As we kick off a new year, businesses should take the time to review their anti-corruption and compliance programs and make sure they are up-to-date and adaptable to the continuously changing environment. Here are five trending areas to keep an eye on in 2019:
- USMCA (NAFTA II) Anti-Corruption Provisions
On November 30, 2018, the leaders of the United States, Mexico, and Canada signed the U.S. Mexico Canada Agreement (USMCA). Although signed by President Trump, President Peña Nieto, and Prime Minister Trudeau, the vast majority of the agreement must be ratified by the legislative branches of all three countries. Commentary after the signing focused the small number of substantive changes to the trade pact given the drama that surrounded the process. One new provision that was not included in the former NAFTA agreement, however, specifically addresses anti-corruption issues. Chapter 27 of USMCA is intended to prevent bribery and corruption in international trade and investments between the three nations. Implementation of such a provision could go a long way toward addressing corruption, particularly in Mexico.
- Increased FCPA Enforcement Under the Trump Administration
2018 saw an uptick in Foreign Corrupt Practices Act (FCPA) enforcement actions compared to the first year of the Trump Administration. To demonstrate, 2017 saw eleven companies paying about $1.92 billion to resolve FCPA cases. The third quarter of 2018 alone included the announcement of seven actions with penalties and disgorgement of $1.97 billion; eclipsing 2017’s total in three months. It is likely that this trend will continue into 2019, particularly focused on prosecution of individuals, as described below.
- Sanctions/Embargo Changes
In May 2018, the United States abandoned the commitments of 2015’s Iran Joint Comprehensive Plan of Action (JCPOA) (unofficially known as the “Iran Nuclear Deal”) and then reinstated most sanctions against core sectors of Iran’s economy in November. Temporary waivers from those sanctions provided to eight nations are set to expire in 2019. As a result, trade not only with Iran, but with other nations that may still be trading with Iran in the interim must be examined with increased diligence. 2018 also saw numerous changes to the sanctions imposed upon various Russian individuals and organizations. Given the wide-range of issues that touch on Russia (including intervention in Ukraine and interference in elections), it is anticipated that 2019 will continue to see changes in the treatment of Russian sanctions. Finally, it was recently reported that the U.S. is also considering a declaration in early 2019 that would bar U.S. companies from using telecommunications equipment made by at least two major Chinese network equipment companies. All of these changes make monitoring sanction and embargo changes critical in 2019.
- Cross-Border/Agency Cooperation
2018 was filled with salacious stories of fraud at the heart of 1Malaysia Development Berhad (1MDB). Millions stolen, bribes paid, lavish spending, and a jet-setting cast of characters. But a central, albeit less sexy, story of the 1MDB saga is the close cooperation between law enforcement officials in the United States, Malaysia, Singapore, and Switzerland (among others). Law enforcement officials have talked for years about the increased importance of transnational coordination in fraud investigations. But with charges pending in Malaysia and the United States, 1MDB demonstrates such cooperation is only growing.
- Increased Emphasis on Prosecution of Individuals
The 1MDB scandal also included U.S. criminal charges, announced in November, against two Goldman Sachs bankers and a Malaysian financier. These were the first charges brought under the FCPA related to 1MDB. It is an example of the Department of Justice’s (DOJ) focus on prosecution of individuals rather than (or in addition to) entities, within the context of FCPA enforcement. Further, in announcing revisions to 2015’s Yates Memo in late-November, the DOJ reinforced its ongoing commitment to prosecution of individual actors within the scope of corporate wrongdoing. The revisions clarified that in order to receive cooperation credit, companies must provide “relevant information” about all individuals “substantially” involved in the misconduct (rather than the previous and potentially more strict “all relevant information” about “any” individuals involved in misconduct). Even with the Yates Memo revisions, criminal prosecution of individuals is likely to remain an emphasis in 2019.
These are topics that we are monitoring because they are ripe for increased attention in 2019. Make sure your business is prepared by performing a thorough review of your anti-corruption policies and compliance procedures. If you have any questions about the potential impact of these topics or any other concerns regarding your company’s compliance programs, please contact us to discuss.
Heather Hatfield represents clients in corporate investigations, white-collar crime investigations and defense involving the Foreign Corrupt Practices Act (FCPA), complex contract disputes, oil and gas litigation ...
Blake Runions assists clients with broad range of business disputes and investigatory matters, including partnership disputes, internal investigations, and commercial litigation.
Prior to joining the Firm, Blake worked in the ...
Jamie Godsey represents public and private corporations, partnerships, and small companies on a broad range of complex business and commercial litigation. Her experience includes a wide variety of matters such as contractual ...
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