Foreign Authorities Are Cracking Down on Corruption

The pace of international law enforcement cooperation in the anti-corruption setting has quickened since 2009. Even so, there is a widespread perception among in-house counsel that Western regulators — including the U.S. Department of Justice and Securities and Exchange Commission — cannot easily pursue anti-corruption matters that require significant assistance from their foreign counterparts, particularly those in the developing world. This assumption is dangerous, as it can lead to poorly conceived anti-corruption risk analysis and potentially disastrous decision-making in the event of an investigation.

We found, after a review of every high-profile Foreign Corrupt Practices Act enforcement action brought by the DOJ or SEC since 2009, that in fact developing countries often offer extensive anti-corruption support and that foreign partners can instigate — and turbo charge — U.S. investigations. Even Switzerland has become a robust anti-corruption partner. To reach these conclusions, we analyzed publicly available materials, including press releases, legal commentary, news articles and information provided during FCPA seminars.

Since 2009, there have been approximately two dozen high-profile FCPA enforcement actions in which the DOJ, SEC or both publicly praised the close cooperation provided by foreign counterparts, including those in the emerging markets. Given the nature of FCPA enforcement, there are likely numerous additional matters in the pipeline in which foreign governments are assisting the DOJ or SEC. The key takeaways from our analysis are:

Developing countries often offer extensive anti-corruption support

Our review of recent cases debunks the misperception that developing-country law enforcement is unable or unwilling to aid Western anti-corruption investigations. Since 2009, the DOJ and SEC have worked closely with partners in a host of the most populated and economically vital developing countries in the world, including China (Hong Kong), Indonesia and Mexico, to name but three examples. Moreover, U.S. regulators have developed close working relationships with their counterparts in other jurisdictions that historically have been considered high risk for anti-corruption or money laundering purposes, such as Costa Rica and Panama.

These trends will accelerate for several reasons. First, corruption is now a central political issue in many developing democracies such as Brazil and Indonesia, and as this trend grows, so too will the breadth and depth of law enforcement cooperation with the West. Second, anti-corruption cooperation is often a requirement insisted upon by Western countries, as well as international organizations such as the International Monetary Fund and the World Bank, when they provide financial or technical assistance to developing nations. Third, even many nondemocratic governments, such as that of Chinese-controlled Hong Kong, are concluding that anti-corruption enforcement enhances the legitimacy of the government, and thus some measure of anti-corruption cooperation could become an area of mutually beneficial common ground in the years ahead.

Foreign partners, including those in developing and emerging countries, can instigate and expedite U.S. investigations

Our analysis of FCPA enforcement activity since 2009 reveals that a substantial number of high-profile FCPA matters pursued by the DOJ and SEC were either instigated or bolstered by foreign law enforcement. For example, the various cases resulting from the Bonny Island scandal in Nigeria all trace their roots to an investigation by French authorities. Numerous recent cases appear to have been advanced by close cooperation between U.S. regulators and their foreign counterparts, particularly those in Western Europe. This cooperation allows U.S. regulators to “piggyback” off the work of such partners by gaining access to seized documents, developing investigative leads, shortening the time needed to conduct an investigation, and reducing the number of departmental resources required to manage the initial, critical stages of an inquiry. Foreign regulators thus have been — and will remain — a critical force multiplier for the DOJ and SEC.

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