Top 10 International Anti-Corruption Developments for November 2020
Top 10 International Anti-Corruption Developments for November 2020
In order to provide an overview for busy in-house counsel and compliance professionals, we summarize below some of the most important international anti-corruption developments from the past month, with links to primary resources. This month we ask: How will the election of Joe Biden as president of the United States impact Foreign Corrupt Practices Act (FCPA) enforcement? How busy was the U.S. Securities and Exchange Commission (SEC) with FCPA-related tips in 2020? How strong are foreign bribery enforcement efforts in the United States and the Netherlands? The answers to these questions and more are here in our November 2020 Top 10.
1. Joe Biden Elected President of the United States. On November 3, 2020, Joseph R. Biden Jr. defeated incumbent Donald J. Trump in the U.S. presidential election. When Trump was elected president in November 2016, we predicted that, despite his historical criticism of the statute, FCPA enforcement likely would not change significantly under his administration. In our view, this was largely because of factors such as historic bipartisan support for FCPA enforcement and the fact that the DOJ prosecutors, SEC enforcement attorneys, and federal law enforcement agents who do the daily work to build FCPA cases are career officials. Our prediction proved largely correct. In fact, as we noted in October 2020, rather than decreasing, FCPA settlement amounts broke successive records in 2019 and 2020. Although we don’t yet know whom President-Elect Biden will choose to fill key leadership positions at the Justice Department, we expect that FCPA enforcement will continue to thrive under the Biden administration because of these same structural factors, among others. (For more on our analysis of FCPA enforcement under the Trump administration and our predictions for FCPA enforcement under the Biden administration, listen to our MoForecast podcast episode on the FCPA.)
2. OECD Working Group on Bribery Lauds the United States’ “Strong” Foreign Bribery Enforcement Record. On November 17, 2020, the OECD Working Group on Bribery announced the results of its Phase 4 evaluation of the United States’ implementation of the OECD Anti-Bribery Convention. All parties to the Convention are subject to a rigorous peer review process, Phase 4 of which focuses on the evaluated country’s enforcement of the Convention and considers the country’s particular challenges and positive achievements. The Working Group “commended” the United States for “a significant upward trend in [anti-bribery] enforcement” and for “the prominent role it plays globally in combating foreign bribery.” The report “praised” the United States for its sustained commitment to enforcing the foreign bribery offense, its key role in promoting the implementation of the Anti-Bribery Convention, and its role in coordinating multijurisdictional foreign bribery investigations and building capacity in its foreign partners. The report attributed the U.S. success to its expertise and resources in investigating and prosecuting foreign bribery, its use of a broad range of offenses in foreign bribery cases, the effective use of non-trial resolution mechanisms (such as deferred and non-prosecution agreements), and the development of published policies to incentivize corporate cooperation. The Working Group had very little in terms of criticism of, or significant recommendations for, the United States. On one issue that has been heavily covered in previous Top 10s, the Working Group appears to agree with DOJ that the Hoskins decision violates the Anti-Bribery Convention. It will be interesting to see whether this comment from the Working Group has any impact on the current appeal in Hoskins (see, e.g., our October 2020 Top 10) or any future cases.
3. OECD Working Group on Bribery Recognizes Increased Foreign Bribery Enforcement by the Netherlands. On November 5, 2020, the OECD Working Group on Bribery announced the results of its Phase 4 evaluation of the Netherlands’ implementation of the OECD Anti-Bribery Convention. The report favorably noted that foreign bribery enforcement ramped up in the Netherlands following the establishment of specialized investigative and prosecutorial teams and that the Netherlands has a strong framework for international cooperation. Nevertheless, the Working Group expressed concern that the Netherlands has concluded only a small number of cases in relation to the size and risk profile of the Dutch economy and failed to adequately protect whistleblowers. Among other things, the Working Group recommended that the Netherlands provide guidance on self-reporting and cooperating with Dutch authorities and amend the Whistleblower Authority Act. In an interesting comparison, an October 2020 report by Transparency International was highly critical of the Netherlands’ foreign bribery enforcement efforts.
