Law firm Miller & Chevalier released its Summer FCPA Review that covers the following highlights:
During the second quarter of 2014, U.S. enforcement agencies entered into four corporate Foreign Corrupt Practices Act (“FCPA”) actions against Hewlett-Packard Company and three of its subsidiaries. This level of activity represents a continued decline in resolved FCPA enforcement dispositions after a slow first quarter that included only three corporate dispositions involving two companies. While investigation activity levels appear robust, the overall pace of enforcement in 2014, in terms of resolved dispositions, remains at very low levels.
According to Miller & Chevalier’s tracking, there have been fourteen resolved enforcement actions (corporations and individuals) so far this year. After the peak in resolved enforcement in 2010, 2014 levels to date are consistent with activity levels of 2012 (when there were fifteen resolved actions at midyear) and slightly ahead of 2013 levels (when there were eleven resolved actions at midyear).
The firm anticipates at least one additional settlement in the near future — that of Avon Products, Inc., which disclosed a tentative settlement with U.S. enforcement agencies in its March 31, 2014, 10-Q filing. Avon stated in its disclosure that the company expects to pay $135 million in aggregate fines, disgorgement, and prejudgment interest to U.S. agencies: $68 million to the U.S. Department of Justice (“DOJ”) to resolve a criminal probe and $67 million to the Securities and Exchange Commission (“SEC”) to resolve a civil probe. On the DOJ side, the company is expected to enter into a Deferred Prosecution Agreement (“DPA”), while its Chinese unit will plead guilty to books-and-records violations of the FCPA. As part of its DPA, Avon will have a compliance monitor for at least 18 months, to be followed by a period of self-monitoring. On the SEC side, Avon will consent to the entry of final judgment against it on civil charges filed by the Commission. The U.S. agency probe has lasted five years and has cost Avon around $400 million in investigative costs, not including the anticipated settlement payments. The investigation began after Avon identified and self-disclosed allegations of potential misconduct in China.
The firm also learned of additional FCPA investigations initiated in 2013 from recent disclosures, and with 32 known investigations, 2013 is now the third-highest year on record in terms of investigations initiated, falling just short of 2007 (33 investigations) and 2012 (44 investigations). While we have identified only eight investigations thus far in 2014, this does not necessarily indicate a decline in enforcement activity, as there can be a lag in identifying new investigations because public companies may wait months (or even years) to disclose the existence of an investigation in their public filings, while private companies often never disclose investigations unless they come to light through independent reporting or the announcement of dispositions with enforcement authorities.