New FCPA Enforcement Trends: Towards An Intensification Of Prosecutions

Since 2008, the number of SEC and DOJ prosecutions of FCPA violations has increased significantly. More and more cases have been brought; penalties and settlement amounts have also skyrocketed, to the point that nine digit figure are becoming standard.

While most of the attention was usually focused on companies, enforcement authorities do not hesitate to go after individuals. In March 2010, Assistant Attorney General L. Breuer declared that “the prospect of significant prison sentences for individuals should make clear to every corporate executive, every board member, and every sales agent that [the authorities] will seek to hold [them] personally accountable for FCPA violations.”

The tendency shows prospects of even more prosecutions in the near future. The authorities are expanding the range of resources allocated to that end. For instance, the Department of Justice has assigned additional prosecutors to the FCPA enforcement division. Furthermore, the SEC recently created a new FCPA enforcement special unit.

The prosecutors are now resorting to very aggressive law enforcement techniques, some of which are directly borrowed from the traditional “blue collar” crime prosecution teams. Sting operations are not uncommon; probes and sweeps have also been deployed, and it would be surprising if the full array of technological eavesdropping devices were not being used.

The risks for individuals are also evidenced by the prosecutors relying upon a wider interpretation of the statute. A recent case dealing with the privatization of an Azerbaijan oil company is a good illustration. In that case, a pool of investment funds elaborated a scheme to bribe high government executives in Azerbaijan with substantial gifts of cash, stocks and other items, in order to influence the privatization a state-owned oil company. Frederic A. Bourke Jr. was one of the investors. Bourke did not directly pay bribes to anybody. In addition, he lost $8 million on the deal. Despite these facts, a jury convicted him of, among others counts, conspiracy to violate the FCPA, and sentenced him to one year and one day in prison. Instructed on a wilful blindness theory, the jury foreman declared that the jury “thought [Bourke] knew [about the alleged bribery] and definitely could have known. He is an investor. It is his job to know.”

With the new UK Bribery Act due to come into force on July 1 of this year, these new trends clearly forecast a globalization of the anti-bribery prosecution efforts.