Source: United States Department of Justice Criminal Division
Remarks as Prepared for Delivery
Thank you, Una, Dan, and Justin, for the invitation to speak today and for the kind introduction. It’s an honor to be with you all, and I am grateful for this opportunity to discuss the important work the Criminal Division is doing day in and day out to combat white collar crime and more specifically, foreign bribery and corruption.
As you all know, there are many new and exciting developments in FCPA enforcement. Indeed, this conference has engaging panels with the world’s foremost experts in this field on topics ranging from the intersection of the FCPA and national security to the new landscape of compliance and enforcement risks in China.
With my time today, I’d like to address three areas.
First, I will describe the Criminal Division’s continued cooperation with our international partners and explain how we are expanding those relationships to combat corruption and other offenses.
Second, I will highlight some of our recent FCPA enforcement actions against both corporations and individuals. I am proud of these achievements, which, as I will explain, illustrate some of the Criminal Division’s enforcement priorities.
Finally, I will address the department’s recent policy enhancements on corporate criminal enforcement, including Deputy Attorney General (DAG) Monaco’s revisions announced in September. In keeping with the Criminal Division’s commitment to transparency in these areas, I will also explain how we will begin implementing some of these policy changes.
International Cooperation
So let me begin today by discussing a long-standing principle that is a cornerstone of the department’s FCPA enforcement – that is, the critical importance of international cooperation and how the Criminal Division has been able to continue to build on these relationships to expand into new jurisdictions and new industries.
The fight against foreign corruption is a top priority for the Biden Administration. Just last year, the White House announced that combating corruption is a core national security interest and released the first-ever “United States Strategy on Countering Corruption.”
But bribery and corruption’s corrosive effects are global, with the world’s poor often bearing the brunt. Bribery and corruption threaten our collective security by weakening democratic processes and empowering corrupt government officials. They often stifle sustainable development by diverting funds meant to improve everyday life for citizens, by driving up prices for consumers, and by harming honest businesses that play by the rules. As a former organized crime prosecutor, I see these bribery schemes as the ultimate shakedown of communities that cannot afford the “vig” they don’t even know they are paying.
But as you know, in the first few decades following the passage of the FCPA, which turns 45 this year, the U.S. was one of the few countries investigating and prosecuting foreign bribery. In fact, when the FCPA was first passed, many countries had no such criminal laws on their books, and even fewer enforced them.
But as you also know, this has changed in recent years – and changed quite dramatically. Due in part to the relationships our Criminal Division prosecutors have built over time and the success of those prosecutions, we now have many foreign partners who have stepped up to join us in the fight against foreign bribery and corruption. In recent years we have worked closely with the governments of the United Kingdom, Brazil, Malaysia, Switzerland, Ecuador, France, the Netherlands, Singapore, and others.
Where possible, we have taken great care to ensure that foreign countries, and by extension their citizens, receive appropriate compensation as a result of our prosecutions.
For instance, in the Goldman Sachs resolution related to the 1MDB scandal in which billions of dollars were stolen from a Malaysian sovereign wealth fund meant to promote the country’s economic development, the Department of Justice repatriated over $1.2 billion to the people of Malaysia.
The department also often credits payments to foreign authorities in its coordinated, multijurisdictional resolutions. These offset provisions serve multiple purposes. For defendants, they help ensure an equitable result by not forcing redundant penalties, or “piling on.”
For the department, these arrangements also help solidify our relationships with key law enforcement partners. By crediting foreign governments’ financial recoveries against ours, we demonstrate our commitment to helping address corruption’s global effects. These efforts also build trust with our counterparts, making for more seamless and efficient cooperation in the next matter – whether that involves FCPA offenses or other types of crime.
To name a few examples, in the 1MDB case, in addition to returning stolen funds, in the corporate resolution, the department also agreed to credit a portion of the monetary penalty and disgorgement against payments the company made to authorities in the U.K., Singapore, Hong Kong, and Malaysia.
