2011 was yet another eventful year for Foreign Corrupt Practices Act (FCPA) enforcement. The US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have continued to focus on bringing action against individuals as well as corporations. They have also sought to encourage self reporting, by offering incentives of lesser penalties, including allowing for “self-monitoring” of a corporation’s compliance with undertakings regarding enhanced FCPA compliance. As a result, the previously standard requirement for an “independent monitor” to oversee such undertakings has been on the decline.

The government continues to emphasize the importance of conducting full and comprehensive FCPA due diligence of potential acquisitions, partners, distributors, and agents. The US Court of Appeals for the Second Circuit confirmed the importance of such due diligence on December 14, 2011 when it affirmed the FCPA conviction of Frederic Bourke. The conviction was based on the theory that he “consciously avoided” knowing about bribes that were being paid. Conducting comprehensive FCPA due diligence, and where “red flags” of violations are found, as was the case with Mr. Bourke, avoiding the transaction at issue, is more than likely going to be the recommended course of action going forward in 2012.

The government also continues to attempt to expand the reach of the FCPA through expansive interpretations of the statute; for example, the December 12, 2011 indictments of several former Siemens AG executives and agents, whose alleged FCPA violations involved an Argentine subsidiary of a German company, which was attempting to secure work from the Argentine government. Here these individuals face possible prosecution and imprisonment in the United States for alleged FCPA violations, even though all them are German citizens and the alleged bribes occurred in Argentina. The jurisdictional basis for the charges is that Siemens AG was a “foreign private issuer” subject to SEC regulation because Siemens had ADR’s listed in the United States and that the defendants agreed to commit acts in furtherance of the bribery scheme “within the territory of the United States.” These indictments reflect the US government’s broad view of the jurisdictional reach of the statute.

Fast-paced developments on the FCPA front will only increase in 2012, with congressional interest in possibly amending the statute (to define “government official” and to create a due diligence defense, among other proposals) and additional DOJ interpretive guidance on the horizon. The government’s increased enforcement of the statute and its ongoing cooperation with foreign jurisdictions on prosecutions, only appear to be increasing, as do the potential consequences for failing to fully and completely comply with all of the requirements of the statute.

Should you have any questions regarding this Alert, please contact members of Arent Fox’s International Trade Group, or the Arent Fox attorney who handles your matters.