L. Erik Ringoen, CPA, CFF, ABV
Under the Trump administration, there may have been some concern about its enforcement efforts of the Foreign Corrupt Practices Act (FCPA), but, in fact, several Department of Justice (DOJ) officials have made it clear in public remarks that the DOJ will continue to make FCPA a priority.
On April 20, 2017, Trevor N. McFadden, acting principal deputy assistant attorney general of the Justice Department’s Criminal Division, spoke at the American Conference Institute’s 19th Annual Conference on Foreign Corrupt Practices Act. Trevor said, “Today, motivated as ever by the importance of ensuring a fair playing field for honest corporations doing business abroad, the Department [of Justice] continues to vigorously enforce the FCPA.” On April 24, 2017, Attorney General Jeff Sessions in prepared remarks for the Ethics and Compliance Initiative Annual Conference stated, “We will continue to strongly enforce the FCPA and other anti-corruption laws. Companies should succeed because they provide superior products or services, not because they have paid off the right people.” On Sept. 21, 2017, the DOJ and Securities Exchange Commission (SEC) FCPA resolutions with Telia Company AB demonstrated the current administration’s commitment to the FCPA. Telia, a Swedish-based telecommunications services company, agreed to pay $965 million in a global settlement with the SEC, DOJ, and Dutch and Swedish law enforcement to resolve charges related to violations of the FCPA to win business in Uzbekistan.1 It was the largest penalty ever under the FCPA.
Earlier this year, DOJ officials re-emphasized the importance of effective compliance programs as well as voluntary self-disclosures, cooperation, and remedial efforts. They also noted that the health care industry will continue to be an area of FCPA focus.
DOJ officials applauded the efforts of compliance professionals to prevent illegal and unethical conduct through building strong cultures of compliance. Sessions noted that when making charging decisions, the DOJ will continue to take into account whether companies have good compliance programs; whether they cooperate and self-disclose wrongdoing; and whether they take suitable steps to remediate problems.
On March 1, 2016, the DOJ’s FCPA resolution with Olympus Corporation of the Americas, the largest distributor of endoscopes and related equipment in the United States, included a deferred prosecution agreement (DPA) and payment of $463.2 million. The complaint noted that, unlike other medical and surgical companies, Olympus did not have an experienced compliance professional until August 2010, and lacked training and compliance programs. The basics for an effective compliance program of large international corporations should include the following:
- Confidential employee hotline and website for employees and customers to report wrongdoing
- Enhanced compliance training
- CEO and board of directors must certify annually that the program is effective
- Guidelines to claw back bonuses from executives who engage in misconduct or fail to promote compliance within their organization
In the Telia FCPA resolution, the SEC and the DOJ considered Telia’s remedial efforts and cooperation with the investigation. The SEC specifically noted that the company replaced all relevant members of its board and senior management, fully cooperated with the SEC’s investigation, and implemented a comprehensive compliance program. Also, the DOJ noted that they did not receive additional mitigation credit because they did not voluntarily self-disclose their misconduct to the DOJ.
On July 25, 2017, Sandra Moser, acting chief of the fraud section of the DOJ Criminal Division, noted in her remarks at the ACI 8th Global Forum in High Risk Markets that health care companies operating overseas may interact in the normal course of business with foreign government officials, often in regions known to be at high risk for corruption. She announced that prosecutors from the Healthcare Fraud Unit’s corporate strike force will formally begin working hand-in-hand with FCPA prosecutors on select criminal investigations in the health care fraud space. Together they will investigate and prosecute health care bribery schemes, both at home and abroad. This increased coordination will create efficiencies within the DOJ and help ensure that companies, their executives, employees, and agents are held accountable should there be any payment of bribes or kickbacks to foreign and domestic officials.
FCPA enforcement continues with vigor, so companies should make investments to develop a culture of compliance, particularly health care companies.
1 U.S. Securities and Exchange Commission, press release 2017-171, Sept. 21, 2017.
L. Erik Ringoen, CPA, CFF, ABV is an associate director at Forensic Resolutions Inc. of Westmont, N.J., and Philadelphia. He can be reached at email@example.com.