We again credited payment to a foreign government in this year’s resolution with Stericycle, which I’ll describe more in a moment. Specifically, we agreed to credit up to one-third of the U.S. criminal penalty – $17.5 million – against fines the company will pay to Brazilian authorities in related proceedings.
Similarly, in this year’s Glencore resolution, the department agreed to credit over $136 million in payments the company will make to the U.K., and nearly $30 million it will pay to Switzerland.
This coordination also allows us to expand our reach to work with new jurisdictions – a trend I expect you will hear more from us about very soon.
On the U.S. side, these FCPA enforcement actions are, of course, led by the Criminal Division’s Fraud Section. But that isn’t the only way the division tackles corruption.
For instance, the Money Laundering and Asset Recovery Section’s Kleptocracy Asset Recovery Initiative has recovered more than $1.7 billion in assets comprising laundered proceeds of foreign corruption affecting the U.S. financial system.
Our Office of Overseas Prosecutorial Development, Assistance and Training, or OPDAT, provides expert assistance and case-based mentoring to foreign counterparts to develop justice systems that can combat corruption. And the Criminal Division’s International Criminal Investigative Training Assistance Program, or ICITAP, builds the capacity of law enforcement institutions and other government entities to investigate misconduct and corruption.
Across the department, the KleptoCapture Task Force uses all available tools to tackle corruption. And other agencies like the Departments of Treasury, Commerce, State, and Defense are key allies in this endeavor.
As a department, we will continue to work tirelessly with our international partners to detect and prosecute corruption, including by growing our relationships and reach to countries whose enforcement regimes and anti-corruption laws are just emerging.
Simply put, the recent trend of coordinated investigations and resolutions is here to stay.
FCPA-Related Enforcement Actions
I would like to pause for a moment on the corporate resolutions that we have entered into this year – no small feat given the great challenges faced by our prosecutors and agents who were largely grounded for over a year by a global pandemic. It bears stating the obvious – to make foreign corruption cases, you kind of have to be able to go where the work is, something we were unable to do for some time.
Nevertheless, in 2022, we have had – so far – three significant corporate FCPA resolutions: Stericycle, Glencore, and GOL Linhas Airlines — as well as one declination under the Corporate Enforcement Policy with disgorgement, JLT, all of which have involved outstanding cooperation with foreign enforcement authorities. And I expect there will be several more resolutions announced in the coming months.
Given all the challenges caused by the pandemic, I am proud of these results. These multi-faceted and meaningful cases are the direct result of the hard work of the department’s talented and dedicated public servants.
These cases also illustrate the breadth of our corporate FCPA enforcement. Each of these companies is in an entirely different industry. Each has a very different footprint. And each of the bribery schemes underlying these resolutions is distinct in scope and scale.
But as different as these resolutions are, they demonstrate a few noteworthy features about the Criminal Division’s FCPA enforcement efforts that I want to highlight.
First, we are adept at tackling conduct that spans the spectrum of transnational corruption, including:
- Regional schemes;
- Global schemes to obtain and retain business;
- Bribes paid to secure legislative advantages; and
- Bribery of government officials to secure contracts with a state-run insurance fund.
The Department of Justice is committed to detecting, prosecuting, and punishing international corruption whatever form it may take.
Second, we will tailor the form of resolution, the assessment of penalties, and the decision of whether or not to impose a monitor to the facts at hand. We do not make these decisions to prove a point. We make these decisions based on what is appropriate for a particular company based on a wholistic assessment of the conduct and circumstances at issue.
Let me spend just a few minutes to highlight a couple of relevant points for our recent matters that illustrate our decision-making and enforcement efforts.
First, Stericycle. In April, the department entered into a Deferred Prosecution Agreement with Stericycle Incorporated, an international waste management company, to resolve charges that the company had paid over $10 million in bribes to foreign officials in Brazil, Mexico, and Argentina. Specifically, an executive at Stericycle’s Latin America division directed employees who paid bribes, typically in cash, that were calculated as a percentage of the underlying contract payments that government customers owed to Stericycle.
