As Mexico works towards implementing its new National Anti-Corruption System, the largest foreign bribery case in history, arising out of Brazil, serves to highlight historic weaknesses in Mexican anti-corruption efforts and just how necessary the National Anti-Corruption System will be to help combat corruption in Mexico.

The Odebrecht and Braskem Plea Agreement

In December 2016, Brazilian construction conglomerate Odebrecht S.A. (“Odebrecht”) (along with Brazilian petrochemical company, Braskem S.A. (“Braskem”)) pleaded guilty to making hundreds of millions of dollars in corrupt payments to government officials in order to secure business, preferential tax treatment, and other commercial benefits. The companies agreed to pay a combined total penalty of $3.5 billion to resolve charges with authorities in the United States, Brazil, and Switzerland, but admitted that their conduct spanned numerous countries throughout Latin America and the world, including Angola, Argentina, Brazil, Colombia, the Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, and Venezuela. With respect to Mexico, Odebrecht admitted to paying approximately $10.5 million in bribes to Mexican government officials in exchange for public works contracts between 2010 and 2014, and realizing over $39 million in benefits as a result. According to public records, all of Odebrecht’s public works projects in Mexico during that time were commissioned by state-owned oil company Petróleos Mexicanos (“Pemex”).
Continue Reading Investigation into Odebrecht Bribes in Mexico Highlights Need For Prompt Implementation of New National Anti-Corruption System

President Trump’s 2012 criticism of the Foreign Corrupt Practices Act (FCPA) is well-documented. At the time, news outlets reported that business mogul Trump commented on Wal-Mart’s alleged facilitation payments in Mexico to obtain various licenses and permits, opining that FCPA was a “horrible law and it should be changed,” and adding that it put U.S. businesses at a “huge disadvantage.” Trump went on to say, “[w]e are like the policemen for the world, it’s ridiculous.”

FCPA Under Previous Administrations

The FCPA was enacted nearly 40 years ago, but its enforcement only really began under President George W. Bush. The Obama administration stepped up enforcement further, opening more FCPA cases than all prior administrations combined. While the DOJ under Obama averaged 12 corporate FCPA resolutions each year from 2011 to 2015, 2016 was a record year for FCPA enforcement with a record 25 corporate resolutions and $2.43 billion in corporate fines and penalties collected by the DOJ and the SEC.

The FCPA Under President Trump
Continue Reading The First 100 Days: Uncertainty in FCPA Enforcement

The U.S. Department of Justice (“DOJ”)’s Criminal Fraud Section recently issued guidance for corporate compliance programs in a document titled Evaluation of Corporate Compliance Programs (“Fraud Section Guidance”), which reflects a number of notable differences from prior guidance on similar issues. The Fraud Section Guidance contains a list of topics and questions used by the Fraud Section in evaluating corporate compliance programs. As several commentators have noted—and the Fraud Section acknowledges—many of the topics contained in this recent guidance are consistent with, among other things, the Resource Guide to the U.S. Foreign Corrupt Practices Act (“FCPA Guide”) and the current U.S. Sentencing Guidelines, both of which outline desired aspects of a corporate compliance program “best practices.” But it is the differences—areas where the DOJ has expanded on prior commentary—that may provide key insights into DOJ areas of concern.

Specifically, the Fraud Section Guidance provides more detail than prior guidance on three key topics, thereby providing companies with a roadmap for how to strengthen their compliance programs—at least from a DOJ perspective—through increased focus on (1) compliance functions, (2) training programs, and (3) testing of compliance programs.
Continue Reading Has the DOJ Perspective on Corporate Compliance Evolved?: Three Ways the DOJ’s Recent Guidance Differs from the FCPA Resource Guide and U.S. Sentencing Guidelines

Mexico’s new anti-corruption system, which was signed into law by President Enrique Peña Nieto on July 18, 2016, builds on constitutional reforms passed in May 2015 and is designed to increase oversight of public officials to deter corruption at all levels of the Mexican government. The laws establish new responsibilities and stricter penalties applicable to public servants and all private parties (domestic and foreign) doing business in Mexico, and for the first time in Mexican legal history, applies to companies and the officers, directors, and employees acting on their behalf.  Coupled with last week’s unsealing of U.S. Department of Justice (DOJ) charges against six individuals who pleaded guilty in an aviation bribery scheme—including two Mexican public officials—Mexican government officials and corporate actors appear to be situated squarely within the enforcement cross-hairs of both U.S. and Mexican anti-corruption authorities as 2017 begins.
Continue Reading Anti-Corruption Scrutiny in Mexico Expands

