Hogan Lovells' Global Bribery and Corruption Review 2013 Expects Increased Enforcement Against Executives and Enforcement Cooperation Between Countries
29 January 2014
WASHINGTON, D.C., 29 January 2014 – The Hogan Lovells Bribery and Corruption Task Force today released its fourth annual review of the latest developments in anti-bribery and corruption regulation and enforcement around the world. A key finding from this year's review is that the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) have made enforcement actions against individuals the clear priority, while simultaneously rewarding organizations and individuals for self-disclosing corrupt activities.
The review notes that a rise in reported declinations – or matters where DOJ declined to require a settlement from the company involved – has followed the DOJ's publication of the FCPA Resource Guide. DOJ's press releases and public filings suggest that, in each of the new declinations, the company in question voluntarily disclosed the matter to the government and took steps to enhance its compliance program.
"These declinations are an encouraging sign that enforcement at agencies are making good on their promise to provide meaningful credit to companies who self-report suspected violations and take prompt remedial actions," said Peter Spivack, Co-Head of Hogan Lovells' Investigations, White Collar and Fraud practice group.
According to this year's review, corporate executives and employees faced an increased amount of scrutiny in 2013. The DOJ and foreign enforcement agencies monitored travel and entertainment expenses involving foreign officials closely. The DOJ's pursuit of criminal charges against executives illustrated how the agency has continued to strive for a model that rewards self-disclosure by corporations while aggressively prosecuting individual violators.
Another key finding of the review is that anti-bribery legislation and enforcement outside of the U.S. and UK became stronger in 2013, and that cross-border enforcement is continuing to move forward. Recent enforcement actions against oil and gas, mining, and fashion companies exemplified this shift in collaborative enforcement trends in regions including the Republic of Guinea, Argentina, Brazil, China, France, and Nigeria.
"Risk management is more than simply risk assessment. This has been apparent by the government's use of bargaining tools and demonstrating its willingness to reward companies and individuals alike for self-reporting," said Jeremy Cole, Co-Head of Hogan Lovells' Investigations, White Collar and Fraud practice group. "There seems to be the emerging sentiment across several nations regarding their corruption enforcement processes."
Among the cases, the review highlights the GlaxoSmithKline PLC (GSK) bribery and corruption investigation, which is the number one development this year in anti-corruption compliance in China. This investigation will be a model for international companies operating in China. The GSK matter illustrates several important risks including being investigated by foreign authorities likely could lead to prosecution by U.S. regulators and vice versa.
Additionally, the review looks at new legislation stemming from Brazil that went into effect 29 January 2014. The newly passed anti-corruption law, popularly called the "Clean Companies Law," provides a framework for the scope and ramifications of corruption enforcement actions ahead of the 2014 World Cup and the 2016 Olympics coming to the country. The law also lays out the process for a company to come forward and confess its participation in the unlawful conduct, cease its involvement, agree to fully cooperate, and help the authorities find other parties involved in the conduct and by which the fines can be reduced up to two-thirds among other incentives.
The review summarizes recent FCPA cases and points out the following developments:
- There is an expected rise in DOJ and SEC enforcement in early 2014 due in part to the entry of the Chinese government into the international fight against corruption and bribery.
- A new bill to appropriate Fiscal Year 2014 funding for certain Department of Defense military construction projects would prevent companies that have bribery convictions within the last three years from receiving funds allocated under that bill.
- The publication of a consultation by the Sentencing Council on the appropriate sentencing guidelines for fraud, bribery, and money laundering offenses in the UK.
- The first prosecution by the Serious Fraud Office (SFO) under the Bribery Act began in 2013.
The Global Bribery and Corruption Review 2013 can be found here.
About the Hogan Lovells Bribery and Corruption Task Force
The Hogan Lovells Bribery and Corruption Task Force offers international clients informed advice in a number of areas of risk, from reactive incident response measures to the development of proactive strategies for managing potential exposure through compliance programs.
The task force brings together a cross-jurisdictional team of partners from Hogan Lovells' international network with more than 25 years of experience in large-scale investigations. The task force has real experience on the ground in the United States and Europe (including the United Kingdom, Germany, Spain, Italy, and France), as well as in Russia, Asia (including China and Hong Kong), and the Middle East. Hogan Lovells is a recognized leader in investigations and fraud work, being ranked in the top tier of leading legal directories.