Skip to main content
May 20, 2015

FCPA enforcement by Justice Department lags SEC’s so far this year

Rising declination trend for firms that cooperate with investigations and staff turnover among the reasons for DoJ holding back

FCPA enforcement by the Department of Justice has gotten off to a slow start in 2015. As of May 18, the DoJ had not resolved an FCPA investigation with an enforcement action, even while the SEC had brought administrative actions against FLIR Systems and Goodyear Tire & Rubber Company and entered a deferred prosecution agreement with PBSJ Corp during the same time frame.

Against this relative paucity of actions, as of April 17, law firm Miller & Chevalier had counted five declinations, or decisions by the SEC or DoJ to close an investigation without taking further action. Those decisions concerned Eli Lilly and Company, 21st Century Fox and News Corp, Cobalt International Energy, Goodyear, and PetroTiger. James Tillen, vice chair of Miller & Chevalier’s international department, believes the DoJ has declined to take action against FLIR Systems and PBSJ as well, because normally the DoJ announces enforcement actions at the same time the SEC does, if both intend to take an action. There are several possible explanations for the relative dearth of enforcement actions, each of which have contributed to the lull, says Tillen.

First, he believes there was likely a push to resolve things at the end of last year, judging by the total of 10 resolutions that the two agencies filed in the fourth quarter. Staff turnover at DoJ also may have contributed, with Andrew Weissman taking over as head of the Fraud Section in January, he adds. A third factor may be the two trials DoJ has set for June in individual matters, which ‘I’m sure [are] pulling a lot of resources,’ Tillen says. Lastly, he sees a ‘a shift to declinations’ that would be consistent with statements by Assistant Attorney General for the Criminal Division Leslie Caldwell earlier this year.

In March Caldwell said there would be an increase in declinations for companies that come in and do the right thing. Last month she emphasized the DoJ’s commitment to making decisions about whether and how to prosecute a company more transparent. She pointed to anonymized examples of declinations and pre-conduct opinion letters on DoJ’s website, and suggested that more would follow. She also stressed DoJ’s appreciation for true cooperation and said that non-cooperation would result in harsher treatment, using Alstom and BNP Paribas as examples.

Another factor that will help a company get a declination from the DoJ is a credible prosecutorial alternative, such as when the SEC or even a separate sovereign state, has enforcement jurisdiction and capability, Tillen says. Indeed, despite declinations they received from the DoJ, both Eli Lilly and Goodyear entered into settlements with the SEC, he adds.

While a trend toward more declinations may be developing, Tillen’s advice to companies has not changed. ‘This is a risk area. You should be worried about this law and international counterpart laws,’ he tells them. Nor have the statements from Caldwell altered the basic risk analysis. When a company discovers a potential violation, the ‘voluntary disclosure calculus is still one that needs to be discussed [with counsel]. The most recent cases and statements about declinations for cooperation can be instructive in that decision, but companies may want to see how that plays out more before changing that aspect of the calculus,’ he says.

Abigail Caplovitz Field

Abigail is a freelance writer and lawyer based in New York.