If developments over the past year are any indication, Lexology GTDT: Government Investigations – a practitioner’s guide to civil and criminal investigations of corporate entities around the world – will continue to be a valuable resource to business organisations in this, its sixth edition. Now, more than ever, government authorities are collaborating with their foreign counterparts in pursuing sophisticated cross-border investigations, while incentivising and leveraging corporate cooperation. In this context, authorities in the United States, working together with counterparts in Europe and around the globe, continue to pursue aggressive enforcement actions, and we see no reason to expect this activity to abate in the coming year.
In cross-border matters, law enforcement agencies have further consolidated their collaboration and coordination, working to overcome the legal and strategic challenges inherent in combating criminal activity across multiple jurisdictions with distinct approaches to data privacy, compelled testimony and other critical issues. In the United States, this collaboration has been particularly prominent in investigations concerning potential violations of the Foreign Corrupt Practices Act (FCPA). In September 2018, for instance, the US Department of Justice (DOJ) obtained a guilty plea from a US subsidiary of Dutch multinational SBM Offshore, secured prison sentences for key executives and entered into a deferred prosecution agreement (DPA) with the parent company, whereby the company agreed to pay a criminal penalty of US$238 million in connection with bribes paid in Angola, Brazil, Equatorial Guinea, Iraq and Kazakhstan. In announcing the resolution, the DOJ cited substantial assistance from the Dutch Public Prosecutor’s Office, the Brazilian Public Prosecutor’s Office (MPF) and the Swiss Office of the Attorney General and Federal Office of Justice, and noted that SBM had paid more than US$475 million in combined criminal penalties worldwide.
Indeed, public corruption continues to be a growing priority for law enforcement agencies globally. Over the past year, several jurisdictions in Latin America, including Chile and Peru, have strengthened their anti-bribery and anti-corruption laws. In Brazil, Operation Car Wash, a broad money laundering and corruption probe, has led to unprecedented prosecutions and penalties. In September 2018, the Brazilian petrochemical major Petrobras reached settlements with the MPF, the DOJ and the US Securities and Exchange Commission (SEC), resolving these agencies’ investigations into the company’s corrupt payments to Brazilian officials and political parties. Petrobras agreed to pay penalties of more than US$682 million to the MPF and US$171 million to the DOJ and the SEC. In Russia, meanwhile, authorities obtained more than 400 corporate convictions under anti-corruption laws in 2018. Jurisdictions in Asia and the Middle East have signalled a similar focus: in March 2018, China established the National Supervision Commission, with the goal of centralising investigative and enforcement efforts that had previously been dispersed across various agencies; and, in December, the United Arab Emirates adopted new anti-corruption legislation with expanded extraterritorial effect.
The past year also saw advances worldwide in the development and use of law enforcement tools. For example, in September 2018, new Canadian legislation providing for the use of DPAs in criminal matters came into force. And in October 2018, the High Court of Justice in England upheld the United Kingdom’s first-ever unexplained wealth order (UWO), which the UK National Crime Agency (NCA) had obtained pursuant to new legislation to compel an Azerbaijani individual to reveal the source of her wealth. The NCA obtained three more UWOs in May 2019, in connection with an investigation concerning an unnamed foreign official. Additionally, in April 2019, the European Union adopted a new framework for whistle-blower protection, providing for EU-wide safeguards for whistle-blowers and establishing secure channels through which individuals can report suspected violations of EU law. Australia similarly adopted a landmark whistle-blower protection law in February 2019, mandating compliance programmes for certain corporations and establishing strict anti-retaliation measures. The past year also brought substantial payouts to whistle-blowers: the SEC awarded more than US$168 million to whistle-blowers who provided assistance to investigators, while the Ontario Securities Commission paid out more than C$7 million to three individuals pursuant to Canada’s nascent whistle-blower award programme.
Another notable area of development has been the regulation and policing of cryptocurrencies and initial coin offerings (ICOs). Operation Cryptosweep, a coordinated effort involving the North American Securities Administrators Association and state and federal enforcement agencies in the United States and Canada, has resulted in more than 200 active investigations and over 40 enforcement actions, as authorities seek to combat unlawful practices in connection with ICOs. US authorities in particular have taken aggressive steps to halt illegal coin sales. In the past year, the SEC brought roughly 20 enforcement actions and initiated dozens of investigations involving digital assets and unregistered ICOs. Notably, in June 2019, the SEC brought a civil action against Canadian technology company Kik Interactive, after the company raised approximately US$100 million by selling digital coins without registering the offer and sale with the SEC. This litigation may provide an opportunity for US courts to clarify the legality of ICOs in the coming year.
In sum, there is every reason to expect aggressive government investigations to continue for the foreseeable future, and ample opportunity 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 sixth edition of Lexology GTDT: Government Investigations serves as a helpful 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 Isabelle Lelogeais for their assistance in the preparation of this chapter.