“In some ways 2009 can be viewed as the calm before the FCPA storm,” says Philip Urofsky, a Washington-based partner at Shearman & Sterling and head of the firm's FCPA and Global Anti-Corruption Practice. “Unlike the prosecutions of Siemens and Halliburton/KBR in late 2008 and early 2009, which resulted in record-breaking penalties of $1.5 billion and $600 million, respectively, many of the corporate cases brought in 2009 involved smaller companies and smaller fines.”
“But,” he adds, “in recent weeks and months, BAE ($400 million), Technip ($400 million), Daimler ($200 million), Alcatel-Lucent ($200 million) and, most recently, ENI ($330 million) all announced that they had settled or were close to settling long-running FCPA investigations with the Department of Justice and the Securities and Exchange Commission. And a number of other companies have announced that they will complete their negotiations with the DOJ and SEC in the near future.”
“These prosecutions suggest that the Obama Administration intends to continue to put the pressure on foreign companies and foreign governments to honor their commitments under the OECD Convention and, in the interim, to fill the gap left by lax foreign enforcement through aggressive use of U.S. jurisdiction,” Urofsky adds. In addition, he noted, senior DOJ and SEC officials have promised a robust program of enforcement, including proactive initiatives focusing on specific business sectors, particularly the pharmaceutical industry.
From a numbers standpoint, FCPA prosecutions of individuals went up dramatically in 2009 – from 16 in 2008 to 42 in 2009. Corporate matters were down – from 18 matters initiated in 2008 to just 13 in 2009.
“Over the years, since the law’s inception in 1977, FCPA prosecutions have increased pretty consistently, with 2007 being a watershed year with particularly high activity,” explains Danforth Newcomb, the New York-based founder of Shearman & Sterling’s FCPA practice. “While we're not at the 2007 activity levels in terms of the overall number of corporate prosecutions, companies shouldn’t be lulled into a false sense of security that the government is any less interested in or committed to combating anti-corruption. Indeed, the use of aggressive investigatory tactics such as an undercover ‘sting’ operation and simultaneous arrests and search warrants in the law enforcement supply case demonstrates that the government has both the will and the resources to use prosecutions to punish wrong-doers and to deter others from following suit.”
