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March 07, 2018 Articles

Key Lessons from the 2017 FCPA Plea Agreements and Indictments

The DOJ will continue to prioritize individual prosecutions in FCPA cases and use the accountability as a benchmark for the successful resolution of corporate investigations.

By Nicholas R. Barnaby, David Bitkower, Kelly Hagedorn, and Veronica Lopez – March 7, 2018

In late 2017, the Department of Justice (DOJ) announced a combination of charges and guilty pleas involving seven individuals relating to violations of the antibribery provisions of the Foreign Corrupt Practices Act (FCPA). On November 9, 2017, two former oil services executives pleaded guilty to criminal informations in connection with bribery schemes involving officials of the Brazilian state-owned oil company Petrobras as well as other state-owned oil companies in Angola and Equatorial Guinea. Earlier the same week, on November 7, 2017, court documents were unsealed in Ohio federal court revealing charges against five individuals—four of whom had already pleaded guilty—for allegedly violating the FCPA by paying bribes to foreign officials on behalf of Rolls-Royce. The four individuals associated with Rolls-Royce had actually pleaded guilty on December 20, 2016; June 6, 2017; June 13, 2017; and July 28, 2017, and the indictment against the fifth individual had been filed on October 12, 2017. However, the plea agreements and the indictment had been kept under seal until last week.

This flurry of activity highlights four key lessons.

Investigations of Individuals
Lesson No. 1: Don’t dismiss DOJ’s rhetoric about focusing on individuals in FCPA cases.

Commentators often note, and DOJ officials themselves have acknowledged, that pursuing criminal prosecutions of individuals can be especially difficult in the context of corporate crime—especially when the alleged wrongdoing occurred abroad, as is typically the case in FCPA investigations. Deputy Attorney General Rod Rosenstein, however, reemphasized the DOJ’s view that pursuing individual prosecutions is essential to deter corporate crime and that the DOJ will continue to prioritize those cases. Indeed, although Rosenstein said that he would revisit his predecessor’s 2015 Memorandum on Individual Accountability (Yates Memo), he broadcast that any changes to DOJ policy would “reflect our resolve to hold individuals accountable for corporate wrongdoing.” Rod J. Rosenstein, Deputy Attorney Gen., Keynote Address at the N.Y. University Program on Corporate Compliance & Enforcement (Oct. 6, 2017).

The recent prosecutions and guilty pleas underline those statements and indicate further that the DOJ not only has been pursuing individual FCPA prosecutions throughout 2017 but also will continue to do so in 2018. For example, at the time of Rolls-Royce’s deferred prosecution agreement in January 2017, the DOJ announced that its investigation of individuals involved in the matter was “ongoing.” The announcements of individual actions against Rolls-Royce executives and employees as well as third parties involved in the misconduct made good on that statement—and revealed that one individual had in fact already been convicted under seal when the corporate resolution was announced.

Companies facing FCPA or other criminal investigations should thus bear in mind that prosecutors will still likely view individual accountability as a touchstone for a successful resolution of a corporate investigation.

Investigations out of Public View
Lesson No. 2: DOJ enforcement activity, including in the FCPA realm, often remains ongoing even when it is not publicly visible. Out of sight should never mean out of mind when it comes to criminal investigations, including in the corporate context.

Indeed, as revealed by the fact that Trump campaign aide George Papadopoulos had been arrested in July 2017, cooperated with prosecutors, and agreed to plead guilty to a felony all before the case was made public on October 30, 2017, it is clear that prosecutors often prefer to move their cases forward outside of the public eye.

This is especially the case where criminal charges are used as a means of developing potential witnesses against more senior defendants down the line. In such cases, prosecutors may seek to seal an arraignment and guilty plea so that the defendant can cooperate proactively against his former colleagues; at a minimum, prosecutors may maintain a low profile for a case so that other potential defendants do not realize the net is closing in and flee the jurisdiction, tamper with witnesses, or destroy evidence.

The guilty pleas announced last week in connection with the Rolls-Royce case fit this pattern: the charges relate to a long-running investigation of alleged bribery misconduct, and the court documents show that the first defendant to be charged agreed to plead guilty and cooperate as the case developed. As the next three individuals were charged and agreed to plead guilty, the case remained sealed on the basis that publicity could harm the DOJ’s efforts to investigate others.

Companies should therefore be aware that even where there are few outward signs of investigation the DOJ may be continuing, below the surface, to pursue traditional investigative efforts to bring FCPA charges.

International Cooperation
Lesson No. 3: International cooperation remains an important source of evidence in making FCPA cases.

A Second Circuit Court of Appeals decision in United States v. Allen, No. 16-898 (2d Cir. 2017), a case arising out of London interbank offered rate (LIBOR) manipulation allegations, cast some doubt on the ability of U.S. authorities to rely on a defendant’s testimony that was compelled under foreign law in circumstances that would pose Fifth Amendment implications in the United States. Nonetheless, DOJ officials over the last several months have repeatedly emphasized the importance of cooperation with foreign authorities in investigating and prosecuting foreign bribery cases.

Last week’s announcements do not diminish the importance of the Second Circuit’s holding but do indicate that cross-border information sharing has continued. The Rolls-Royce cases relied in part on information gathered by the United Kingdom’s Serious Fraud Office as well as cooperation from several other foreign law enforcement agencies. Likewise, the other individual plea agreements involved cooperation from Brazilian and Dutch authorities. Whatever the ultimate fallout from Allen, these enforcement activities show that transnational cooperation remains vibrant in FCPA investigations.

Number of Cases: False Reflection of Enforcement
Lesson No. 4: Counting cases leaves an incomplete picture of enforcement trends.

FCPA and other complex criminal cases often have long gestation periods, which makes the use of superficial resolution counting a potentially problematic way to compare the vigorousness of FCPA enforcement over time or across administrations. The cases announced last week illustrate that shortcoming: cases brought or publicized in 2017 often reflect substantial work done in past years—even, as in the Rolls-Royce matter, a completed criminal conviction. Simply counting those cases as “new” matters brought in 2017 discounts the foundations that were laid before. By the same token, significant investigative steps taken in 2017 may not come to fruition—or be publicly reported—until 2018 or later, potentially obscuring the important fact that the DOJ continues to press ahead with aggressive FCPA enforcement under its current leadership.

Rather than relying solely on the number of cases brought or resolved, an observer will often find it more informative to add a focus on qualitative factors, such as how enforcement actions fit into the DOJ’s articulated policies and priorities, or to compare present enforcement with past enforcement precedent.


Nicholas R. Barnaby, David Bitkower, and Kelly Hagedorn are partners at Jenner & Block, and Veronica Lopez is a staff attorney with the firm.