4. SEC Developments.
5. Brazilian Aircraft Manufacturer’s FCPA DPA Dismissed. On November 25, 2020, Southern District of Florida Judge James Cohn dismissed all FCPA charges against Embraer SA stemming from the deferred prosecution agreement (DPA) it entered into with DOJ in October 2016. The Court found that Embraer had fully complied with all of its obligations under the DPA, including implementing an enhanced compliance program, consenting to an independent compliance monitor, and paying a monetary penalty of approximately $107 million. As discussed in a June 2020 securities filing, the original term of the DPA was extended 90 days in order to allow the monitor to complete his work. In April 2020, the monitor delivered his final report to DOJ and SEC, finding that Embraer’s compliance program was reasonably designed and implemented to detect and prevent violations of anti-corruption laws.
6. World Bank Debars German Water-Maintenance Company for Alleged Bribery in Myanmar. On November 4, 2020, the World Bank Group announced that Berky GmbH would be debarred for two years and six months. According to the announcement, the company was found to be involved in collusive, fraudulent, and corrupt practices in connection with the Ayeyarwady Integrated River Basin Management Project in Myanmar. Among other things, the Bank found that the company had failed to disclose the commission paid to a local Myanmar agent in its initial bid and in a later amendment to the contract and had provided a trip for three officials from the project management unit to improperly influence their acceptance of the equipment provided by the company. The sanction period was ultimately reduced because the company provided “extraordinary cooperation and [took] voluntary remedial actions.”
7. UK SFO Recovers Funds Allegedly Related to Brazilian Bribery Scheme. On November 12, 2020, the UK Serious Fraud Office (SFO) announced that it had reached a £1.2 million civil settlement with Julio Faerman over his ownership of a £4.25 million apartment in London, which the SFO suspected had been partly purchased with corrupt funds. Faerman previously admitted to acting as an agent and paying bribes to win contracts for Dutch company SBM Offshore NV in Brazil. In January 2019, the SFO secured a property freezing order over Faerman’s apartment to prevent it from being sold while the investigation proceeded, as well as a Disclosure Order to allow the SFO to trace commissions that Faerman used to purchase the property. In its announcement, the SFO acknowledged the cooperation it received from the Office of the Attorney General of Switzerland and the Dutch Fiscal Intelligence and Information Service (FIOD). (For more on this case, see our UK Quarterly Review from September 2020.)
8. Venezuela Update.
9. Mexico Update.
10. China Reports on Its Efforts to Repatriate Corrupt Fugitives. On November 9, 2020, the Communist Party of China’s Central Commission for Discipline Inspection (CCDI) and the National Supervisory Commission reported that, from 2014 to June 2020, China had repatriated 7,831 fugitives, including 60 of its 100 most-wanted corruption fugitives, from more than 120 countries and regions. This represents a huge uptick since March 2017, when the CCDI reported that a total of approximately 2600 fugitives had been returned to China. Nevertheless, some have observed that China’s efforts have been hampered by recent tension between China and the United States, which China believes to be among the most favored destinations for its high-profile fugitives. Indeed, in late October 2020, DOJ announced that it had charged eight individuals in the Central District of California for conspiring to act as illegal Chinese agents in connection with an effort to “harass, stalk, and coerce certain residents of the United States to return to the PRC as part of a global, concerted, and extralegal repatriation effort known as ‘Operation Fox Hunt.’” In November 2020, the Security and Intelligence Service of Canada, another allegedly favored destination for Chinese fugitives, similarly criticized China for using threats and intimidation to coerce targets in Canada to return to China.
 Order Granting Motion to Dismiss Information, United States v. Embraer S.A., No. 16-CR-60294-JIC, ECF No. 5 (S.D. Fla. Nov. 25, 2020).