If developments over the past year are any indication, Getting the Deal Through – Government Investigations, a practitioner’s guide to civil and criminal investigations of corporate entities around the world, will continue to be highly relevant to today’s business organisations in this, its fifth edition. While certain US regulatory and law enforcement authorities have brought fewer enforcement actions against financial institutions and corporations in the first two years of the Trump administration than in prior administrations, US authorities are continuing to focus on international public corruption investigations of such entities. Particularly in that context, US authorities, working with authorities in Europe and across the globe, continue to pursue aggressive enforcement actions, and there is no reason to expect this activity to abate in the coming year.
In cross-border matters, law enforcement agencies have further strengthened their collaboration and coordination with foreign counterparts, working to overcome the legal and strategic challenges posed by criminal activity spanning multiple jurisdictions, which often have distinct approaches to data privacy, compelled testimony and other critical issues. Especially in international fraud and corruption cases, the Department of Justice (DOJ), the Securities and Exchange Commission (SEC) and other US authorities continue to work closely with their counterparts abroad. To take one example, the SEC credited the assistance of regulatory authorities in eight countries – Australia, Canada, Japan, Malaysia, Pakistan, Singapore, Switzerland and the United Arab Emirates – in its April 2018 settlement with Panasonic Corporation on civil charges of accounting fraud and Foreign Corrupt Practices Act (FCPA) violations.
Public corruption has been a particular focus for law enforcement authorities and legislatures alike over the past year. In the first quarter of 2018, new anti-corruption laws took effect in Argentina and Peru, establishing corporate criminal liability in those jurisdictions for domestic and international bribery of public officials. Moreover, growing anti-corruption sentiment in Latin America has led to more vigorous investigation and prosecution of corruption offences in that region. In Brazil, Operation Car Wash – an ongoing anti-corruption sweep – has ensnared two former presidents of the country, one of whom was ordered to prison on a 12-year sentence in April 2018. Anti-corruption efforts have received similar attention in East and South East Asia: Malaysian authorities, in coordination with the DOJ and other foreign counterparts, are continuing to investigate the state-owned 1MDB fund and associated entities and individuals, while Chinese enforcement agencies – including the newly established National Supervisory Commission – are engaged in an ever-expanding anti-corruption campaign.
The past year also brought developments in the framework for resolving cases of bribery, corruption and other misconduct in the corporate context. In November 2017, French prosecutors concluded the country’s first-ever deferred prosecution agreement (DPA) with a corporation under the Sapin II anti-corruption law of 2016, which introduced the concept of DPAs into French law. France saw two further DPAs in February 2018, both of which required periods of corporate monitorship by the new French Anti-Corruption Agency. In the US, meanwhile, the DOJ made permanent its FCPA corporate cooperation programme, which had been launched as a pilot programme in April 2016. The FCPA programme provides for substantial penalty reductions, less onerous corporate undertakings and potential declinations of prosecution for companies that self-disclose FCPA violations, remediate their misconduct and fully cooperate with the government. Moreover, in March 2018, DOJ Criminal Division leadership announced that the principles of the FCPA programme would be extended to other types of misconduct, potentially including fraud, money laundering and a range of other federal offences.
Another notable area of development has been the regulation and policing of cryptocurrencies and initial coin offerings (ICOs). Securities regulators and other law enforcement authorities in more than 40 national and subnational jurisdictions in North America have been participating in Operation Cryptosweep, a coordinated crackdown on fraudulent activities involving cryptocurrency-related investments and ICOs. Separately, in May 2018, amid wide price fluctuations in Bitcoin, the DOJ and Commodity Futures Trading Commission launched a joint probe into potential manipulation of Bitcoin and related derivatives. Additionally, the SEC and DOJ have pursued civil and criminal fraud charges in connection with ICOs, which the SEC has indicated that it intends to regulate as securities. As of June 2018, the Federal Bureau of Investigation was reported to be conducting more than 100 cryptocurrency-related criminal investigations. Of course, ICOs and cryptocurrencies have drawn the attention of prosecutors and regulators outside North America as well: in May 2018, for instance, the UK Financial Conduct Authority (FCA) was reported to be investigating two dozen companies involved in cryptocurrency activity, to ascertain whether those entities are engaging in regulated activity requiring FCA authorisation. Also in May, South Korea’s Financial Supervisory Service raided the offices of UPbit, one of the largest cryptocurrency exchanges in the world, in connection with an investigation concerning potential fraud and accounting irregularities. And in June 2018, Japan’s Financial Services Agency issued business improvement orders to several Japan-based cryptocurrency exchanges, in connection with long-standing and growing concerns about the potential use of such instruments for money laundering.
In summary, there is every reason to expect aggressive government investigations to continue for the foreseeable future, and for law enforcement authorities and regulators to continue to strengthen their collaboration with foreign counterparts. Corporate entities suspected of wrongdoing, regardless of their size or global reach, are likely to face multiple inquiries from law enforcement and regulatory agencies in different countries. Such investigations are expensive, time-consuming and challenging for management, employees and counsel alike. We hope that this fifth edition of Getting the Deal Through – Government Investigations serves as a valuable introduction to the unique features of law and practice that shape civil and criminal investigations across the globe.
* The authors would like to thank Daniel Merzel and Deepa Devanathan for their assistance in the preparation of this overview.