FCPA Cooperation With Foreign Governments' Likely to Expand in 2024, Lawyers Say

DOJ likely will continue expanding its cooperation with foreign governments in investigating and prosecuting Foreign Corrupt Practices Act violations, Miller & Chevalier lawyer John Davis said in an interview. After a year that saw DOJ cooperate with South Africa and Colombia for the first time, Davis said, the agency will seek to work with more Latin American and European nations on FCPA enforcement.

One reason other countries are cooperating more with the U.S. is due to DOJ's willingness to give the other authorities a larger share of the fines and penalties received from prosecuting these cases "as an incentive for them to cooperate in these types of cases," Davis said.

That already has produced results -- DOJ worked with South Africa for the first time in going after German software giant SAP SE, which the U.S. earlier this month fined more than $200 million for FCPA violations (see 2401100069).

Last year saw FCPA enforcement actions almost reach pre-COVID-19 pandemic levels, and more are expected in 2024, Davis said. Some of that may result from the DOJ's increasing focus on data analysis to catch violations. While DOJ has been open about its use of data analytics, bolstered by its hiring of former Anheuser-Busch global compliance head Matt Galvin in 2022 for a newly created resident data expert position, the agency has largely been secretive about the types of information it's scouring, Davis said. The agency "doesn't want people to know" what data it is looking at, he said, adding that DOJ has said it's "both publicly available" and private data.

For instance, in a 2022 FCPA case against a Bolivian foreign minister (see 2210210024), DOJ said it developed the case by looking at "data available to the department including financial records." And this is "really all" the agency said, Davis noted.

Because of challenges DOJ may face in collecting data that may not be public, the agency places the burden on the companies accused of violating the FCPA to provide certain information. The agency recently clarified the types of data it expects companies to hand over, including certain data from employees' personal phones on apps like WhatsApp and WeChat that may be relevant to a government investigation (see 2303030056 and 2304050081), Davis said. In the SAP case, DOJ discussed evidence from WhatsApp communications.

To convince companies to submit this information, the agency is offering lower penalties for certain disclosures (see 2301190031). It's unclear how much of a penalty reduction a company may receive, though guidelines are beginning to form, Davis said.

DOJ is beginning to outline "defined percentages off of penalty levels" and say what's required to receive a declination, or a decision not to prosecute, he said. Davis again pointed to the SAP case as an example, noting that SAP didn't get a declination, but it got 40% off the maximum penalty, and it didn't get assigned a monitor, "which is another big deal."

Others are more skeptical about the benefits of disclosure with DOJ, given that companies are still seeing massive fines in FCPA matters. Reid Whitten, partner at Sheppard Mullin in London, noted that after disclosing violations to DOJ on behalf of a client, the agency said it would lower the penalty, but that lowered penalty was still hundreds of thousands of dollars. "I don't think that that's lower," Mullen told Trade Law Daily. "There's a lot of different factors that go into the calculation, and in my view, I don't see enough weight being given to cooperation in investigations with DOJ. It feels more like a 'got you.'"

Another area to watch will be the interplay between the FCPA and the Foreign Extortion Prevention Act (FEPA), a recently enacted bill aimed at foreign individuals who accept bribes. Dan Kahn, the former head of DOJ's FCPA unit, recently said in a podcast (see 2401110051) that there are a host of differences between the FCPA and FEPA, including the types of officials covered by each bill. FEPA covers "unofficial agents" of foreign states, immediate family members and associates of foreign officials, and entities set up by or for the benefit of foreign officials, while the FCPA doesn't, Kahn said.

While U.S. companies won't be the target of FEPA action, there are "important questions" for these firms to answer, including on who exactly the new law covers and what this implies for FCPA enforcement, Kahn said.