In all three countries, the co-conspirators tracked the bribe payments through spreadsheets and described the bribes through code words and euphemisms, such as “CP” or “commission payment” in Brazil; “IP” or “incentive payment” in Mexico; and “IP” or “alfajores” (a popular cookie) in Argentina.
In total, Stericycle agreed to pay a total of over $80 million to resolve parallel investigations by the DOJ, SEC, and Brazilian authorities.
As this resolution demonstrates, the department will not limit itself to large payments to senior government officials. Rather, we will also continue to prosecute smaller, ubiquitous payments to lower-level government officials.
While larger numbers may attract more headlines, these systematic and pervasive payments are incredibly important to prosecute even if they’re relatively smaller. Smaller, commonplace bribes slowly weave corruption into an industry’s and country’s culture, signaling that just “a little” corruption is okay; it’s just a part of doing business. This slowly but surely erodes the rule of law and causes the insidious damage that accompanies corruption.
Next, Glencore. I won’t spend too much time on this case, which I understand has been the subject of a number of panels yesterday and may also be discussed later today. But briefly, in May, the department announced that it had entered into two separate plea agreements with Glencore, one in the FCPA case and one in a case concerning the manipulation of fuel oil prices that was brought by the Fraud Section’s Market Integrity and Major Frauds Unit. This case stands as an excellent example of the department’s ability to successfully investigate and identify complex FCPA cases and cooperate with domestic and foreign law enforcement.
Next, the department in September entered into a Deferred Prosecution Agreement with Brazil-based GOL Linhas Airlines relating to bribes GOL had offered and paid to officials in Brazil to secure the passage of favorable tax laws, corrupting the country’s legislative process.
In that case, a member of GOL’s Board of Directors agreed to pay approximately $3.8 million in bribes to two Brazilian government officials to help ensure the passage of two laws that financially benefited GOL. One of the laws added the air and road transportation industries to Brazil’s alternative payroll tax program, which saved GOL at least $39 million in taxes.
The other law reduced the aviation fuel tax in the Federal District of Brasilia, which saved GOL at least $12 million. As is often the case, to facilitate the bulk of the bribe payments, GOL used an intermediary who was a close associate of one of the Brazilian government officials. The intermediary kept one-third of the bribe payments as a fee for himself and distributed the remaining money, often using a black-market money exchanger, or “doleiro.”
GOL agreed to pay more than $41 million to resolve parallel bribery investigations by criminal and civil authorities in the United States and Brazil.
Again, we worked in parallel with our foreign law enforcement partners in Brazil to investigate and prosecute this case, as is reflected in our agreement to credit a portion of the U.S. penalty against fines paid to Brazilian authorities. This is yet another example of sustained international cooperation.
You may have noticed that GOL was not required to retain a monitor as part of this resolution, so let me explain why. At the time of the resolution, the company had redesigned its whole anti-corruption compliance program.
But GOL presented more than just words on a page – it demonstrated to the Criminal Division through testing that the program was functioning effectively and adequately resourced. And in line with the announcement by our Assistant Attorney General Kenneth Polite in March of this year, the company agreed that its CEO and CCO will certify at the end of the DPA term that the compliance program is reasonably designed to detect and prevent FCPA and other anti-corruption violations. Given all of these factors, we determined a monitor was not necessary.
But corporate resolutions are not the only metric of success – this year, we have also showcased our longstanding commitment to investigating and charging individual defendants. As the DAG said in announcing the September policy revisions, the department’s number one priority is individual accountability. The Criminal Division has been bringing – and will continue to bring – impactful prosecutions against individuals to punish corrupt actors and deter others on all sides of the illegal scheme – bribe payors, intermediaries, and public officials.
In fact, since 2015, the Fraud Section’s FCPA Unit has obtained over 150 guilty pleas and convictions of individuals involved in foreign corruption, securing more than $1 billion in forfeiture by agreement or court order. Of the individuals charged during this period, approximately 80 were in cases with associated FCPA corporate resolutions.
