In remarks at the American Conference Institute’s 37th International Conference on the Foreign Corrupt Practices Act (FCPA) on December 3, 2020, Gen. Brian C. Rabbit, then acting assistant attorney general of the U.S. Department of Justice (DOJ), stated that “[n]otably, many of [DOJ’s] corporate resolutions in 2020 included coordination with one or more foreign enforcement authorities — an increasingly important aspect of [DOJ’s] work.”
His statement reflects a continuing trend over the last several years, in which DOJ and the Securities and Exchange Commission (SEC) have increasingly coordinated with foreign enforcement authorities to resolve multi-jurisdictional FCPA cases. Such increased coordination in multi-jurisdictional enforcement has coincided with or resulted from an increase in enforcement by foreign countries. Other countries may be recognizing more and more the financial gains of coordinated cross-border anti-bribery prosecution, leading to implementation or serious enforcement of their own anti-bribery and anti-corruption laws.
This trend of coordinated multi-jurisdictional enforcement continued with 2020’s two biggest FCPA enforcement actions, also ranked among the top record-breaking enforcements in FCPA’s history — Airbus SE and Goldman Sachs — which involved coordinated investigations and resolutions between U.S. authorities and several foreign enforcement authorities.
In January 2020, DOJ announced its FCPA settlement with Airbus SE, a French company that supplies civilian and military aircrafts. To resolve global bribery charges and trade violations, Airbus SE agreed to pay combined penalties of $4 billion to authorities in the U.S., United Kingdom and France.
The FCPA charges against Airbus SE arose from a scheme, starting in 2008 and continuing until at least 2015, in which Airbus used third-party intermediaries to bribe foreign officials in China and other countries to obtain and retain business contracts, in some instances from state-owned or state-controlled companies. The U.K.’s Serious Fraud Office (SFO) was the first to investigate in 2012, following whistleblower allegations of the company bribing Saudi Arabian officials to retain a communications contract worth £2 billion. In 2017, the Parquet National Financier (PNF) in France opened a preliminary investigation based on the same allegations. DOJ’s later assertion of FCPA jurisdiction over the French company was premised on Airbus employees and agents sending emails while in the U.S. and providing foreign officials with luxury travel within the U.S.
The vast majority of Airbus SE’s penalties were paid to foreign enforcement authorities in the U.K. and France. Airbus SE entered into a 3-year deferred prosecution agreement (DPA) with the UK’s SFO, paying the equivalent of $1.09 billion — $649 million in disgorgement and $441 million in criminal fines — for bribes and improper payments in Ghana, Indonesia, Malaysia, Sri Lanka and Taiwan. Similarly, Airbus SE reached an agreement with PNF in which it agreed to pay the equivalent of $2.29 billion for bribery in China, Colombia, Nepal, Russia, Saudi Arabia, South Korea, Taiwan and the United Arab Emirates. Recognizing the “strength of France’s and the United Kingdom’s interests over [Airbus SE’s] corruption-related conduct,” DOJ entered into a DPA with Airbus SE in which it imposed a criminal penalty of $2.09 billion for FCPA-related offenses, but credited the company for the amounts it paid to PNF up to $1.8 billion. Ultimately, Airbus SE paid DOJ only $582.4 million, with $294.5 million being paid to settle the FCPA charges and the remaining $232.7 million going towards conspiracy charges under the International Traffic in Arms Regulations.
Rounding out 2020 was the FCPA enforcement resolution for Goldman Sachs, a global financial institution based in New York, announced in October. Similar to Airbus SE, Goldman Sachs agreed to pay more than $2.9 billion to resolve bribery offenses as the result of separate yet parallel and coordinated resolution efforts between criminal and civil authorities in the U.S., U.K., Hong Kong, Singapore, Malaysia and elsewhere. Goldman Sachs and its Malaysian subsidiary admitted to conspiring in a massive corruption and bribery scheme spanning more than 5 years where they paid more than $1.6 billion in bribes to high-ranking officials in Malaysia and Abu Dhabi to obtain and retain business for the company, including its role in underwriting three bond deals worth approximately $6.5 billion for 1 Malaysia Development Berhad (1MDB).
