LITIGATION/CONTROVERSY
February 2, 2016
Foreign Corrupt Practices Act Alert
Global Anti-Bribery Year-in-Review: 2015 Developments and Predictions
for 2016
I. Introduction: Enforcement Trends and Priorities
Among other significant developments, 2015 saw the U.S. Department of Justice (the “DOJ” or the
“Department”) document a policy priority of holding individuals accountable for corporate wrongdoing.
This policy was laid out in the “Yates Memorandum”—announced by Deputy Assistant Attorney General
Sally Quillian Yates—and related changes the DOJ made to the U.S. Attorney’s Manual. The most
significant aspect of the Yates Memorandum is the requirement that corporations turn over “all relevant
facts relating to the individuals responsible for the misconduct” in order to be eligible for any cooperation
credit. This requirement creates questions about how the DOJ will deal with aspects of attorney-client
privilege law and foreign blocking statutes that intersect with the “all relevant facts” requirement.
The commitment to pursuing more cases against individuals appears to be strong, and the DOJ does
appear to be passing on some corporate cases where it once might have insisted on a resolution. Going
by the statistics, the Yates Memorandum’s policy was reflected in the number of cases brought during the
year, although the policy was not announced until September. Last year the DOJ resolved with or
charged eight individuals in FCPA-related cases,1 as compared to only two individuals in 2014.2
Meanwhile, its tempo with respect to corporations decreased. It resolved such cases against only two
corporations (or groups of corporations),3 down from seven in 2014.4 The penalty amounts were lower,
with no corporate penalty cracking the “top ten” of FCPA resolutions in dollar amount, and none coming
close to the record $772 million that Alstom paid at the very end of 2014. 5 Another possible consequence
of the new policy emphasis is that both of last year’s DOJ corporate resolutions were “package”
resolutions—the DOJ announced guilty pleas with individuals on the same day the DOJ announced an
agreement with the company related to the same conduct.
0
5
10
15
20
25
30
35
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
DOJ and SEC Enforcement Actions 2005-2015
DOJ Cases
Against
Individuals
DOJ Cases
Against
Corporations
SEC Cases
Against
Individuals
SEC Cases
Against
Corporations
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However, it can be dangerous to extrapolate too much about the government’s enforcement agenda
based on a single year. While the DOJ last year brought more actions against individuals than in 2014, its
2015 total of eight was less than its 2013 total of sixteen.6
This year could easily see the DOJ announce significantly more than two FCPA actions with respect to
corporations; there are many corporate cases publicly reported to be in the pipeline, and the Department
has dedicated significantly increased resources to anti-corruption enforcement. It announced in 2015 that
it is hiring ten additional FCPA prosecutors and is also adding at least a dozen FBI agents solely focused
on FCPA cases. In early 2016, a senior DOJ official suggested that the num ber of cases may look very
different after just a few months. 7
Even if the DOJ’s emphasis on individuals might mean that the mix of cases will continue to skew away
from those that result in a resolution with the company, compliance and investigations will continue to be
important priorities for global corporations. Even a case that is only likely to result in a resolution with, or
charge against, individuals creates work and headaches for corporate counsel, as well costs of
cooperating with the investigation and reputational damage to the company if its employees are charged
with wrongdoing. Moreover, whether or not the company is charged is a decision that likely will continue
to be made by the DOJ at the end of an investigation, after considerable time and resources have been
expended.
The U.S. Securities and Exchange Commission’s (the “SEC” or the “Commission”) headline numbers, on
the other hand, were more consistent with its previous pattern. It resolved with nine corporations8 and
charged or resolved with two individuals.9 As in prior years, most of the SEC’s FCPA resolutions with
corporations were based on violations of the FCPA’s books-and-records and internal-controls provisions,
with only three of the corporate cases including violations of the anti-bribery provisions. For the first time
since 2001, none of the corporations that executed a resolution with the SEC simultaneously executed
one with the DOJ. Again, this likely reflects the DOJ’s shift in emphasis—the DOJ does appear to be
passing on cases against corporations that in prior years it might well have treated more aggressively.
Notably, China continued to be a country with a concentration of corruption cases—three of the SEC’s
resolutions involved conduct in China. Two of those China resolutions involved payments to health care
providers, a reminder that such payments must be handled carefully in China and other countries where
many hospitals are state-owned entities.
We have noted previously the importance of designing compliance programs that are sensitive to the
risks posed by third-party payments. In 2015, as in recent years, third parties were involved in the majority
of FCPA cases that required entering into a resolution with the government. Both of the DOJ corporate
resolutions and six of the nine SEC corporate resolutions involved allegedly improper payments made
through third parties.