Over the past year, we have brought charges against, among others:
- Two former senior officials in Ecuador and Bolivia for alleged bribery-related money laundering;
- Three businessmen relating to an alleged bribery and money laundering scheme involving a state insurance company in Ecuador;
- Two former Venezuelan prosecutors for allegedly agreeing to receive $1 million in bribes to not prosecute a corrupt contractor; and
- Two former coal company executives relating to an alleged bribery scheme in Egypt.
And right now, prosecutors from the Fraud Section’s FCPA Unit and the Southern District of Florida are on trial against the former national treasurer of Venezuela and her husband for alleged bribery-related money laundering.
This year, we have also secured significant convictions of individuals.
For instance, in April, prosecutors from the Fraud Section, MLARS, and the Eastern District of New York prevailed in a significant, complex, and lengthy trial, convicting Roger Ng, a former Goldman Sachs managing director, of FCPA and money laundering charges for his participation in the massive 1MDB bribery scheme. The trial against Ng follows, of course, the resolution of the corporate case against Goldman in 2020 – which was another successful example of a globally coordinated resolution and was only possible due to the significant cooperation of numerous countries devoted to fighting foreign bribery.
Separately, in addition to filing bribery-related charges against the former senior Bolivian government official I mentioned, we also arrested the Bolivian official’s chief of staff as well as three bribe-paying U.S. businessmen and intermediaries. All five of these defendants have pleaded guilty and accepted responsibility for their wrongdoing.
As significant and important as these enforcement actions are, we recognize that enforcement alone will never be enough to eradicate corporate crime. We must also count on committed businesspeople and compliance personnel inside companies to detect and prevent misconduct. Putting the people, resources, and controls in place to make sure a company complies with the law is not only the right thing to do, but it ultimately helps companies operate more efficiently and profitably.
As the White House Strategy Memo announced, the U.S. will work with the private sector by “encouraging the adoption and enforcement of anti-corruption compliance programs by U.S. and international companies, and promoting relevant anti-corruption provisions in trade agreements.” Make no mistake, the alternative – failing to take compliance seriously – will, in the long-run, be far more painful.
Policy Changes
This leads me back to my final topic today, the department’s recent policy announcements.
As you are all aware, in September, the DAG announced numerous revisions to the department’s approach to corporate criminal enforcement. The Criminal Division applauds the revisions’ extension of some of our existing principles to the rest of the department, such as providing incentives to encourage voluntary self-disclosure (VSD). The Criminal Division has of course long appreciated the significance and benefits of timely VSD as well as full cooperation and timely and appropriate remediation, as reflected in the FCPA Corporate Enforcement Policy, or CEP, which was incorporated into the Justice Manual in 2017.
As I mentioned earlier, in March of this year, the department announced a CEP declination for Jardine Lloyd Thompson Group Holdings, or JLT. The company had helped pay over $3 million in bribes to Ecuadorian government officials through an intermediary to obtain and retain contracts with a state-owned surety company in violation of the FCPA. The company detected and then voluntarily disclosed the misconduct to the department.
After fully cooperating with the investigation, making enhancements to its compliance program to reduce the risk that the misconduct would recur, and agreeing to return the ill-gotten gains from the scheme, the department issued a declination letter to JLT. And consistent with the department’s top priority, we prosecuted five individuals for this misconduct.
The new policy announcements from the DAG speak to the other end of the spectrum – how VSD can help a corporation to avoid a guilty plea. The clearest path for a company – even a recidivist – to avoid a guilty plea or an indictment is voluntary self-disclosure.
Let me explain how the department will approach balancing corporate recidivism with mitigating factors, such as a company’s strong cooperation and compliance improvements.
Under department policy – including the recent DAG memos and announcement by our AAG in mid-September – a history of misconduct will not mean a guilty plea for a company that self-discloses, cooperates, and remediates unless other aggravating factors – aside from recidivism – are present.
As the AAG explained, the aggravating factors that we will consider in the Criminal Division under the new policy can include, but are not limited to, involvement by executive management in the misconduct, significant profit to the company from the wrongdoing, or pervasive or egregious misconduct. Recidivism is purposefully not one of these aggravating factors.
