FCPA/Anti-Corruption Developments: 2020 Year in Review January 2021 Steptoe FCPA, White-Collar and International Investigations Practices FCPA/Anti-Corruption Developments: 2020 Year in Review Steptoe FCPA, White-Collar and International Investigations Practices Lucinda A. Low, Zoe Osborne, Brigida Benitez (eds.)1 Introduction Despite the challenges presented by the global COVID-19 pandemic, US Foreign Corrupt Practices Act (FCPA) enforcement authorities announced several high-profile individual and corporate enforcement matters throughout 2020, including several coordinated resolutions with foreign authorities as well as new domestic players. Overall, while the number of enforcement actions was slightly down from 2019 (34 total enforcement actions, 23 of which were brought by the Department of Justice (DOJ) and 11 of which were brought by the Securities and Exchange Commission (SEC)), 2020 was a record-breaking year in terms of corporate penalties, which totaled over $6 billion (with approximately half of that, $3.09 billion, ultimately payable to the US Treasury). The biggest corporate stories of the year were mega-resolutions with Airbus SE (Airbus) and Goldman Sachs Group Inc. (Goldman Sachs), both involving coordinated enforcement activity across multiple enforcement agencies and resulting in billions in fines and penalties to authorities in the United States, France, United Kingdom, Malaysia, Singapore, and Hong Kong. For the first time in 2020, the US Commodity Futures Trading Commission (CFTC) also issued an enforcement order involving foreign corruption, finding that energy and commodities trading firm Vitol Inc. (Vitol) engaged in fraudulent and manipulative conduct in Brazil, Ecuador, and Mexico. Enforcement against individuals slowed noticeably in 2020 following the COVID-19 pandemic, with new or unsealed charges against 18 individuals in 2020 (15 of which were brought by DOJ). These numbers are down from 2019’s actions against 27 individuals, and include a number of actions which have been sealed for one or more years. A significant Supreme Court decision and other policy developments also kept FCPA and anti-corruption experts on their toes this year. As previewed in our 2019 FCPA/Anti-Corruption Year in Review, in Liu v. SEC the Supreme Court resolved a key question left open in Kokesh v. SEC, determining that some forms of disgorgement could constitute permissible equitable relief (and thus is not a penalty per se) subject to certain conditions. We also saw updates to the FCPA Resource Guide and to DOJ’s Corporate Compliance Program Guidance this year, as well as the first DOJ Opinion Procedure Release since 2014. 1 Other contributors to Steptoe’s 2020 FCPA/Anti-Corruption Year in Review include Alexandra Baj, Chris Conte, Alexandria Melia, Susan Munro, Richard Battaglia, Ali Burney, Fernando Merino, Wendy Wysong, Rachel Peck, Nicholas Turner, and Hena Schommer (Eds.); Elizabeth Arkell, Jessica Piquet Megaw, and Jefferson Klocke (Associate Eds.); and Lucas Caiado, Jordan Cannon, Yas Froemel, Veronica Ganzitti, Wan Yi Ho, Jingchun (Cherry) Huang, Peter Ibrahim, Nicholas Kimbrell, Jessica Maneval, Lia Metrevelli, Anthony Pan, Marcia Pulcherio, Troy Shephard, Jennie Shulkin, A. Cherie Tremaine, Stefan Tsakanakis, Lin Yang, and Bo Yue. i Although there were headline-making multi-jurisdictional enforcement against Airbus and Goldman Sachs, an October 2020 Transparency International report lamented a perceived slowdown in anti-corruption enforcement among G20 countries (calling out China, Japan, the Netherlands, South Korea, Hong Kong, Canada, India, and Mexico as having the worst enforcement track records). COVID- 19 restrictions and delays also resulted in the first trial in the Swiss FIFA corruption probe to be time-barred. Nonetheless, there were some notable developments including: in Austria (which saw its largest corruption trial in post-war history), Spain (where prosecutors launched an investigation into Spain’s former king), France (which, in addition to the Airbus investigation, saw the trial of former president Nicolas Sarkozy for corruption and influence-peddling charges), and Peru (which continued active enforcement, including against former prime minister Yehude Simon Munaro). Investigation and enforcement by international financial institutions, including the World Bank, also remained active (though on a modified basis and with the increased use of technology in light of the COVID-19 pandemic). In 2021, we will be keeping an eye on possible changes to FCPA enforcement policies under the Biden Administration. We may begin to see the impact of COVID- 19 on the investigations pipeline. An increased focus on enforcement of securities law violations also seems likely, as enforcement authorities have indicated that the pandemic environment is “ripe” for such violations and market manipulation. Legislation giving the SEC authority to seek disgorgement as a legal remedy in federal court and doubling the statute of limitations for scienter-based securities violations (such as FCPA anti-bribery violations, 10(b) fraud claims, and others) may also result in increased prosecutions. Furthermore, companies in 2021 should be prepared to identify and address any areas of heightened anti-corruption risks created by COVID-19-related circumstances and to revisit any COVID-19-related changes to their compliance efforts as the current situation continues to evolve in 2021. Finally, we expect to see a reinvigorated international agenda in the anti- corruption arena, including in multilateral fora. ii Table of Contents I. Enforcement Statistics and Trends ................................................................................... 1 A. Number of Enforcement Actions ......................................................................................1 B. Monetary Sanctions ..............................................................................................................3 C. Geography of Conduct ....................................................................................................... 4 D. Nature of Conduct .................................................................................................................5 E. Monitors .....................................................................................................................................6 II. FCPA Policy Developments ............................................................................................... 7 A. Enforcement Agency Policies ...........................................................................................7 1. FCPA Resource Guide Update ................................................................................7 2. DOJ Updates Corporate Compliance Program Guidance, Emphasizes Role of Data ....................................................................................................................7 3. DOJ Opinion Procedure Release ............................................................................8 4. FCPA Enforcement Approach During COVID-19 ..............................................9 5. DOJ China Initiative ...................................................................................................10 6. OECD Phase 4 Review of the United States ..................................................... 11 B. Potential Biden Administration Policy Changes ........................................................ 11 C. Enactment of National Defense Authorization Act ................................................. 12 III. Significant Judicial Decisions in CPAF Matters and Related Civil Collateral Litigation ..............................................................................................................................16 A. Judicial Decisions ................................................................................................................. 16 1. United States v. Hoskins .......................................................................................... 16 2. Liu v. Sec. & Exch. Comm’n ..................................................................................... 17 3. United States v. Ho .................................................................................................... 18 B. Significant Civil ollateralC Litigation ............................................................................. 21 1. Keppel Offshore & Marine Ltd. .............................................................................. 21 IV. 2020 FCPA Corporate Settlements ............................................................................... 22 A. Parallel DOJ/SEC Corporate Enforcement Actions ............................................... 22 1. Goldman Sachs Group Inc. .................................................................................... 22 2. Herbalife Nutrition Ltd. .......................................................................................... 23 3. J&F Investimentos S.A. ............................................................................................ 25 4. Novartis AG and Subsidiaries ............................................................................... 26 B. DOJ Corporate Enforcement Actions ......................................................................... 28 1. Airbus SE ...................................................................................................................... 28 2. Beam Suntory Inc. .....................................................................................................30