The continued focus on compliance programs crystallized last year with the Fraud Section’s hiring of Hui
Chen as a dedicated compliance expert. Chen will assist section attorneys in evaluating company
presentations about their compliance programs (which usually take place in the context of Filip factors
analyses10), will interface with monitors concerning their oversight of companies that have previously
resolved with the DOJ, and will train DOJ attorneys on the features of an effective compliance program.
In addition, after several years of news reports about financial institution hiring cases, 2015 saw the first
resolution of one. BNY Mellon—without admitting or denying the allegations—resolved the SEC’s
investigation into whether it hired interns in order to obtain business from a Middle East sovereign wealth
fund. The SEC’s Order sheds light on a gray area in FCPA enforcement: when, in the government’s view,
does hiring cross over from relationship building or providing a business courtesy into bestowing a benefit
on an official that is corrupt under the statute. WilmerHale represented BNY Mellon in this matter. The
case, and the government’s other 2015 resolutions, are discussed in more detail in Section III below.
Finally, the DOJ had its wings clipped—ever so slightly—by two rulings that limited its ability to use
conspiracy charges to pursue individuals who did not actually carry out any acts within the United States:
United States v. Hoskins, No. 3:12-CR-00238-JBA, 2015 WL 4774918 (D. Conn. Aug. 13, 2015), and
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United States v. Sidorenko, 102 F. Supp. 3d 1124 (N.D. Cal. 2015). These rulings, which are consistent
with a 2011 ruling in the “Africa Sting” case that addressed a similar issue without a written opinion, give
some comfort to individuals and entities abroad who do not fall into the traditional categories for FCPA
liability. The overall jurisdictional reach of the FCPA remains exceedingly broad, however, and there are
no legal developments on the horizon that would change that.
II. Key Investigation-Related Developments
This year saw several significant changes in the DOJ’s and SEC’s approaches to investigations and
enforcement generally. In this section we will discuss these significant cross-cutting trends, followed in
the next section by a discussion of specific cases.
A. The DOJ Brought Fewer Cases Against Corporations, More Against Individuals
The headline trend in anti-corruption investigations this year was the DOJ’s shift in emphasis toward
cases against individuals and apparently away from resolutions with companies. As noted above, that
shift is reflected in the number of actions the Department took with respect to each type of case, and also
apparently reflected in the DOJ’s use of “package” resolutions.
Beyond the numbers, Justice Department officials made several public comments characterizing the shift.
In January 2015, Assistant Attorney General Leslie R. Caldwell suggested to members of the San
Francisco legal community that deferred prosecution agreements “were a bit overused” and that they had
become the “default” method for resolving corporate investigations. 11 She told the audience to expect
more declinations from the government.12 Caldwell also said the Criminal Division would aim to bring
more and larger cases under the FCPA.13
In April, Caldwell dialed up her message by saying the Criminal Division expects corporations to turn over
evidence of wrongdoing in a timely and complete way if they want cooperation credit.14 She emphasized
that companies must “identify culpable individuals—including senior executives if they were involved—
and provide the facts about their wrongdoing.”15 Caldwell acknowledged that the internal investigations
necessary to provide such evidence could cost companies substantial time and money. However, the
decision to incur those costs is made by the company, she said, noting that while the Department
“expect[s] internal investigations to be thorough, we do not expect companies to aimlessly boil the
ocean.”16 Instead, Caldwell suggested that companies should appropriately tailor investigations to root
out misconduct, identify wrongdoers, and provide all available facts. 17 Broader surveys of a company’s
operations were not a requirement of the Department.18
These expectations were formalized in a September 9, 2015 policy memorandum authored by Deputy
Attorney General Sally Quillian Yates, known as the “Yates Memorandum.” 19 The memorandum outlines
new policies designed to facilitate criminal cases against individuals. The most significant aspect of this
new policy, foreshadowed by Caldwell’s April remarks, requires that corporations provide the Department
with “all relevant facts relating to the individuals responsible for the misconduct” in order to receive any
cooperation credit.20 This “condition of cooperation” appears designed to focus the scope of corporate
investigations and disclosures to the government.21
At a conference sponsored by the Global Investigations Review and held at WilmerHale’s offices later in
September, Caldwell characterized the Yates Memorandum as “new policy guidance” that reinforced
simple existing Department considerations while also taking “a strong step forward” to reflect the
importance of individual accountability.22 She remarked that attorneys who frequently deal with the
Criminal Division in investigations might not see the new guidance as anything radical. However, those
who had previously advised their clients that the Department was more interested in corporate resolutions
and large fines, rather than obtaining evidence concerning individuals and holding them accountable,
“should hear a new message and see a different approach.”23
