The U.S. Department of Justice and Securities and Exchange Commission both use a number of methods to detect foreign bribery and related conduct for purposes of initiating FCPA investigations. Both agencies cast a very broad net and rely on a variety of sources to open new cases, including the following:
Whistleblowers: Reports from whistleblowers remain a strong source of cases for both agencies, in large part due to the SEC’s whistleblower program, which offers a percentage of recovered penalties to individuals who report misconduct. The last few years have seen record numbers of whistleblower reports (18,000 in 2023) and the highest whistleblower reward in history ($279 million) to a single individual. Making recent headlines, the DOJ just announced that it will launch its own whistleblower rewards program in the coming months, which has the potential to make a significant impact on the number of foreign bribery investigations.
Corporate Self-Reporting: DOJ also continues to leverage voluntary self-disclosures from companies in identifying FCPA violations. Over the last 12-18 months, DOJ has updated and refined its guidance on self-reporting focusing on providing additional incentives and expectations in this area.
Law Enforcement Sources/Cooperators: DOJ also identifies potential new cases through law enforcement sources and by “flipping” cooperators who commit other crimes and offering the opportunity to cooperate and earn reduced prison sentences or better plea offers.
Foreign Authorities: One of the biggest developments in recent years has been the uptick in foreign authority referrals that DOJ and other authorities receive. Long gone are the days when different countries investigated foreign bribery in isolation. Today, prosecutors from around the world regularly discuss their parallel investigations - whether it is exchanging evidence, coordinating resolutions, or providing tips and other referrals of misconduct to their overseas partners.
News Reporting: U.S. authorities closely follow domestic and foreign press reports related to allegations of corruption, dawn raids abroad, and other publicly available information and investigative reporting leading to actionable intelligence and evidence of foreign bribery.
Big Data: Finally, DOJ and SEC leadership have been outspoken recently on the use of data to identify criminal misconduct, including potential violations of the FCPA. To that end, DOJ has hired experts in data analytics and the use of “big data” to mine and search all available data sources to identify crimes and open new investigations.
Given the efforts by DOJ and SEC to identify conduct leading to the opening of new FCPA investigations, companies would be wise to continue focusing attention on developing and enhancing their compliance programs, in particular with respect to whistleblower policies and reporting channels.
Partner, Cleary Gottlieb Steen & Hamilton LLP, and Former Chief of the FCPA Unit, U.S. Department of Justice
This post is part of our “Ask an Expert” series where we take questions submitted by readers and ask an expert in the compliance field to provide insight. If you have a question you would like answered, please submit here. |
Self-disclosure. Cooperation. Remediation. Anyone who has planned for an FCPA-related investigation by U.S. agencies knows this mantra well. Current expectations on these issues are addressed in the DOJ’s updated Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP). The CEP establishes incentives for companies that the DOJ determines meet these expectations. However, companies weighing self-disclosure still face questions regarding timing and quantum of benefits, including the following.
Are Aggravated Circumstances Present?
CEP incentives depend on whether “aggravating circumstances” are present. In such cases, disclosure must happen “immediately” upon awareness of alleged misconduct. Unfortunately, uncovering such circumstances often requires significant investigation that occurs too late to inform disclosure decisions.
How Long Does a Company Have?
The CEP encourages self-disclosure “at the earliest possible time, even when a company has not yet completed an internal investigation” and places the burden on companies to “demonstrate timeliness” under specific circumstances. Recent cases and public DOJ commentary provide some parameters.
DOJ personnel have suggested that “immediately” can be within “a matter of weeks.” The recent Lifecore declination states that disclosure occurred within three months from when the company first discovered potential misconduct "and hours after [the] internal investigation confirmed that misconduct had occurred.” The DOJ’s recent M&A Safe Harbor policy defines “timely” disclosure as 180 days after transaction closing.
A key consideration is whether a disclosure allows for preservation of key evidence. With this in mind, DOJ officials have stated that “while early reporting is best, self-reporting late is always better than never,” citing “concrete benefits” for a company that disclosed late but effectively.
Disclosures Transcend Borders
Most corruption cases today also involve authorities outside the U.S. That can lead to challenges not seen in U.S. investigations, such as dawn raids and data privacy restrictions on access to employee data, as well as different legal rules and expectations. Any disclosure decision should account for these issues.
Other Recent Factors
Recent developments such as the DOJ’s proposed whistleblower reward program, the agencies’ increasing use of data analytics to develop potential investigation leads, and self-reporting by competitors driving new industry sweeps will affect the disclosure calculus going forward.
Member, FCPA and International Anti-Corruption Practice Lead, Miller & Chevalier, Washington, DC
On February 27, 2024, Mauricio Gomez Baez, a former Senior Vice President of international waste management company Stericycle, Inc., pleaded guilty to one count of conspiracy to violate the FCPA’s anti-bribery provisions.[3] Gomez Baez, a citizen of Mexico and resident of Miami, Florida, worked for the company’s Latin American headquarters in Miami.[4] From 2011 to 2016, Gomez Baez and others allegedly coordinated payments of roughly $10.5 million in bribes to government officials in Mexico, Brazil, and Argentina to obtain government contracts for medical waste collection, resulting in approximately $21.5 million in profits for the company. In each of these alleged schemes, Gomez Baez and others typically generated spreadsheets with false transactions and used code words to discuss the bribes. Under the terms of the Plea Agreement, Gomez Baez faces a term of imprisonment of up to five years, a supervised release term of up to three years, and a fine of up to $250,000, along with any additional forfeiture and restitution that the court orders. This criminal charge follows Stericycle’s April 2022 resolutions with the U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC) for related conduct.
Partner and Co-Head of the FCPA and Global Anti-Corruption Practice, Morrison Foerster