Yesterday, the U.S. Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”) announced that JPMorgan Chase & Co. (“JPMorgan”) and its Hong Kong-based subsidiary, JPMorgan Securities (Asia Pacific) Limited (“JPMorgan-APAC”), agreed to pay over $264 million to settle charges that JPMorgan violated the Foreign Corrupt Practices Act (“FCPA”) by providing jobs and internships to relatives and friends of clients, including government officials, in order to obtain business in the Asia-Pacific region.

The enforcement action resulted in a DOJ Non-Prosecution Agreement (“NPA”) with JPMorgan-APAC (JPMorgan also agreed to certain terms and obligations under the NPA), which included a $72 million criminal penalty, as well as a SEC Cease-and-Desist Order against JPMorgan, under which the company agreed to pay disgorgement and prejudgment interest of approximately $130 million. Further, the Federal Reserve Board, which lacks FCPA enforcement authority, also announced that JPMorgan agreed to pay a nearly $62 million civil penalty for “unsafe and unsound” hiring practices.

According to the SEC order and the DOJ NPA, investment bankers at JPMorgan-APAC instituted a client referral hiring program that bypassed the company’s regular hiring process and gave well-paying, career-building jobs to candidates referred by client executives and influential government officials. From 2006 to 2013, JPMorgan-APAC hired approximately 100 interns and full-time employees referred by clients, including executives at state-owned enterprises, owned or controlled by the Chinese government, which the enforcement agencies deem government “instrumentalities” covered by the FCPA. From the outset, the goal of the program was to boost JPMorgan-APAC’s business.
Continue Reading JPMorgan Chase Will Pay $264 Million to Settle FCPA Charges Relating to Improper Hiring Practices

In a move that follows long-standing complaints from the corporate community and the FCPA defense bar concerning the Government’s vague assurances of “cooperation credit” in FCPA resolutions for self-reporting companies, on April 5, 2016, DOJ officials announced a new one-year FCPA “pilot program” that outlines a concrete set of standards defining what constitutes cooperation and what credit companies can expect to earn for that cooperation.  Rumors of the program first emerged in late 2015, amid DOJ officials acknowledging a desire to motivate companies to voluntarily self-disclose FCPA-related misconduct, to fully cooperate with the DOJ’s Fraud Section, and to remediate flaws in their controls and compliance programs.  
Continue Reading DOJ Seeks to Boost Voluntary Disclosures Through FCPA Pilot Program

The Washington Post reported last week that the DOJ is considering an internal policy that could give some companies a “free pass” if they voluntarily disclose violations of the FCPA, including information regarding culpable employees.  The proposed policy—which is under review and has not yet been adopted—strongly recommends that prosecutors decline to bring criminal charges against companies who self-report violations and cooperate in any resulting government investigations.  According to the Post, such declinations could be accompanied by a financial penalty amounting to a disgorgement of company profits.

Continue Reading New DOJ Guidance on Self-Disclosure in FCPA Cases?

In his keynote address at the ACI 32nd International Conference on the Foreign Corrupt Practices Act in Washington, DC on November 17, 2015, SEC Enforcement Director Andrew Ceresney announced to the in-house compliance officials and corporate defense attorneys in attendance that, going forward, any public company that fails to self-report a potential FCPA violation to the SEC will be ineligible for a deferred prosecution agreement (“DPA”) or a non-prosecution (“NPA”).  While the Commission’s Seaboard report in 2001 included self-reporting as one of the four broad factors considered in evaluating a company’s cooperation when determining appropriate charges and remedies (the others being self-policing, remediation, and cooperation), this marks the first time Enforcement policy has been clarified to require self-reporting as a prerequisite to DPA or NPA eligibility.
Continue Reading SEC Enforcement:  Self-Reporting is Prerequisite to Deferred and Non Prosecution Agreements in FCPA