Despite Slow Start, FCPA Enforcement Likely to Increase Under Biden, Lawyers Say
Although enforcement of the Foreign Corrupt Practices Act this year is off to its slowest start in a decade (see 2105050018), industry should expect FCPA penalties to pick up as more Justice Department officials are appointed and the Biden administration follows through on its commitment to combat corruption, lawyers said. They also said the administration will work more closely with allies and within the interagency, which should continue a trend of rising FCPA enforcement.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The Biden administration has announced just two FCPA penalties this year: one in January against Deutsche Bank (see 2101120021) and another in June against Amec Foster Wheeler Energy Ltd. (see 2106280033). The two cases represented some of the lowest penalty amounts collected under the FCPA over the last five years and pale in comparison to the pace of enforcement under the Trump administration, the lawyers said. But companies shouldn’t be fooled into thinking that the Justice Department is disregarding FCPA work.
“This is not something that we expect to be a sustained trend,” said Laura El-Sabaawi, an FCPA lawyer with Wiley Rein. She said the administration has “strongly expressed its commitment to cracking down on corruption,” a commitment that will likely translate into more actions before long.“We do expect that other major FCPA enforcement actions will be coming down the pipeline soon,” she said.
Daniel Pickard, also a lawyer with Wiley, said the Justice Department is still filling out senior positions. He specifically pointed to the fact that the Senate just this week confirmed Kenneth Polite to be assistant attorney general for the Justice Department’s criminal division, which oversees FCPA work. “While [Polite] didn't really address FCPA as one of his priorities during his Senate hearing,” Pickard said, his “regard for the prosecution of corrupt individuals” is “well established.”
Pickard also pointed to other recently appointed officials in the DOJ’s fraud unit, who he said will bring significant FCPA experience to the division. “It's not just that the administration has said that they're committed -- we're seeing the actual changes over at DOJ with very seasoned prosecutors,” Pickard said. “This administration has clearly stated that FCPA enforcement is a high priority.”
The administration is also prioritizing interagency cooperation and collaboration with foreign allies to bolster FCPA enforcement, El-Sabaawi said. She said more FCPA cases will likely involve resources from multiple agencies and help from other countries.
This cooperation is “likely to increase further under the Biden administration, particularly given the President's known preference for multilateralism and working with foreign counterparts,” El-Sabaawi said. “This kind of cooperation makes it easier to gather evidence of violations and will likely continue to lead to increased FCPA enforcement.”
El-Sabaawi said companies doing businesses in Guatemala, El Salvador and Honduras should particularly be aware of increased enforcement efforts, partly because the Justice Department has announced plans to specifically target violations stemming from Central America. “It's not that common for the government to announce explicitly specific countries that it plans to target for FCPA enforcement,” El-Sabaawi said. “So certainly any companies with operations in these countries should really beef up compliance and auditing efforts.”