This article was originally published in Bloomberg Law.
The Department of Justice recently released a highly anticipated memo outlining its priorities for Foreign Corrupt Practices Act enforcement. The updated guidelines make it clear that the DOJ won’t abandon FCPA enforcement, which should come as a welcome sign to whistleblowers and allay reasonable concerns about foreign corruption and bribery cases.
The announcement follows Executive Order 14209, which directed the US attorney general to halt new FCPA enforcement investigations and actions, and review all existing ones, for 180 days.
The FCPA prohibits offering, promising, or paying anything of value to foreign officials to secure or retain business. The DOJ jointly enforces the FCPA alongside the Securities and Exchange Commission; the former generally handles criminal enforcement, while the latter generally focuses on civil violations by companies that sell securities in the US.
The SEC has historically been concerned with the FCPA’s accounting provisions, which require that US issuers maintain accurate and transparent financial records and internal controls. Although paying bribes is illegal in and of itself, the SEC often goes after companies for failing to record the bribes on their books instead.
SEC enforcement of the FCPA relies heavily on information provided by whistleblowers, who may be eligible to receive an award of 10%-30% of total monetary sanctions in a successful enforcement action. In 2023, the agency issued a record $279 million award to a single whistleblower whose information led to a $1 billion bribery settlement with Ericsson, a Swedish telecommunications firm. As of fiscal year 2024, the SEC has awarded more than $2.2 billion to whistleblowers.
Protections
SEC whistleblowers are shielded from retaliation via robust legal protections, including the ability to report corporate wrongdoing anonymously when working with an attorney. These protections ensure that whistleblowers have legal recourse if they’re illegally retaliated against, such as through termination and blacklisting, by corporate malicious actors.
The SEC whistleblower reward program has been a success and recently became a model for the DOJ’s pilot reward program. Launched in August 2024, this pilot program seeks to fill enforcement gaps by offering financial incentives to individuals who report certain categories of crime not covered by existing whistleblower programs, including FCPA violations. However, unlike the SEC program, the DOJ pilot program doesn’t include statutory anti-retaliation protections for whistleblowers—a notable flaw that may ultimately hamper its effectiveness.
Enforcement
Notwithstanding the administration’s recent decision to dismiss an FCPA case against two US executives, the DOJ’s memo makes clear that enforcement of the FCPA will largely focus on individual criminal misconduct as opposed to “nonspecific malfeasance” by corporate entities. The DOJ also aims to handle investigations as quickly as possible and to consider “collateral consequences” of an investigation on lawful business activity.
The memo directs DOJ prosecutors to also consider the following non-exhausting factors when mulling FCPA investigations: whether they implicate cartels and transnational criminal organizations, whether the alleged bribes put other law-abiding US companies at a serious economic disadvantage, whether they impact national security concerns, and whether the conduct implicates serious corruption, rather than “low-dollar, generally accepted business courtesies.”
These guidelines suggest that the DOJ plans to take a slightly more targeted approach to FCPA enforcement, including a shift toward prosecuting cartels. However, its stated priorities are consistent with those of prior administrations, including emphasis on individual accountability and making sure that US companies can compete on a level playing field with their foreign rivals. This is also consistent with the SEC’s historical enforcement of the FCPA. The DOJ memo acknowledges that the largest FCPA cases “have been overwhelmingly brought against foreign companies.”
Foreign companies that were hit with joint SEC and DOJ sanctions totaling more than $500 million include:
- Germany-based Siemens agreed to pay $800 million in 2008 to settle an investigation into bribery and corruption.
- Alstom, a French power and transportation company, agreed to pay $772 million related to charges of a global bribery scheme in 2014.
- Russian telecommunications firm Mobile TeleSystems PJSC agreed to pay $850 million in 2019 after being charged with a bribery and money laundering scheme.
- Swiss commodity training and mining firm Glencore agreed to a $700 million payment after pleading guilty to bribing foreign officials.
- Israel-based Teva Pharmaceutical settled FCPA charges for $519 million in 2016.
This should send a clear message to prospective whistleblowers: If you have knowledge of serious foreign bribery activities or related accounting fraud—particularly at foreign companies with US operations—the federal government wants to hear from you.
Further, insofar as SEC whistleblowers can secure 10%-30% of total sanctions from the commission and related actions by other agencies, the incentives to speak up are significant.
Massive penalties are at stake, coupled with the strong employment protections and anonymity available to whistleblowers under the SEC reward program.
Individuals with firsthand knowledge of FCPA violations should consider bringing their information to an experienced whistleblower attorney who can help them weigh the risk of coming forward against the opportunity to protect investors and further US interests.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
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