The UK Bribery Act came into force on 1 July. Companies will need to understand the various jurisdictional risks that they face and ensure that their compliance programs are robust, tested and monitored. (see featured article)
Also on 1 July Australian Federal Police announced criminal charges being laid against a number of Australian companies and individuals in relation to alleged bribes paid to Government officials in Vietnam, Malaysia and Indonesia. The AFP’s two year investigation will now support the first ever prosecution of Australian foreign bribery legislation. (see featured article)
One of the current high profile FCPA cases, dubbed the “Sting Case”, reached a milestone recently. For two years, the FBI conducted an elaborate undercover operation involving a supposed arms sale to the African nation of Gabon. The African “Minister” that the defendants allegedly bribed was actually an undercover FBI agent. Twenty two arrests were made in December 2009. Since then, three of the defendants have pleaded guilty while the first of several trials involving four of the defendants has been held. This month, however, following a six week trial and one week of jury deliberation, the Judge declared a mistrial, citing a jury deadlock. The DOJ has announced that all four defendants will be re-tried.
The fastest growing issue this month has involved News Corporation and allegations of phone hacking and Police bribery. News is subject to, amongst others, US jurisdiction, which raises the prospect of FCPA violations if bribery of foreign Government officials (i.e. UK Police) is ultimately proved. US Senators have requested the US DOJ and SEC to commence investigations to determine whether News has violated US law, and in particular the FCPA.
US Securities and Exchange Commission growing teeth
In recent years, the SEC has promoted its intention to use a variety of means to encourage (i) companies to self-report incidents of corruption and (ii) the co-operation of individuals with knowledge of incidents of bribery. While the US Department of Justice has, for years, utilised Deferred Prosecution Agreements and Non-Prosecution Agreements, the SEC used a DPA for the first time in June to resolve a FCPA enforcement action.
Perhaps of more significance, however, is the recently approved rules implementing a “whistleblower bounty” scheme, mandated by the US Dodd-Frank Wall Street Reform and Consumer Protection Act. This scheme requires the SEC to award individuals between 10% and 30% of any monetary sanctions totaling more than US$1 million, which result from voluntarily provided “original information” relating to the federal securities laws violations that led to the successful enforcement action. Whilst the amount of the bounty will depend on issues such as whether the individual first reported the information to the corporation concerned, it is widely expected that such powerful financial incentives will lead to increased numbers of reports being made to regulators. Companies will therefore need to ensure that compliance programs are robust and that responsive procedures are in place to properly investigate allegations of wrong-doing.