U.S. enforcement authorities offer insights into FCPA investigations and priorities from Covid crisis
During a May 20, 2020 anti-corruption webinar, senior representatives of the DOJ’s Fraud Section, the SEC’s FCPA Unit, and the FBI’s International Corruption Unit spoke about their respective agencies’ enforcement priorities and approach in light of the COVID-19 pandemic. There were a number of interesting takeaways.
FCPA Investigations are Pushing Forward
Given the influx of government spending in response to COVID-19, the landscape is ripe for bribery. We have written more about that here. The DOJ and SEC expect to see FCPA investigations arising from the current circumstances, but the exact nature of those investigations or the bribery-related fallout from COVID remain to be seen.
The DOJ and SEC both stated that FCPA (and other) investigations are continuing “as usual” and that there has not been a notable decrease in opening new cases (although they also confessed that they hadn’t done a rigorous numerical analysis). Additionally, existing cases are being pushed forward, and the DOJ, SEC, and FBI each voiced confidence in the abilities of their staff to handle the bulk of their work remotely. That said, they did acknowledge some difficulties in the current climate—most notably access to the courts (including access to grand juries, which have been suspended in many districts) and the ability to conduct interviews.
The DOJ and SEC explained that they are a taking flexible, case-by-case approach to interviews with some being conducted by telephone, some over video conference, and others being pushed off to a later date when they might be able to take place in person. The DOJ explained that it is able to show documents to witnesses and question them over videoconference, but the process is naturally slower and more cumbersome. Interviews by telephone or video conference, however, present unique challenges to the defense bar who may have concerns over how to effectively prepare and represent their clients remotely.
Similarly, the DOJ has adopted a somewhat flexible approach to document and information requests, depending on the justification, based on the understanding that there are currently challenges to gathering some information. Finally, the DOJ and SEC both noted that they continue to encourage self-reporting, even if it only involves laying down a marker with the promise to circle back once companies are able to learn more about the potential misconduct.
One interesting substantive point volunteered by Dan Kahn, the Senior Deputy Chief of the Fraud Section (and former head of the FCPA Unit), related to FCPA charging theories. He explained that not all bribes are made with “corrupt intent”. Thus, he said, if a company paid a customs agent a bribe to expedite the shipping of personal protective equipment for that companies’ employees’ safety, it is unlikely such a bribe could give rise to FCPA charges.
Healthcare Fraud and Securities Fraud will be Key Focus Areas
Robert Zink, Chief of the DOJ’s Fraud Section, explained that a key focus for them would be on three types of COVID-related fraud: Payroll Protection Program (PPP) fraud; COVID-related healthcare fraud; and market-based conduct tied to COVID. While the DOJ’s Fraud Section has no plans to shift resources from the FCPA Unit to either of the Health Care Fraud Unit or the Market Integrity and Major Frauds Unit, it is confident those units have the resources they need to investigate aggressively.
Focus on Compliance
We have recently written on the importance of heightened vigilance against corruption and bribery risks amidst the current global crisis. The DOJ and SEC panelists echoed these views, saying that the raft of current health and economic challenges worldwide make corporate compliance efforts more important than ever. Companies should not view compliance measures as luxuries that can be relaxed in challenging times. To the contrary, compliance efforts should be increased. This includes carefully reviewing compliance policies and internal controls in light of new and changing business environments and risks. Robert Zink noted that the Fraud Section was taking this opportunity to assess its own internal controls and policies, and he recommend that companies do the same.