Corruption Crime & Compliance

Even with the absence of any major DOJ FCPA enforcement actions, DOJ issued an interesting FCPA Opinion Letter last week addressing application of the FCPA in circumstances where organizations face imminent serious bodily harm. While the situation may appear to be unique, it is a factual scenario that occurs more often than DOJ recognizes.In October 2021, a Requestor submitted an Opinion Letter application that presented compelling circumstances. The Requestor, an owner of a vessel, explained that a Foreign Country’s Navy had seized its vessel. Arrested and detained the captain and detained the vessel and its crew. Given the captain’s mental and physical health, the captain’s incarceration created an immediate threat of serious physical harm. A third-party acting on behalf other Country’s Navy demanded a cash payment of $175,000 to release the captain, the crew and the vessel. DOJ acted quickly and approved the Opinion Letter request. The payment was made and the captain and crew were released.The Requestor submitted additional information to DOJ, and a more formal Opinion Letter was released last week containing the full story and analysis. While the circumstances are relatively unique, DOJ’s analysis provides additional clarity surrounding the definition of “corrupt intent” and the “business purpose” test.In this Episode, Michael Volkov reviews this interesting FCPA Opinion Letter.

Economic sanctions enforcement is a fast-rising risk for global companies. For many years, the Treasury Department’s Office of Foreign Asset Control (“OFAC”) focused primarily on financial institutions. Over the last ten years, OFAC has stretched its enforcement eyes towards software, manufacturing, telecommunications and technology companies. With this growth in sanctions enforcement, OFAC has embraced an aggressive view of third-party risks. Like the FCPA, under OFAC’s regime, third parties are not permitted to do what the primary company cannot do. As a result, we have witnessed a steady increase in OFAC enforcement actions against global companies for failing to ensure compliance by third-party agents, distributors and other intermediaries.In this Episode, Michael Volkov takes a deep dive into third party sanctions risks and strategies to mitigate such risks.

One of my favorite New Year's reviews is under the title of “Person” of the Year. In the past, I have singled out Chief Compliance Officers, Chief Ethics Officers, Prosecutors, and Whistleblowers.For 2021, the choice is obvious – the most important trend is the rise of Environmental, Social and Governance (“ESG”) programs. In second place, I would choose Supply Chain Management and Risks, given the importance of supply chain management in the post-pandemic world. In the end, ESG dominated the headlines and earned the annual recognition as the issue of the year. 

The Department of Justice secured a guilty plea from NatWest Markets, the newly-named Royal Bank of Scotland, for trade manipulation, referred to as “spoofing,” in U.S. Treasury markets. The NatWest resolution reflected new changes in DOJ’s white collar enforcement policies, including acknowledgement and consideration of NatWest’s prior misconduct (criminal and civil) and appointment of an independent compliance monitor. NatWest was not offered a deferred or non-prosecution agreement; instead it was required to plead guilty to a criminal charge of securities fraud and another charge of wire fraud.Under the plea agreement, NatWest agreed that during the period of 2008 to 2014, traders in its Stamford and London offices spoofed the market for Treasury futures contracts. In addition, two traders at NatWest’s Singapore branch spoofed the secondary cash market for Treasury securities in 2018. The spoofing scheme violated a 2017 non-prosecution agreement between the United States and NatWest’s broker-dealer subsidiary, and occurred while NatWest was on probation for a separate conviction for manipulation of the foreign currency exchange market.DOJ cited NatWest’s status as a repeat offenders as justification for requiring a criminal guilty plea to two counts. Under the plea agreement, NatWest Markets will pay $35 million in restitution, forfeiture and a criminal fine, serve three years’ probation and take on an independent compliance monitor.In this Episode, Michael Volkov reviews the NatWest prosecution and settlement agreement.

In a major development, the Antitrust Division returned an indictment against six executives from aerospace engineering firms for an illegal conspiracy to restrict competition in the labor market for aerospace engineers.After warning U.S. businesses, DOJ started bringing criminal cases against businesses that restrict competition for labor through illegal price-fixing or no-poach agreements. The Connecticut criminal case represents a major step in the Justice Department's focus on illegal agreements in labor markets.In this Episode, Michael Volkov reviews the criminal case and the specific allegations.

The Biden Administration announced a new, comprehensive anti-corruption initiative, the United States Strategy on Countering Corruption. The new anti-corruption initiative is the follow on to the earlier announcement elevating the global anti-corruption battle to a national security concern. After that announcement, the Biden Administration conducted a 200-day inter-agency examination to develop a comprehensive government-wide anti-corruption initiative. The 38-page plan released last week outlines steps for cracking down on criminal actors and their networks while improving cooperation among federal agencies and law enforcement. The Biden Administration announced plans to increase financial transparency and new regulations on U.S. real-estate purchases to prevent money laundering.In this Episode, Michael Volkov reviews the new initiative and the important issues raised.

The Delaware Chancery Court is continuing its trend of permitting Caremark claims against corporate board members who fail to exercise proper oversight and monitoring of compliance programs. Over the past few years, the Delaware Chancery Court has consistently raised the stakes and expectation for Board member performance on corporate boards.In this Episode, Michael Volkov reviews the current board member liability cases and the Court's recent rulings.

Tom Fox is a leader in the ethics and compliance field. He is regularly referred to as the "Compliance Evangelist."Tom recently just released the Second Edition of The Compliance Handbook, a comprehensive review and guide to the elements of an effective ethics and compliance program. Tom is known for his practical and efficient approach to difficult ethics and compliance issues. His new Handbook is a must-have for ethics and compliance professionals but more importantly for business leaders and managers who understand the importance of implementing an effective ethics and compliance program.In this Episode, Michael Volkov interviews Tom Fox about the Second Edition of The Compliance Handbook and the important issues addressed in the Handbook.

The Boeing 737 MAX scandal is a troublesome and disturbing case where corporate board oversight and responsibility was lacking. The implications of the board’s failure resulted in the killing of innocent passengers and the grounding of Boeing’s 737 MAX. Add to that a $2.5 billion settlement, a criminal case against a Chief Technical Pilot, and continuing safety and technical problems, and you have recipe for continuing disaster at Boeing.The Delaware Chancery Court's recent decision denying Boeing's motion to dismiss shareholder derivative claims outlines a devastating picture of Board governance failures relating to Boeing's response to the Lion Air crash in October 2018 and the Ethiopian Airlines crash in March 2019. In this Episode, Tom Fox and Michael Volkov discuss the implications of this recent decision.

Credit Suisse Group AG (“Credit Suisse”), a global financial institution, and its London-based European subsidiary, Credit Suisse Securities (Europe) Limited (“CSSEL”) resolved a wide-ranging bribery and fraud scheme involving investments and financing arrangements for an $850 million loan for a tuna fishing project in Mozambique. To resolve the violations, Credit Suisse agreed to pay a total of $547 million in penalties, fines and disgorgement as part of comprehensive criminal and civil resolutions in the United States and the United Kingdom.In this Episode, Michael Volkov reviews the Credit Suisse global fraud and bribery enforcement action.