Navigating the minefield: Special risks in FCPA cross-border internal investigations

Although potentially quite beneficial, international internal investigations are not easy

In January, a unit of Alcoa pled guilty to violating the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). In one of the ten most costly FCPA settlements to date, Alcoa agreed to pay a total of $384 million to resolve DOJ criminal charges and SEC civil charges. Given the DOJ’s and SEC’s continued, aggressive enforcement of the FCPA, there is little doubt that Alcoa’s settlement was but the first of many FCPA mega-settlements to come in 2014.

Although it is impossible to know how many more companies will pay large FCPA settlements in 2014, it is quite clear that no corporate executive or director wants to incur FCPA liability. Accordingly, U.S. companies with significant FCPA risks are turning to in-house and outside counsel to conduct international internal investigations to evaluate and mitigate FCPA risks. Although potentially quite beneficial, such investigations are not easy. FCPA internal investigations are complex and require counsel to overcome special challenges and avoid common pitfalls.

Disclosures to authorities

Cooperation with U.S. or foreign authorities is often an attractive option for companies, as it can be a means of avoiding FCPA or bribery charges. But disclosing wrongdoing to government entities can also create new risks. Many countries have mutual legal assistance treaties (MLATs) or memoranda of understanding (MOUs) with the United States that permit regulators or prosecutors in one signatory country to obtain evidence from their counterparts in the other. A company that reveals a bribery violation to cooperate with a foreign government may inadvertently create a basis for an FCPA investigation in the United States, and vice versa. Companies should take this prospect into account before disclosing any information to the authorities. On the other hand, in some countries, such as Slovakia, the law requires companies that discover wrongdoing to disclose it. In these jurisdictions, it is important to be aware that the law imposes this requirement so that the company can ensure compliance.

Contributing Author

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Marcus Christian

Marcus Christian is a Washington, D.C.-based partner in Mayer Brown LLP’s Litigation & Dispute Resolution and White Collar Defense & Compliance practices. Previously, he was...

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