Ask an Expert: How do FCPA Cases Typically Come to Light?
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
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