And an additional carrot for a company that self-discloses is that the department may not require a monitor for a cooperating corporation, if at the time of resolution, the company can demonstrate that it has implemented and tested an effective compliance program.
The message here is clear. Do not wait for us to call you. By then, it’s too late. A company that voluntarily self-discloses will see a lot of upside, while a company that decides to white-knuckle it through is taking on a lot of downside risk.
In addition, the AAG announced in March that in Criminal Division corporate resolutions, we will consider requiring certifications by Chief Executive Officers and Chief Compliance Officers. If the certification requirement is imposed, these individuals must affirm at the conclusion of a resolution period that the company’s compliance program is reasonably designed to detect, and prevent, the type of criminal violation that gave rise to the resolution in the first place.
As I mentioned in connection with the case against GOL, we have entered into multiple resolutions containing this new compliance program certification, though none has yet been signed by CEOs and CCOs, as the resolution terms will not conclude for several years. I mention it, however, to reiterate a point that the AAG made in his announcement on this topic: this change is meant to empower, not punish, compliance teams and help ensure that compliance officers have an important voice in the business organization.
To be sure, there is more to come from the DAG’s announcements. At the DAG’s direction, the Criminal Division is examining whether additional guidance is necessary about the use of personal devices and third-party messaging applications, including those offering ephemeral messaging. Let me offer some insight into this issue as well.
We at the department recognize that there may be legitimate reasons for the use of these applications, such as reliability and enhanced security through end-to-end encryption. But they also present significant challenges for companies’ ability to ensure they have a well-functioning compliance program and ability to access such communications when necessary.
As you know, our approach on this to date has consisted of the CEP’s section on cooperation and remediation, which focuses on “prohibiting the improper destruction or deletion of business records” and “implementing appropriate guidance and controls” on the use of personal communications and ephemeral messaging platforms.
Under the current rubric, the department considers whether companies that permit employees to use these ephemeral messaging platforms are continually assessing and revising their policies in compliance with their legal obligations, including those related to retention. The challenges in this area are myriad – the rapidly changing technology, diversity of retention requirements between industries, privacy implications in jurisdictions – all of which we are considering as we decide how best to move forward.
Key to any guidance in this area, or any other, is transparency. We understand that the department must be clear and predictable about our expectations and our policies so that you can provide the best advice to your clients and so that they can make tough choices about how to set priorities and where to direct resources.
As you know, the Criminal Division has long been committed to ensuring transparency in corporate matters. The Fraud Section’s website lists all corporate and individual enforcement actions in FCPA-related cases as well as all CEP declinations. We also recently updated the Fraud Section’s website to include monitor selections for the last 10 years. Our corporate agreements and press releases generally detail the relevant considerations that explain the department’s reasons for entering into the agreement. The FCPA Resource Guide and the Corporate Enforcement Policy, which includes our assessment of VSD, are also publicly available, as are our policies on how we select corporate monitors and evaluate corporate compliance programs. And, of course, all of the recent policy revisions have been publicly announced.
In addition to the work on ephemeral messaging, the Criminal Division is also considering what additional guidance may be warranted on how we evaluate compensation clawback policies. To craft this potential guidance, we are meeting with, among others, our agency partners, such as the SEC; members of the defense bar; experts on executive compensation; and other regulators to gain valuable perspectives and data points. Based on these inputs, we will consider how prosecutors might reward companies that employ clawback policies and/or bonuses and positive incentives for compliant behavior.
Again, this initiative underlines the importance of developing good corporate culture – culture that rejects wrongdoing for the sake of profit, that incentivizes good citizenship, and that empowers ethical employees. As you know, our goals as a department go beyond enforcement to deterrence, which is another important tool to protect against corruption before it can take hold.
So stay tuned on these fronts.
But while we will always refine our policies and strive to improve, I can confidently say that the department has, and will continue, our extensive efforts fighting foreign bribery and corruption.
We will continue to work closely with our partners both here and abroad, take appropriate yet significant action against companies and individuals alike, and vigorously combat transnational corruption and help uphold the rule of law.
Thank you for your time. It has been a pleasure to speak with you today.