Here We Go Again

19 Nov

Today, from Main Justice, we get a post about the antitrust division, and how international cooperation is up.

This movement has got legs, and that’s not good news for compliance programs.  Here’s why:

  1. No such thing as a local problem.  It used to be that what happens overseas stays overseas.  We’ve all seen how FCPA enforcement has changed that game.  I like to joke that when I was with the Commission, and we wanted assistance from a foreign government, we’d submit a request and wait two years to hear back “no.”   Now, with the increased cooperation, any problem goes international quickly. You need to ask three questions:  where else does this business operate?  Where have the personnel involved in this issue been posted before this?  And the controls that failed, where do we have similar controls?  If those questions don’t bring your investigation global, you’re not looking deep enough.
  2. A billion here and a billion there…. When the DOJ was the only enforcer with a desire to actually bring cases, it was one fine and you’re done.  Maybe two, if the SEC glommed onto the case.  But this arena has become a cash cow for the DOJ’s FCPA unit.  Which means other subject matter enforcement officials are going to go to school on the DOJ.  Antitrust is a good example.  The fines are going to get larger, and they’re going to go for jail time.  Last year was the biggest on record for the antitrust division, with over $1 billion in fines.  This year, fines are a little down, but jail time is up.  Welcome to the new world.  OFAC is also getting into the game.  They’re not doing Cuban cigar cases, and Dennis McInerny has said that they’re looking for fewer, but bigger cases.  Credit Suisse settled for $530 million.  Lloyds for $217 million.  I’d like to say these are outliers, but I foresee a trend.  Not just for OFAC, or FCPA, or antitrust, but for all of them at the same time.  And let’s talk about outside counsel fees.  Daimler settled their FCPA case for $185 million, and spent $500 million on the investigation.  That has to hurt.
  3. And his brother too…. Be prepared for multi-jurisdictional settlements.  As more enforcement agencies get in the game, you’re going to be talking to multiple agencies on any issue.  Plus, you’re going to see lots of glomming onto cases.  A bribery issue will become an OFAC issue will become an SEC issue will become an AML issue, will become an anticompetition issue.  Everywhere.
  4. And finally, stop the ride, I want to get off.  Welcome to the wonderful world of the neverending investigation.  Because once the regulators leave, here come the plaintiffs’ attorneys.  Even though the FCPA has no private right of action, courts have not thrown out shareholder suits based on the underlying bribery.  I’m not sanguine that other plaintiff attorneys won’t follow that lead on things like OFAC settlements, antitrust settlements, and the like.  So once the investigation is over, the investigation starts.  Intrusive discovery.  Higher outside counsel fees.

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