Lindsey Fetzer

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In recent months, the U.S. Department of Justice (DOJ) and Securities & Exchange Commission (SEC) have announced several notable penalties for violations of the U.S. Foreign Corrupt Practices Act (FCPA).  The FCPA prohibits bribery of foreign government officials and requires issuers of securities on U.S. exchanges to keep and maintain accurate books and records and robust internal controls.

We have summarized a few of these enforcement actions below to serve as a reminder of the various ways in which companies can fall afoul of the FCPA.

Goldman Sachs Pays Largest-Ever FCPA Penalty

In October 2020, Goldman Sachs Group Inc. (Goldman Sachs) agreed to a $3.3 billion penalty to resolve allegations that the company and its Malaysian subsidiary violated the FCPA by making payments to a Malaysian sovereign wealth fund 1Malaysia Development Berhad (1MDB).  This represents the largest-ever FCPA penalty imposed on a company.

The DOJ and SEC alleged that senior employees of Goldman Sachs used a third-party intermediary to bribe high-ranking government officials in Abu Dhabi and Malaysia.  The improper payments were allegedly made by Goldman Sachs to assist with efforts to obtain business from 1MDB.…

Continue Reading FCPA Update: Enforcement Continues

As developments related to COVID-19 continue to unfold, Bass, Berry & Sims attorneys are monitoring the situation and providing guidance through a series of video chats entitled, “COVID-19 Compliance Conversations.”

In this episode, Thad McBride and Lindsey Fetzer provide a brief overview of compliance considerations related to international donations and charitable contributions. Watch the…

  • Humanitarian exports to Iran are permitted – within limits.
  • Corruption can flourish in the midst of crisis.
  • Export controls limit sharing technical data related to the virus with some countries.
  • Compliance professionals should be proactive and visible during a time of crisis.

Despite the sobering news reports on the global spread of COVID-19, companies are…

  • A payment to a government official can take many forms.
  • The SEC charges bank for books and records violation even absent a bribery charge.
  • Industry-wide enforcement is a continuing tactic for U.S. regulators.

On September 27, 2019, Barclays PLC agreed to pay $6.3 million to the Securities and Exchange Commission (SEC) to settle charges that Barclays violated the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA). The Barclays settlement fits a pattern of recent U.S. government enforcement against companies, particularly in the financial services sector, relating to FCPA violations stemming from hiring or providing internships to relatives and friends of government officials.  Penalties have been significant – for example, Credit Suisse Group AG paid a $47 million penalty in 2018 as part of a Justice Department FCPA investigation into their hiring practices in Asia.  We previously wrote about this issue in an August 2015 article about a settlement related to the hiring practices of Bank of New York Mellon.

The Barclays matter is a useful reminder of three things:

  1. What constitutes the giving of a thing of value to a government official is broadly interpreted and goes beyond simply giving money or a gift or other tangible thing directly to an official.
  2. The SEC can – and will – enforce the FCPA when there are deemed to be violations of the books and records provisions of the law, even if no charge of bribery is brought in the matter.
  3. The U.S. government continues to pursue industry-wide enforcement under the (apparently accurate) belief that what one company does in a specific industry is likely something that many companies in that industry also do.

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Continue Reading (Another) Big Bank Pays FCPA Penalty for Hiring Practice

Civil Investigative Demands (CIDs) are powerful pre-litigation tools the government frequently utilizes to investigate potential allegations of FCA liability. CIDs can be broad and invasive, time-consuming and expensive. What’s a company to do upon receipt of a CID? Is there any recourse? Unfortunately, neither case law nor published guidance offers the recipient much in the way of a formal, timely mechanism to challenge the scope or appropriateness of a CID. Nevertheless, there are certain practical steps one can take to reduce a CID’s scope that, in turn, will reduce disruption and expenses associated with CID compliance.
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Continue Reading The Civil Investigative Demand: An Increasingly Aggressive Investigative Tool and Common-Sense Scope-Reduction Strategies

On September 9, 2015, U.S. Department of Justice (DOJ or the Department), Deputy Attorney General Sally Yates issued a memorandum to all U.S. Attorneys regarding individual accountability for corporate wrongdoing (Yates Memo).

The point of the Yates Memo is clear: while DOJ will continue to pursue companies for corporate wrongdoing, the Department will also simultaneously pursue charges against individual employees. According to the Yates Memo, “[b]ecause a corporation only acts through individuals, investigating the conduct of individuals is the most efficient and effective way to determine the facts and extent of any corporate misconduct.”

And the ultimate target of these efforts? Corporate executives. The DOJ understands that lower-level employees facing individual civil or criminal liability are likely to cooperate against their superiors, thereby facilitating DOJ’s ability to obtain information necessary to prosecute individuals further up the corporate ladder.…

Continue Reading DOJ Targets Corporate Executives

In recent months, Relators’ qui tam complaints have been subject to increased scrutiny by criminal prosecutors. In addition to civil False Claims Act (FCA) liability, individuals doing business with the federal government face potential criminal liability under various criminal fraud-related statutes. Potential charges for fraudulent activities are not limited to a criminal fraud charge, but also include bribery, false statements, conspiracy to defraud, wire fraud, mail fraud, and identity theft, among others. Most of these crimes are felonies and carry substantial penalties, including fines, freezing of assets, and imprisonment. Especially in the healthcare industry and defense procurement space, many criminal investigations originate as civil qui tam filings only later adopting a criminal component. These parallel investigations typically involve the U.S. Department of Justice (DOJ) and may include other enforcement agencies.

Recent DOJ rhetoric encourages an increased use of such parallel investigations. In September 2014, Assistant Attorney General for the Criminal Division of the DOJ, Leslie Caldwell, announced that the Criminal Division would be “stepping up” its review to look for potential criminal liability in qui tam complaints, noting that such complaints “are a vital part of the Criminal Divisions’ future efforts.”[1] Consistent with this message, Caldwell encouraged the Relator’s bar to notify the Criminal Division directly when a complaint is filed instead of coordinating only with the local U.S. Attorney’s Office. As part of the new process, the Criminal Division will receive and review new complaints so that prosecutors may determine the nature and extent of any criminal exposure.…

Continue Reading New DOJ Qui Tam Protocols Likely to Lead to Increased Parallel Criminal Investigations