Manufacturing, News & what's on, US Foreign Corrupt Practices Act & Dodd Frank - Written by on Wednesday, November 17, 2010 5:17 - 0 Comments

24th National Conference on the FCPA, Lanny Breuer speech: A UK perspective

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Perhaps unsurprisingly one of the constant themes throughout this US Foreign & Corrupt Practices Act conference is the importance of the new UK Bribery Act and the impact that this will have on US companies who are also subject to the FCPA.

It is telling that so far practically every speaker and panellist has made reference to the Bribery Act. There have been numerous questions from the floor about it.

Lanny Breuer, Assistant Attorney General for the criminal division of the US Department of Justice, was no exception.  His speech is a must read for any one who is serious about understanding where UK anti-corruption enforcement is headed.  Why?

To recap:

FCPA DNA

We posted on Monday
that while the Bribery Act and surrounding laws are different and will potentially create challenges between the jurisdictions there is plenty of FCPA DNA to be found in the Bribery Act.

Against this backdrop it is useful, for example, to see how courts look at corporate hospitality in the US when considering how a court might view them in the UK.

US/UK special relationship & DNA

But why should the UK look at the US as a weather vane for enforcement activities?  There are a couple of additional reasons.

First as we posted on Monday, the UK and the US co-operate closely.  Yesterday Lanny Breuer confirmed (once again) the strength of the relationship saying:

“In last March’s resolution of the BAE Systems case, for example, in which BAE Systems plc, a U.K. company, pleaded guilty to corruption-related offenses, and agreed to pay a $400 million criminal fine, the Justice Department benefited substantially from assistance by the U.K.’s Serious Fraud Office (SFO). The same is true of the Innospec case, also resolved last March, in which Innospec Inc. pleaded guilty and agreed to pay a $14.1 million criminal fine. Partnerships like the one we have with the Serious Fraud Office are critical to our transnational approach to combating foreign bribery, and we intend increasingly to rely on our foreign partners in future cases.” [our emphasis]

Today to underline the point (and as we reported on Monday) Vivian Robinson QC General Counsel of the SFO is speaking about co-operation on international investigations between enforcement agencies.

Second, in the last two years or so the UK’s Serious Fraud Office has been quietly, and succesfully, remodelling itself in the image of the US enforcement agencies following the Jessica de Grazia review.  This review, which has been reported on before, was commissioned by Lord Goldsmith and undertaken by a very experienced Manhattan District Attorney. The report compared the SFO to two prosecutors’ offices in the US: the US Attorney’s Office for the Southern District of New York (SDNY), a Federal prosecution agency, and the Manhattan District Attorney’s Office (DANY), a local prosecutor’s office.

In summary, today while the SFO is different from the US enforcement agencies, plenty of DNA from them can be found in the SFO itself.

We’ve extracted some of the elements of what Mr. Breuer said which make sobering reading and chime with the various public statements made by the SFO in recent weeks and months in the run up to the Bribery Act:

“I’m proud to say that our FCPA enforcement is stronger than it’s ever been – and getting stronger. To give you just one metric, in the past year, we’ve imposed the most criminal penalties in FCPA-related cases in any single 12-month period – ever. Well over $1 billion.

I am aware that, for some of you, as we have become more aggressive, you have become more worried.

…I want to tell you this afternoon that you are right to be more concerned. As our track record over the last year makes clear, we are in a new era of FCPA enforcement; and we are here to stay…”

“…in January of this year, we unsealed indictments against 22 defendants in the military and law enforcement products industry. As I have said before, these indictments resulted from the Department’s most extensive use ever of undercover law enforcement techniques in an FCPA investigation, and they represent the single largest prosecution of individuals in the history of our FCPA enforcement efforts. I continue to believe that prosecuting individuals – and levying substantial criminal fines against corporations – are the best ways to capture the attention of the business community.[our emphasis]

“To give you some historical perspective: In 2004, we charged two individuals under the FCPA and collected around $11 million in criminal fines. In 2005, we charged five individuals and collected around $16½ million. By contrast, last year and this year combined, we’ve charged over 50 individuals and collected nearly $2 billion. Furthermore, today there are approximately 35 defendants awaiting trial on FCPA charges in the United States – in Houston, Miami, Los Angeles, and Washington, D.C. You can draw your own conclusions from these figures.”

While UK penalties have historically been much smaller following the Innospec decision it is clear that going forward they will be in line with US penalties. Looking at the trend to prosecuting individuals: In the UK this year has already seen Mr. Dougall and Mr. Messent receive prison sentences for their part in bribery.

In answer to critics in recent weeks and the argument sometimes made outlawing bribery is “bad for business” he had this to say:

“I am also aware, however, of much less thoughtful commentary. For example, there are some who have suggested recently that FCPA enforcement is “bad for business.” To me, this is a little like saying that our public corruption prosecutions are “bad for government.” It’s exactly upside down. As Attorney General Holder explained to an audience earlier this year, bribery in international business transactions weakens economic development; it undermines confidence in the marketplace; and it distorts competition.

So let me be perfectly clear about the Justice Department’s views on that topic: FCPA enforcement is not bad for business; it is, instead, vital to ensuring the integrity of our markets. Our FCPA enforcement program serves not only to hold accountable those who corrupt foreign officials, but in doing so it also serves to make the international business climate more transparent and fair for everyone. FCPA enforcement both roots out foreign corruption and deters it from taking hold in the first place.”

We recommend that organisations who will be subject to the UK Bribery Act keep a weather eye on our transatlantic cousins.

The Bribery Act. Coming soon to a cinema near you.

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