In a speech before the American Conference Institute's 36th International Conference on the Foreign Corrupt Practices Act ("FCPA"), DOJ Assistant Attorney General Brian A. Benczkowski highlighted the Criminal Division's prosecutorial achievements and policy initiatives in 2019. He stated that "reports of the death of white collar enforcement at the Department are grossly exaggerated."
Mr. Benczkowski said that, in 2019, the Criminal Division's FCPA Unit:
Mr. Benczkowski touted this "remarkable prosecution activity," and noted that the number of individual prosecutions reflected "the Department's continued dedication to holding individual wrongdoers accountable across the board." He also noted that the Unit's trials were generating much-needed case law on the FCPA, and opined that, "in another ten years, the FCPA section in white collar crime textbooks will be chock full of judicial opinions."
Mr. Benczkowski also highlighted the Criminal Division's pursuit of foreign corruption through money-laundering enforcement and asset forfeiture. He noted the "historic settlement" reached with Jho Low, the Malaysian national at the center of the 1MDB scandal, who allegedly misappropriated development funds and laundered them through financial institutions around the world (including in the United States). In October 2019, the DOJ announced a settlement with Low and related entities that resulted in the recovery of more than $1 billion in assets associated with 1MDB. That represented the "largest civil forfeiture ever concluded by the Justice Department," according to Mr. Benczkowski.
Mr. Benczkowski said that prosecutorial achievements in foreign corruption cases mirrored the overall trend of white collar enforcement in 2019. He reported that the DOJ's Fraud Section brought charges against 440 individuals in 2019, an all-time high, and had reached 16 corporate criminal resolutions.
Extent of Agency Liability under FCPA
Mr. Benczkowski paid special attention to the prosecution and recent conviction of Lawrence Hoskins. Hoskins, a British national and resident, was allegedly part of a bribery scheme to secure a $118 million contract to build a power plant in Indonesia for the U.S. subsidiary of Alstom S.A. As previously covered, though Hoskins worked for a non-U.S. subsidiary of Alstom: and though he never travelled to the United States during the alleged scheme, the government argued that he was subject to the FCPA because he acted as an "agent" of the U.S. subsidiary. In November 2019, a jury convicted him on that theory.
Seeking to dispel concerns about Hoskins' impact, Mr. Benczkowski said that the DOJ was "not looking to stretch the bounds of agency principles beyond recognition," or to "push the FCPA statute towards its outer edges." Instead, he stated, the DOJ will (i) evaluate each application of agency liability "on its own," (ii) measure the facts to assess whether the government will be able to carry its burden of proof on agency at trial and (iii) exercise "appropriate prosecutorial discretion" to assess whether the case presents an appropriate application of agency liability. Mr. Benczkowski stressed that the DOJ would "strongly favor prosecution" in instances in which it sees evidence of the use of corporate structures to shield a parent from criminal liability or the use of agents to shield a high-level individual executive from accountability.
Mr. Benczkowski said that he hoped his comments provided a "window" into the DOJ's thinking and approach to cases, particularly regarding the factors that prosecutors consider when evaluating corporate compliance programs. He recognized that companies may experience a "sense of increased risk" when enhancing their compliance programs, as those enhancements may identify previously undetected misconduct or other areas of legal exposure. He said that the DOJ has attempted to implement policies that help companies "trust" that they are making the right investments in compliance. He listed several DOJ policy strides in that regard, including:
Mr. Benczkowski said that the Criminal Division would continue to adhere to its policy pronouncements, and continue "making worthwhile refinements to existing policies and developing our own building blocks for the future."
On August 24, 2018, the Second Circuit affirmed a lower Court's ruling that the Foreign Corrupt Practices Act does not apply to non-resident foreign nationals unless they were either physically present in the United States or acting as agents of a U.S. entity when they committed their crimes.