By Michael Connor
Look for the U.S. government to further intensify its efforts to combat transnational bribery and corruption, broadening them to include more government agencies in addition to the Justice Department, a top government prosecutor said.
“It’s my view that the U.S. government – and not just the Justice Department, but the U.S. government more broadly – is going to focus on international corruption in a more comprehensive and even more rigorous way than it has in the past,” said Mark Mendelsohn, the Justice Department’s lead criminal prosecutor for violations of the Foreign Corrupt Practices Act (FCPA).
Speaking to an audience of corporate compliance officers at the Dow Jones Global Ethics Summit in New York City, Mendelsohn said the increased activity would reflect President Obama’s “well-known and strongly-held views about the corrosive effect of corruption on the role of development and the rule of law.”
FCPA prosecutions have exploded in the past five years, with the Department of Justice bringing a total of twenty-six enforcement actions in 2009 compared to only two in 2006. Earlier this month, British defense contractor BAE agreed to pay fines totaling almost $450 million to settle charges that it had made illegal payments to officials in various countries to obtain contracts. In late 2008, industrial giant Siemens agreed to pay more than $1.6 billion in fines and penalties to settle charges brought under the FCPA.
Among the trends highlighted by Mendelsohn:
Increased prosecutions of individuals – More cases are being built against individuals as well as companies, including senior and mid-level executives and third-party representatives. Total individual prosecutions increased to 44 in 2009 from only 6 in 2006, according to Mendelsohn.
More Aggressive Investigative Techniques – Investigators are no longer waiting for companies to voluntarily disclose FCPA violations and are instead using far more aggressive law enforcement techniques. Mendelsohn cited recent indictments of 22 people in a two-and-a-half year FCPA “sting” operation which involved 5,287 tape-recorded phone calls, more than 800 hours of video and audio recordings and 231 face-to-face meetings.
Going to Trial – A “logical consequence” of more FCPA prosecutions is more litigation and trials, according to Mendelsohn. “We have probably 25 to 30 defendants pending trial in 2010, and undoubtedly some of them will proceed to trial,” Mendelsohn said.
Charges Beyond the FCPA – Prosecutors are looking to bring charges for violations of laws other than the FCPA, including aiding and abetting, conspiracy, money laundering and wire fraud. “We’re not myopically focused just on the FCPA,” Mendelsohn said. “We’re federal prosecutors, we have a big fat criminal code at our disposal.”
Greater Focus on Forfeiting Proceeds of Corruption – “The goal here is fairly obvious: it’s to take away the incentive for corrupt officials to steal and embezzle and solicit bribes,” Mendelsohn said.
More Multi-Jurisdictional Prosecutions – U.S. authorities are increasingly collaborating with foreign law enforcement partners. “This is not an entirely new phenomenon,” Mendelsohn said, “but the extent to which we are doing it is growing exponentially,” with the case against Siemens a “high water mark” in that process.
Industry-wide Investigations – Mendelsohn said the Justice Department is combining its health-care fraud prosecution resources and FCPA prosecution resources in a collaborative effort to combat “international bribery in the pharmaceutical sector.” Makers of military and law enforcement products were the focus of the recent FCPA “sting” operation, he said.
Outside the U.S., Mendelsohn said, there’s been progress in implementing the Anti-Bribery Convention of the Organization for Economic Cooperation and Development (OECD), and in prosecuting transnational bribery. “I don’t want to overstate this,” Mendelsohn said. “The progress is modest and mixed, and overall, outside the U.S., enforcement remains inadequate.”