Rising cooperation and coordination in global anticorruption enforcement

December 2021  |  SPECIAL REPORT: WHITE-COLLAR CRIME

Financier Worldwide Magazine

December 2021 Issue

The most significant trend in anticorruption enforcement over the last five-plus years has been the increase in cooperation and coordination among global authorities. The US enforcement authorities – historically the world’s primary anticorruption enforcers – have been increasingly investigating corruption cases in parallel with their international counterparts.

This activity has included not only information sharing and cooperation among US and non-US authorities, but also more active enforcement of local laws by those non-US authorities. This cross-border anticorruption enforcement has complicated the landscape for companies that are subject to these investigations and has resulted in multibillion-dollar penalties for certain companies implicated in corruption-related misconduct.

Cooperation and coordination in corruption cases

Laws prohibiting foreign bribery are extraterritorial in nature. Corruption cases often involve bribe payers located in one jurisdiction, intermediaries facilitating and concealing the bribes while located in another jurisdiction, and officials receiving bribes while located in a third jurisdiction. For authorities investigating and prosecuting these cases, it is often critical to obtain assistance and cooperation from multiple jurisdictions around the globe.

Evidence and information sharing between countries is an essential component of this cooperation. Authorities share evidence in corruption cases through formal processes, often relying on treaties between countries that define each country’s obligation to provide evidence. Authorities may also seek to share evidence informally. Informal evidence sharing can take many forms and may include, for example, a prosecutor emailing key evidence to a prosecutor in another country who is investigating the same misconduct.

This type of evidence sharing is significantly faster and more efficient than sharing evidence through the formal process, and it has grown more common among many authorities investigating international corruption as relationships between those authorities have strengthened.

As various authorities around the world have increased their focus and resources dedicated to investigating and prosecuting corruption cases, US authorities have increasingly been investigating corruption cases in parallel with foreign authorities and have increasingly been cooperating with many of these authorities through both formal and informal channels.

This rise in parallel investigations and increasing cooperation among authorities has resulted in the authorities obtaining more useful evidence on a significantly shorter timeline. It has also resulted in companies subject to these investigations more frequently having to contend with authorities in multiple different countries investigating the same misconduct.

Companies facing investigations in multiple jurisdictions will typically seek to have the authorities coordinate with each other on the resolution of their respective cases. Coordinated resolutions involve each authority negotiating separate and distinct resolutions with a company in a coordinated manner. Each authority will independently determine and negotiate the appropriate form of the resolution with the company (in the US that will typically be a guilty plea agreement, a deferred prosecution agreement or a non-prosecution agreement), the penalties that the company will be required to pay in the country, and any other obligations that the company will be required to meet as part of the resolution, such as requirements that the company enhance its anticorruption compliance policies and procedures.

While the resolutions are independently negotiated between each authority and the company, coordination among the authorities can occur on many levels. Companies can seek to have authorities coordinate the timing of the negotiation and the announcement of their respective resolutions. Companies can also seek to have authorities coordinate their respective penalties in a manner that will mitigate the amount of duplicative penalties that the company will be required to pay.

Although coordinated resolutions cannot always be achieved, when authorities are willing to coordinate their resolutions, the company will obtain the additional benefit of understanding the full exposure associated with its case before finalising any individual agreement and the company can seek to obtain closure in its case on a single day.

Rise in coordinated resolutions

A review of US foreign corruption-related corporate resolutions shows that there has been a significant spike in the number of corporate resolutions the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) – the primary enforcers of the foreign bribery law in the US – have coordinated with foreign authorities in recent years.

Since 2016, there have been more than a dozen foreign corruption-related corporate resolutions that have involved US authorities and other global authorities announcing coordinated corporate resolutions. This is compared to only a handful of resolutions coordinated between US and foreign authorities in the years prior to 2016. This trend has been accelerating recently. Since the beginning of last year, 40 percent of all foreign corruption-related corporate resolutions involving the DOJ were coordinated with foreign authorities.

To date, the US has coordinated foreign corruption-related resolutions with authorities in many different countries, including authorities in Brazil, France, Germany, Hong Kong, the Netherlands, Singapore, Switzerland and the UK.

The Airbus SE case is an example of this reality. Last year, authorities in France, the UK and the US all announced coordinated resolutions with Airbus, a multinational aerospace company, on the same day. The resolutions stemmed from the authorities’ investigations into Airbus’s use of third-party business partners to bribe government officials and private airline executives in multiple countries across the globe in order to win business. Airbus agreed to pay more than $3.9bn in combined penalties and other monetary payments to the US, France and the UK, pursuant to the resolutions reached with authorities in each of those countries.

The Airbus case demonstrates the benefits that coordinated resolutions can provide to both authorities and to the companies that find themselves subject to investigations in multiple jurisdictions. From the perspective of the investigating authorities, having multiple countries enter into resolutions with Airbus allowed the authorities to collectively address more misconduct and obtain larger global penalties – thus sending a greater deterrent message – than would have been achieved if the company had only resolved with a single authority. Coordinating resolutions also allows law enforcement to demonstrate to their foreign partners that they are willing to cooperate and credit their work.

From the perspective of the company, because the authorities coordinated their resolutions, the company was able to mitigate the amount of duplicative penalties it was required to pay in reaching resolutions with each of the authorities and was able to obtain closure with each of the authorities on a single day.

For example, as part of the US resolution with Airbus, the DOJ agreed to credit approximately $1.79bn of the penalties Airbus would have otherwise been required to pay to the US to payments that Airbus made pursuant to the company’s resolution with authorities in France in association with the same misconduct. The US also deferred resolution over certain misconduct to the resolution reached between Airbus and authorities in the UK, further mitigating the amount of duplicative penalties that Airbus would have otherwise been required to pay had the authorities not coordinated in this case.

Considerations

The international community is moving toward a more cooperative and coordinated effort to deter bribery in international business. As more and more countries enter the anticorruption enforcement arena, the number of parallel investigations and coordinated enforcement actions will continue to rise.

Companies that are subject to international corruption investigations must now, more than ever before, consider each of the jurisdictions implicated by any alleged misconduct and consider the best approach to each jurisdiction and the potential benefits of seeking to coordinate its response across jurisdictions.

 

Christopher Cestaro, Jay Holtmeier and Kimberly Parker are partners at WilmerHale. Mr Cetaro can be contacted by email: christopher.cestaro@wilmerhale.com. Mr Holtmeier can be contacted by email: jay.holtmeier@wilmerhale.com. Ms Parker can be contacted by email: kimberly.parker@wilmerhale.com.

© Financier Worldwide

BY

Christopher Cestaro, Jay Holtmeier and Kimberly Parker

WilmerHale

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