DOJ Unit That Prosecutes FCPA to Bulk Up “Substantially”

As reported today in Corporate Counsel magazine, anti-corruption enforcement is bulking up (click here for article).    Mark Mendelsohn, deputy chief of the DOJ fraud section’s criminal division, said his section “may grow as much as 50 percent in size in the next year or two.”  At the same time, he added, he expects companies to play an increasingly aggressive role in thwarting corruption.

His comments were made on Wednesday at the  Global Ethics Summit 2010 in New York City which The Posse List covered.   We’ll have a follow-up report  on the Summit over this weekend.

As the Corporate Counsel article mentions, Mendelsohn discussed the upcoming Organisation for Economic Co-operation and Development (OECD) “best practices guidelines” as well as other developments.   Yet some of these developments are likely to land after Mendelsohn, who has been a federal prosecutor for nearly 12 years, is gone.  He was scheduled to appear at last year’s ACC Annual meeting which we covered (click here) but his last-minute bow out was attributed to the announcement of his pending departure (the date not yet set).

Mendelsohn reviewed recent enforcement trends including the build up of FCPA cases.  This was confirmed by several law firms we met with at the Summit and comports with previous posts on The Posse List about the enormous increase in document review work.  It explains the high percentage of foreign language document reviews (78% of our postings in the last year, and over 60% of those FCPA related).   And we use the term FCPA broadly because, as Mendelsohn said, it isn’t only FCPA violations per se.   These cases include money laundering, wire fraud, antitrust laws, etc.  

It also explains the surge in document review and e-discovery work in Europe as more and more cases are reviewed “in country”.   There are (at least) 8 projects spanning Belgium, France, Germany and the UK.   More on that in a later post this weekend.

A summary of  Mendelsohn’s points:

1.   There are going to be heightened FCPA enforcement.

2.  There will be a closer look at individuals versus firms.

3.  Multi-jurisdiction prosecution has escalated.

4.   There is (has been) increased industry and sector-wide investigation and not just “by company” investigation.

5.  There is an increased focus on transactional and M&A activity, and also other non-FCPA crime such as obstruction, false claims, and export control and asset trust — are all things that you need to look at on a globalization basis.

We have posted numerous background pieces on the FCPA (click here)  and there are several blogs that cover the area.  One of the best:  the FCPA Blog produced by Richard Cassin which you can access by clicking here.  His blog is incredibly comprehensive and authoritative.   To get an idea of all the cases out there check his link “The All-In-One FCPA Enforcement List” (click here). 

Some “intro” points:

1.  Enacted in 1977, the FCPA was a response to government findings that hundreds of U.S. companies, including many of the Fortune 500, were using cash and “slush funds” to make questionable or illegal payments to foreign government officials, politicians and political parties. The purpose of the FCPA is to halt the bribery of foreign officials and restore public confidence in the integrity of the American business system.

2.   Recent international initiatives, including the Inter-American Convention against Corruption and the OECD’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, have refocused the world’s attention on anti-corruption issues.

3.  Major U.S. trading partners are enacting legislation similar to the FCPA. These international efforts to battle corruption mean that U.S. companies can compete on the merits with increasing certainty that they will not be undercut by a competitor’s illicit payment to a foreign-government purchaser. They also mean that there is an increased emphasis on enforcement of anti-corruption legislation worldwide, and particularly of the FCPA within the U.S., making company compliance more important than ever.

There are numerous online programs and basic articles about the FCPA and its key terms.   But for a good “where to start” we recommend a primer from the Pennsylvania Litigation Blog (click here).

Also, we spoke to several law firms that expressed an interest in providing a live presentation on the FCPA for contract attorneys, and/or a webcast.   If we get sufficient interest we’ll organize it as we have been doing with the document review software certification program.  If you are interested, email us at fcpa@theposselist.com and tell us what city you are in.