Foreign Corrupt Practices Act

Juggling conversations with multiple enforcement agencies simultaneously in the course of a cross-border anticorruption investigation can be a difficult and daunting task for legal and compliance teams. Getting it right can mean the difference between reaching a fair outcome or causing more legal trouble for the company in the end.

“Companies can assume that the United States, the United Kingdom, and other notable jurisdictions—France, Germany, the Netherlands, for example—will all be working in concert together,” said Barry Vitou, head of the global investigations and enforcement practice at Holman Fenwick Willan.

That increased coordination between agencies ups the ante for companies under investigation, because it “creates a greater risk of wrongdoing being uncovered, and also, perhaps, creates a greater degree of complexity when seeking to resolve the issue,” Vitou noted.

While the relationship between the U.S. Department of Justice and the U.K. Serious Fraud Office (SFO), in particular, certainly has seen ups and downs, “It’s definitely in an up period,” said Daniel Kahn, former head of the DoJ’s Fraud Section and FCPA Unit, and now a partner at Davis Polk.

Camilla de Silva, former co-head of Fraud and Corruption at the SFO, said during her time at the agency, from 2014 to 2020, “there was definitely an ever-increasing development of coordination.” That coordination was twofold: operationally and intellectually, from an information-sharing standpoint, she said.

The Rolls Royce case, in particular, was a real turning point, because it demonstrated how the two agencies “could work together on a matter and get a good result,” Kahn said. “We have continued to see strong coordination and cooperation in recent cases as well.”

As SFO Director Lisa Osofsky highlighted in public remarks, “our record-breaking resolutions with Glencore and Airbus would not have been possible if we had not invested in the relationships that enabled us to have frank discussions and identify effective ways of working side by side with our international partners.”

In Glencore, the SFO levied the biggest corporate sentence in U.K. history, while the €3.6 billion (US$4 billion) global coordinated resolution reached with Airbus in January 2020 resulted in the SFO’s largest penalty under a deferred prosecution agreement—a €991 million (US$1.1 billion) fine.

In another collaborative move, the Fraud Section has, since 2017, detailed a U.S. prosecutor to the SFO and U.K. Financial Conduct Authority (FCA). Deployed from and overseen by the Corporate Enforcement, Compliance, and Policy (CECP) Unit, this individual participates in FCA and SFO investigations, and advises law enforcement personnel on effective interagency coordination, “and otherwise serves as a liaison between the Fraud Section and some of its most critical overseas law enforcement and regulatory partners,” according to the Fraud Section’s 2022 “Year in Review” report.

Investigation Stages

Kahn says there are three stages of an investigation, each of which should be handled differently. Those three stages are the initiation of an investigation, the investigation/cooperation phase, and the resolution phase. Each of those stages is discussed in more detail below.

During the initiation of an investigation, if the company has made a decision to voluntarily self-disclose a matter, and the issue touches upon both the United States and the United Kingdom, “you most likely will want to disclose to both agencies to get the benefit of self-disclosures from both agencies,” Kahn said.

A company should be prepared to field “fact-specific questions when the investigation first kicks off around the underlying facts or issues,” Vitou said.

“In the investigation stage, the most important thing is to keep open lines of communication and to talk through any issues or any differences between each agency’s demands and requests,” Kahn said. If the DoJ is demanding something that is going to impact what the SFO wants or is doing, “make sure you are communicating that to both agencies, and that you are having good enough dialogue to flag things, so that the SFO and DoJ can be talking to each other,” he said.

At some point during the discussion enforcement authorities, questions will be posed about the company’s compliance program, and so “you would expect the general counsel or the head of legal to be involved,” and, often, the chief compliance officer as well, Vitou said. In some companies, that individual may hold this dual role.

Lastly, during the resolution stage, it’s important to ensure everyone is on the same page and progressing at the same pace in order to get to one coordinated resolution. “We’ve seen that in the public cases that have resolved where credit was given, so there is precedent for that,” Kahn said.

Although enforcement agencies are increasingly coordinating with one another, and some degree of investigative overlap will occur, companies should still anticipate having separate conversations with authorities. “The SFO, for example, is not going to rubberstamp everything the DoJ asks. They will want to ask their own questions, as will the French and Dutch authorities, for example,” Vitou said.

Because each enforcement authority’s enforcement approach and legal systems differ, “you’d want to have legal counsel on board that are experienced in the jurisdictions that you are dealing with,” de Silva said.

It’s also critically important to be upfront and transparent with all the agencies. “If Agency A receives slightly different information than Agency B, that’s not going to fly. It’s likely to backfire,” Vitou said. “You want to be transparent with everybody.”

Having “open and frank conversation with both agencies” and making sure to flag all relevant issues, Kahn said, also will work in the company’s favor in matters where privacy issues or employment law issues arise, and the company may not be able to produce certain records because they violate the EU General Data Protection Regulation (GDPR), for example.

Looking ahead, “we’re seeing more jurisdictions looking to resolve issues within their own jurisdiction, as well as pushing forward with their own anticorruption legislation,” de Silva said. In some ways, that’s beneficial to companies facing investigations, because it’s less of a drain on corporate resources when you can respond to multiple agencies at the same time, she said.

At the same time, however, jurisdictions new to the anticorruption regulatory or enforcement landscape present unknowns for companies as far as their expectations. “If you can get to a place where you have a good working relationship with the other side, even if it is adversarial,” de Silva said, “that is better than being in a position where there is lack of trust.”

ACI will be holding its “Anticorruption London” conference June 20-21 in London  | For more information, and to register, please visit: https://www.c5-online.com/ac-london/

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