave said in announcing the settlement. Similar large cases, such as the $772 million settlement against Alstom in December 2014, also relied heavily on the FBI.

FBI’S LEGAL ATTACHÉ PROGRAM

Below is a description of the FBI’s global Legal Attaché Program.
Legal Attaché Role
The FBI Legal Attaché works with the law enforcement and security agencies in their host country to coordinate investigations of interest to both countries. The role of Legal Attachés is primarily one of coordination, as they do not conduct foreign intelligence gathering or counterintelligence investigations. The rules for joint activities and information sharing are generally spelled out in formal agreements between the United States and the host nation.
Typical duties of a Legal Attaché include coordinating requests for FBI or host country assistance overseas; conducting investigations in coordination with the host government; sharing investigative leads and information; briefing Embassy counterparts from other agencies, including law enforcement agencies, as appropriate, and Ambassadors; managing country clearances; providing situation reports concerning cultural protocol; assessing political and security climates; and coordinating victim and humanitarian assistance.
Legal Attaché Coordination
The Legal Attaché offices provide critical and timely support in the defense of our homeland through direct coordination with the Department of Justice, Department of State, Interpol, and other law enforcement and security entities. For example, the FBI has full-time detailees to the Interpol offices in Lyon, France, the United Nations, and the Washington, D.C., based National Central Bureau. Together with the Department of State, the Office of International Affairs of the Criminal Division, Department of Justice, is responsible for the negotiations of bilateral and multilateral law enforcement treaties needed to effect the extraditions of fugitives and to facilitate collection of evidence from foreign countries. In addition to the Office of International Affairs, the FBI also supports the ongoing efforts of the Department of Justice to provide long-term justice sector assistance to prosecution and police services in numerous foreign countries. This long-term assistance, which is provided through the Criminal Division’s Office of Overseas Prosecutorial Development, Assistance and Training, and the International Criminal Investigative Training Assistance Program, helps to ensure that our foreign partners not only follow the most modern law enforcement techniques, but also respect the rule of law. As a result, the Legal Attaché offices benefit from their coordination, training, and mutual support. The Legal Attaché offices directly coordinate with United States Embassy representatives by personally representing the FBI as a country team member and serving as the lead federal law enforcement agent for all crimes for which it exercises lead investigative jurisdiction. That includes both counterterrorism and terrorism finance investigations.
In virtually all major FBI investigations, a significant international nexus develops. To balance the FBI’s interest in addressing the international aspects of its investigations with the requirement to respect the host country’s national sovereignty, the FBI must rely on the capability of the host country’s law enforcement community. This is accomplished through the liaison partnerships developed by the Legal Attaché and reinforced through elements of the international law enforcement community such as Interpol, the FBI’s National Academy, and numerous working groups, task forces, and training initiatives. These efforts foster interagency cooperation and are extremely productive in the pursuit of traditional criminal law enforcement matters, and even more so as we seek to identify, disrupt, and prosecute terrorists.
Source: FBI.

Furthermore, having resident agents overseas often times results in tips about bribery allegations that are reported back to headquarters. “Tools the FBI has used for decades in more conventional, domestic criminal investigations, they’re bringing to bear on the international realm in FCPA investigations,” Garrett says. “You’re seeing more of that in the white-collar arena, and I think you’ll see more of it in the FCPA arena. That will likely intensify as they continue to make clear their presence in the international enforcement arena.”

Who Else Is Here

The FBI is not the only law enforcement agency that has played a prominent role in FCPA investigations. The Internal Revenue Service-Criminal Investigation (IRS-CI) unit increasingly plays a role as well. The $223 million FCPA settlement that Alcoa World Alumina reached with the government in 2014 is one prominent example.

The case was the result of “unraveling complex financial transactions” used by Alcoa World Alumina’ agent “to facilitate kickbacks to foreign government officials,” Richard Weber, head of the IRS-CI, said in a statement. “IRS-CI will not be deterred by the use of sophisticated international financial transactions as we continue our ongoing efforts to pursue corporations and executives who use hidden offshore assets and shell companies to circumvent the law.”

The IRS-CI declined requests for an interview to talk about its role in FCPA investigations. On its website, however, it states that criminal investigations are initiated from information obtained from within the IRS when an auditor or collection officer detects possible fraud. Information is also routinely received from the public, as well as from ongoing investigations underway by other law enforcement agencies or by U.S. attorneys offices across the country. 

“Once an investigation is opened, the special agent obtains the facts and evidence needed to establish the elements of criminal activity,” the IRS-CI said. Similar to the FBI, the IRS-CI uses various investigative techniques to obtain evidence, “including interviews of third-party witnesses, conducting surveillance, executing search warrants, subpoenaing bank records, and reviewing financial data.”  

With the FBI’s new international corruption squads, and more agencies playing a prominent role in FCPA investigations than ever before, companies can expect that the Justice Department and their agency partners will continue to get more aggressive in global law enforcement efforts to battle international bribery and corruption cases.