As global companies face rising regulatory and enforcement pressures, they’re also contending with significant disruption from geopolitical change. In-house legal teams should continue efforts to prepare for sustained enforcement and uncertainty across sectors and countries.
US Enforcement
Last year, the first Foreign Corrupt Practices Act cases appeared following the Department of Justice’s rollout of revisions to two key policies: its Corporate Enforcement Policy—aimed at incentivizing companies to voluntarily self-disclose misconduct and cooperate with government investigations—and its Evaluation of Corporate Compliance Programs—its criteria for evaluating a corporate compliance program.
Encouragement of voluntary self-disclosure remains a key DOJ objective. Under the revised corporate enforcement policy, even companies involved in misconduct with aggravating circumstances, such as pervasive misconduct or criminal recidivism, may obtain declinations and reduced financial penalties if they meet the following conditions: “immediate” voluntary self-disclosure, an effective compliance program at the time of misconduct and disclosure, “extraordinary cooperation,” and “extraordinary remediation.”
The “Criminal Division encourages self-disclosure of potential wrongdoing at the earliest possible time, even when a company has not yet completed an internal investigation”—though it remains unclear what will be fast enough.
Last October, Deputy Attorney General Lisa Monaco announced a new safe harbor policy for mergers and acquisitions. To qualify, companies must voluntarily disclose potential misconduct of an acquired company within six months of closing, regardless of when the misconduct was discovered. The disclosure must be timely, and the acquiring company must “cooperate in the ensuing investigation, and engage in requisite, timely and appropriate remediation, restitution, and disgorgement.”
In November, the DOJ declined to prosecute a US biotech firm for a bribery scheme by an acquired subsidiary to secure a wastewater discharge permit in Mexico. The agency credited the company’s timely and voluntary self-disclosure, which was reported “within three months of first discovering the possibility of misconduct [during a post-closing integration audit] and hours after an internal investigation confirmed that misconduct had occurred.”
Companies considering voluntary self-disclosure will need to examine the DOJ’s expectations of prompt disclosure, considering the practical challenge of quickly assessing alleged misconduct.
Anti-Corruption Expansion
The Foreign Extortion Prevention Act became law in December. This significant development supplements the FCPA, with US law now criminalizing both the payor and payee sides of foreign bribery activities—and expands liability to those acting on behalf of foreign government officials, even in an unofficial capacity.
Among other things, FEPA makes it a federal crime for foreign government officials to seek or receive bribes from a US person, issuer, or domestic concern. Although the US has long been at the forefront of anti-corruption enforcement, the FCPA has provided for the prosecution of active bribery (allowing for enforcement against the payor), but not passive bribery (by leaving out the payee).
The DOJ has prosecuted bribe-taking government officials through charges of other crimes related to FCPA schemes, such as money laundering. However, the FEPA’s passage fills a remaining gap in the FCPA itself, giving prosecutors another tool to target bribery schemes.
Global Enforcement
Global companies also must account for a host of legal and enforcement developments that continue worldwide.
In Europe, for instance, all but two EU member states transposed Directive 19/1937 on the protection of persons who report breaches of Union law (the Whistleblowing Directive) into national law. This marks a milestone for the protection of whistleblowers in Europe, but challenges remain—including implementing often-ambiguous concepts that have no equivalent in national law.
In the UK, the Economic Crime and Corporate Transparency Act 2023 has expanded the powers of the Serious Fraud Office—led by a new director since September—and widened the scope of corporate criminal liability for economic crimes.
More broadly, authorities in countries from Asia to the Middle East to Latin America have accelerated anti-corruption efforts. From a history-making $12.4 billion banking embezzlement scandal in Vietnam to money laundering charges against a former prime minister of Malaysia, and even a corruption investigation of several government officials in relatively corruption-free Singapore, Southeast Asia signaled to potential investors it is willing to work to become a global player on the world financial stage.
Likewise, a desire to attract greater foreign investment has led to more commitments to tackle corruption and bribery among Middle East countries, particularly the UAE and Saudi Arabia. In Brazil, the federal prosecutor’s office and the general comptroller’s office, Brazil’s anti-bribery agency, have invested in technology to help fight corruption, positioning them to continue efforts that in recent years have included cross-border law enforcement collaboration.
Looking Ahead
Given these developments, global companies have a strong interest in reviewing their compliance programs while closely monitoring and accounting for the activity and expectations of enforcement authorities wherever they operate.
Compliance programs must be designed to detect wrongdoing, be capable of evolving to align with a company’s changing business activities and risk profiles, and allow a company to act swiftly—with guidance of counsel—as compliance incidents come to light.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Author Information
Stephanie Yonekura is partner and global head of the investigations, white collar, and fraud practice at Hogan Lovells.
Matthew Sullivan is partner at Hogan Lovells, with focus on government investigations, enforcement actions, sensitive internal investigations, and complex civil litigation.
Write for Us: Author Guidelines
To contact the editors responsible for this story: