U.S. FCPA Guidance Imminent: Recent Settlements Set the Stage
James T. Parkinson
September 21, 2012
In November 2011, Assistant Attorney General for the Criminal Division Lanny Breuer announced that the U.S. Department of Justice would issue “detailed new guidance on the [US FCPA's] criminal and civil enforcement provisions” at some point in 2012. Here is our prior post on the announcement. While the guidance has not yet been released, recent enforcement activity – most notably the August 2012 Pfizer resolution – allows insight into possible directions that the guidance may go. We believe that the DOJ has, through these prior settlements, essentially set the stage for the guidance.
Drumbeat of Compliance Undertakings
In December 2011, Deutsche Telekom and its majority-owned Hungarian affiliate, Magyar Telekom Plc., settled an FCPA enforcement action for a total sanction exceeding $95 million. Part of the resolution called for the companies to undertake a series of compliance measures. The undertakings (here in table/checklist format) allow a look at the FCPA compliance program the DOJ wanted those companies to construct as part of the resolution. Settlements in February (Smith & Nephew), March (BizJet and Biomet), and July (Nordham Group) each contained some form of compliance undertakings, but in many cases, these did little more than repeat the elements of an “effective compliance and ethics program” as set forth at Chapter 8B2.1 of the U.S. Sentencing Guidelines, and did not specify the application of those elements in the anti-corruption context.
Pfizer Settlement: FCPA-Specific “Enhanced Compliance Obligations”
More recently, Pfizer and two components – Wyeth and Pfizer H.C.P. Corp. – resolved an FCPA action for a combined sanction exceeding $60 million. In the deferred prosecution agreement, Pfizer agreed to a detailed series of FCPA-specific compliance undertakings, augmenting the more general rendition of program elements. In part, the enhancements:
- Detail the structure of the company’s compliance program staffing and oversight;
- Mandate the maintenance and content of certain anti-corruption policies and procedures;
- Provide mechanisms and resources for internal compliance reporting;
- Require annual company-wide, corruption-related risk assessments and five market-specific proactive compliance reviews annually;
- Call for acquisitions to be made only after thorough corruption-risk diligence;
- Describe a program of third party diligence and control; and
- Direct a program of biennial FCPA training for specified personnel and directors, and a three-year training rotation for certain third parties.
The entire list of “Enhanced Compliance Obligations” is available on the BuckleySandler website in a table/checklist format, allowing compliance counsel to conduct a quick cross-check of their company’s existing compliance program elements.
Possible Preview of DOJ FCPA Compliance Guidance
When the DOJ releases its FCPA compliance guidance – expected soon – FCPA practitioners will evaluate the guidance to confirm whether existing anti-corruption compliance programs are in line with the DOJ’s announced expectations. Reviewing the “Enhanced Compliance Obligations” contained in the Pfizer deferred prosecution agreement should allow compliance counsel a head start on where the DOJ’s FCPA guidance will lead. When the guidance is issued, we will provide an update and analysis.