Recent Developments Provide First Look at FCPA Enforcement Priorities Under the Second Trump Administration

After a temporary “pause” in enforcement of the Foreign Corrupt Practices Act (“FCPA”) and issuance of revised Guidelines for Investigations and Enforcement of the FCPA (“FCPA Guidance”), DOJ announced its first FCPA indictment and corporate resolution under the new framework, signaling the start of a new phase of FCPA activity that aligns with the Trump Administration’s stated enforcement priorities. 

I. First FCPA Indictment Post-Pause Underscores Focus on Mexican Cartels

First, as we’ve discussed, the Trump Administration has articulated an explicit goal of “total elimination” of cartels and transnational criminal organizations (“TCOs”), and the FCPA Guidance explicitly directs enforcement agencies to prioritize investigations where the alleged misconduct: “(1) is associated with the criminal operations of a Cartel or TCO; (2) utilizes money launderers or shell companies that engage in money laundering for Cartels or TCOs; or (3) is linked to employees of state-owned entities or other foreign officials who have received bribes from Cartels or TCOs.” 

On August 11, DOJ unsealed an indictment charging two Mexican businessmen with violations of the FCPA for their alleged role in a scheme to bribe employees of Petróleos Mexicanos (“PEMEX”), Mexico’s state oil company.  The indictment alleges that the two men gifted luxury items and made payments to PEMEX officials to obtain contracts with PEMEX worth at least $2.5 million.  Most notably, the Government alleged that one of the two defendants, Ramon Alexandro Rovirosa Martinez, “has ties to Mexican cartel members and that he was previously involved in violent conduct in Mexico.”  This appears, therefore, to be the first instance (but likely not the last) in which the FCPA is being wielded as a tool against actors the Government believes to have supported Cartels or TCOs, consistent with stated priorities. 

II. First FCPA Corporate Resolution Post-Pause Clarifies Path to Declination 

Second, as previously discussed, in May the DOJ announced updates to its corporate enforcement and voluntary self-disclosure policy (the “CEP”) which sets forth a “clear path” to a declination (i.e., decision not to prosecute) for companies that voluntarily self-disclose misconduct and meet certain enumerated criteria. 

This month, DOJ announced that Liberty Mutual Insurance Company (“Liberty Mutual”) received a declination relating to FCPA violations “despite evidence of bribery committed by certain employees of (Liberty Mutual’s) subsidiary in India who were acting as agents of (Liberty Mutual).”  Specifically, DOJ cited evidence that Liberty Mutual’s Indian subsidiary paid almost $1.5 million in bribes to officials at six state-owned banks in exchange for customer referrals, and that employees concealed the nature of such payments by falsely recording them as legitimate business expenses. 

Citing the CEP, DOJ explained its decision to decline prosecution of Liberty Mutual stating that: (1) the company timely disclosed the misconduct to DOJ (before the company’s internal investigation concluded); (2) the company fully and proactively cooperated with the Government’s investigation; (3) the nature and seriousness of the offense; (4) the company’s timely and appropriate remediation; (5) significant improvements made to the company’s compliance program; (6) the absence of aggravating factors; and (7) the fact that the company agreed to disgorge the value of its ill-gotten profit (approximately $4.7 million).

It seems, therefore, that the Liberty Mutual declination signals that the revised enforcement framework, including the FCPA Guidance and the CEP discussed above, may provide real incentives and opportunities for companies to engage in early advocacy and resolution with U.S. authorities.