In the U.S., Goldman Sachs entered into a DPA with DOJ, agreeing to pay $2.3 billion in criminal penalties, with more than $1.6 billion credited from the companies’ payments to SEC and other enforcement authorities in the U.S., U.K., Singapore and Hong Kong. Further, Goldman Sachs’ Malaysian subsidiary pleaded guilty to one count of conspiracy to violate the FCPA anti-bribery provisions and will pay a $500,000 criminal penalty. SEC ordered Goldman Sachs to pay $400 million in civil penalties and $606.2 million in disgorgement to settle violations of FCPA’s anti-bribery, books and records, and internal accounting control provisions. However, SEC also agreed to provide the company with a dollar-for-dollar disgorgement credit based on similar payments Goldman Sachs made in its settlement with Malaysian authorities. Goldman Sachs agreed to pay the Malaysian government $2.5 billion, with the agreement that pending criminal charges against the company and 17 of its current and former executives would be withdrawn.
In the U.K., Goldman Sachs was fined $126 million by the Financial Conduct Authority and the Bank of England for its risk-management failures connected to 1MDB. In Singapore, the company was fined $122 million by the attorney general, along with $61 million in disgorgement to 1MDB. And Hong Kong’s Securities and Futures Commission imposed a $350 million fine on a local unit of Goldman Sachs for deficiencies and failures in its risk management, compliance and anti-money laundering controls.
The FCPA resolutions of Airbus SE and Goldman Sachs highlight significant developments and considerations for coordinated multi-jurisdictional FCPA enforcement. First, these enforcement actions reflect the fact that after years of vigorous U.S. enforcement of the FCPA, other foreign authorities, both in major economies and in smaller jurisdictions, are joining the fray and beginning to seriously enforce their anti-bribery and anti-corruption laws. With the bribery resolution for Airbus SE, France — which recently passed its own deferred prosecution agreement laws — has cemented itself as a pronounced presence, along with the U.S. and U.K., in combatting foreign bribery and corruption. Time will tell whether it sustains that presence. And with Goldman Sachs, DOJ’s resolution included recognition and crediting of payments the company made in its settlement with local Malaysian authorities. The increased likelihood of multiple prosecutions and penalties for anti-bribery law violations elsewhere in the world should underscore for multinational companies the value of investing proactively in implementing their compliance programs as well as monitoring and auditing third-party intermediaries in high-risk markets.
Second, the continued and increased coordination between U.S. and foreign authorities to enforce anti-bribery laws highlights both the necessity and impact of DOJ’s “no piling on” policy, which was introduced in May 2018. Recognizing the growing trend of coordinated multi-jurisdictional enforcement, DOJ’s “no piling on” policy is meant to discourage imposition of duplicative fines and penalties against a company for the same misconduct, and encourage information-sharing and cooperation among enforcement agencies around the world when determining resolutions. As seen in its FCPA resolutions with both Airbus SE and Goldman Sachs, DOJ deferred to foreign authorities who were heavily involved in their anti-bribery enforcement. It is likely that DOJ’s selective deference to investigating foreign authorities with more acute interests in the company’s corruption-related conduct will continue in the face of increased multi-jurisdictional enforcement pursued in good faith. Keeping this in mind, multinational companies should be mindful at the beginning of a matter of trying globally to resolve violations with all relevant enforcement authorities to avoid or reduce duplicative penalties for the same conduct.
Lastly, the prevailing trend of coordinated multi-jurisdiction FCPA investigations and enforcement demonstrates how foreign authorities are identifying ways to effectively investigate bribery and corruption while not violating one another’s privacy and data privacy laws. In Airbus SE, the investigations conducted by the U.K. and France were challenged by the “French blocking statute” and other privacy laws, which prohibit or restrict the ability of foreign entities to obtain documents and other evidence from French companies. The UK’s SFO and the French PNF resolved these issues by entering into a Joint Investigation Team Agreement in 2017, in which they developed procedures that permitted the collection of documents and for jointly conducted interviews in France. Firms representing companies under investigation also must comply with such privacy and data privacy laws, and can do so by employing local counsel to review information within the countries where the data is located.
Communication and coordination among various foreign authorities in pursuing FCPA anti-bribery and anti-corruption enforcement, as shown in the Airbus SE and Goldman Sachs’ FCPA resolutions, is sure to be a continuing and ever-growing trend, especially given travel restrictions from the global pandemic. The ability to pool resources and share evidence among the various authorities involved has enabled far-reaching FCPA investigations and resolutions that would likely not be feasible if conducted alone.