Co-Authored by Sharath Patil
Largest FCPA Settlement to Date
The U.S. Securities and Exchange Commission (“SEC”) and the U.S. Department of Justice (“DOJ”) announced in October that Goldman Sachs Group, Inc. (“Goldman Sachs”) agreed to pay $2.9 billion as part of a settlement agreement. The settlement was a result of the agencies’ enforcement action after they learned that Goldman Sachs had allegedly paid $1.6 billion in bribes to officials in Malaysia and the United Arab Emirates (“UAE”) to secure its position as the underwriter of $6.5 billion in three bond deals with 1Malaysia Development Berhad. The settlement constitutes the largest Foreign Corrupt Practices Act (“FCPA”) settlement ever recorded.
The SEC and DOJ found that Goldman Sachs’ internal controls were deficient because employees were able to engage in corrupt activities despite a comprehensive anti-corruption and compliance program that had been implemented. Furthermore, the agencies explained that Goldman Sachs and ignored “significant red flags” and had failed to voluntarily disclose its conduct.
Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office said:
“When government officials and business executives secretly work together behind the scenes for their own illegal benefit, and not that of their citizens and shareholders, their behavior lends credibility to the narrative that businesses don’t succeed based on the quality of their products, but rather their willingness to play dirty. Greed eventually exacts an immense cost on society, and unchecked corrupt behavior erodes trust in public institutions and government entities alike. This case represents the largest ever penalty paid to U.S. authorities in an FCPA case.”
Under U.S. anti-bribery laws, U.S. citizens, nationals, residents, and businesses are prohibited from giving a corrupt payment to a foreign government official for the purpose of influencing a decision of the official in his or her official capacity. Specifically, a “corrupt payment” is the payment of money or an offer or promise to give anything of value to influence the official in his or her official capacity, to influence the official to violate his or her lawful duty, or to seek an improper advantage. Under the law, even making an offer of payment, as long as it is made with the intent to influence, obtain improper advantage, or induce improper influence, is all that is required for a violation. Even if the official refuses to accept the benefit, or accepts the benefit but does not take the desired action, it is still a violation.
There are limited exceptions for common business practices, however. For example, paying the costs of a foreign official to travel to a plant for a plant visit may be legal. In addition, certain payments transmitted as part of a routine government action may be allowed. Because the exceptions are extremely limited, companies should be proactive to investigate whether such payments could violate U.S. anti-bribery laws. The SEC and DOJ jointly publish an FCPA resource guide that further explain FCPA standards.
Building a Strong FCPA Program
Does your business have a strong FCPA compliance program? Or does the strength of your FCPA compliance program need to be reviewed and audited?
Diaz Trade Law, P.A. offers a number of services pertaining to FCPA compliance, including:
- Auditing your company’s operations and building a strong FCPA compliance plan that reflects your organization
- Reviewing your existing FCPA compliance plan to ensure that it’s strong and reflects the latest changes to anti-corruption laws
- Training your employees in avoiding FCPA violations
- Establishing clear lines of responsibility to determine how potential violations are proactively addressed
- Representing your firm in mitigating penalties and reaching settlements with federal agencies after violations have occurred
- Creating corrective action plans so that violations don’t occur again
If you have questions about your firm’s FCPA compliance plan or are interested in scheduling a training, reach out to us at firstname.lastname@example.org or call us at 305-456-3830. For information on Diaz Trade Law’s other training programs, check out our recent article.