Self Report – Or Else!


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The U.S. is intensifying the hunt for bribes paid overseas and is warning corporations to cooperate — or else.

Using funds from the billions of dollars seized from criminals, the government is committing more agents, attorneys and accountants to the mission. With 40 new lawyers and FBI agents dedicated to foreign-bribery probes, investigators have begun working out of specialized anti-bribery units across the country as they chase hard-to-get evidence about crooked deals in Asia, Africa and South America. “We’re trying to leverage” companies into reporting suspected bribes by their workers “because often only they have the ability to get that information,” Assistant U.S. Attorney General Leslie Caldwell said in an interview. “We expect that with new agents and our prosecutors out there,” companies “will think significantly about self-reporting.” The Justice Department’s move to bolster its forces under the Foreign Corrupt Practices Act echoes a different buildup of white-collar law enforcement a decade ago, which kicked off the biggest U.S. crackdown on insider trading. Back then, as prosecutors opened dozens of probes that rattled Wall Street, the FBI added agents and the Justice Department turned to wiretaps and informants in its push to infiltrate crooked trading rings. Now, the Justice Department is promising to deliver new bribery cases, escalating its use of such tools while demanding that corporations come clean.

“I’m a big fan of all sorts of tactics, including wiretaps, to build a case,” George Khouzami, the assistant special agent in charge of the Federal Bureau of Investigation’s New York office, said in an interview. “We’ve had significant success in recent public corruption cases where it’s easy to play the tape and prove the crime. Why wouldn’t we take advantage of that now when doing FCPA cases?” The government has won some heavy penalties from companies under the FCPA, which makes it illegal for U.S. companies and those working for them to pay bribes to win overseas business. Since 2005, the U.S. has collected more than $4 billion in fines from foreign companies and more than $1.8 billion from U.S. firms. But the U.S. has had mixed success against individuals. While dozens of bribe payers have been convicted over the years, the U.S. in 2012 dismissed the biggest prosecution of individuals accused of foreign bribery after failing at a trial against 10 defendants. It was the first time the government used an undercover sting operation to charge violations of the FCPA. In 2014, the department reached accords with seven companies, including a $772 million case against Alstom SA. The department last year resolved the fewest number of FCPA cases since 2006 — two corporate settlements and six individual prosecutions. The drop came as the department shifted its focus to pursuing bigger prosecutions. One current probe focuses on Wal-Mart Stores Inc., which in 2011 disclosed possible violations in Mexico to the Justice Department and Securities and Exchange Commission. The company has said it’s cooperating. The U.S. prosecuted about 80 FCPA cases from 2005 to 2015, Khouzami said.

“That’s over ten years, and you may wonder why so few?” he said. “A lot of these cases were not addressed because we didn’t have adequate resources to investigate them.” The Justice Department’s FCPA unit has grown to 29 line attorneys from 19, with six supervisors, Andrew Weissmann, chief of the fraud section, said Tuesday during a speech at a Global Investigations Review conference in Washington. Prosecutors in Washington are aided by 30 agents in New York, Los Angeles and elsewhere.

“It will be the largest it’s ever been in the fraud section’s history,” Weissmann said. FBI agents working out of Los Angeles will focus on transactions in Asia, investigators in Washington will scrutinize government contracts, New York-based agents will examine Wall Street banks, and those in Texas will probe the oil industry, Caldwell said. The U.S. is also stepping up its cooperation with other countries. Companies that self-disclose are typically seeking lesser penalties from the government. The new self-disclosure initiative may make it less likely that companies will voluntarily reveal wrongdoing to the Justice Department, said Mike Koehler, a law professor at Southern Illinois University who writes the FCPA Professor blog. Because the government is demanding complete cooperation, companies may be reluctant to come forward, he said.

“Were trying to change the conversation in the boardroom,” Caldwell said. “If they don’t self-report and we find out about it in a year, and they decided that they would only cooperate if the government comes calling, we want them to understand they’re not going to get credit from us.”