Top 10 International Anti-Corruption Developments for November 2024

Designed for busy in-house counsel, compliance professionals, and anti-corruption lawyers, this newsletter summarizes some of the most important international anti-corruption law and enforcement developments from the past month, with links to primary resources. This month we ask: How will the election of Donald J. Trump as President of the United States impact enforcement of the Foreign Corrupt Practices Act (FCPA)? Which companies resolved FCPA cases with the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC)? How does the United Kingdom’s new guidance on the failure to prevent fraud offense compare to its previous guidance on the failure to prevent bribery offense? The answers to these questions and more are here in our November 2024 Top 10.

1. Donald Trump Elected President of the United States

On November 5, 2024, Donald J. Trump defeated incumbent Vice President Kamala D. Harris in the U.S. presidential election. When Trump was elected president for the first time in November 2016, we predicted that, despite his historical criticism of the statute, FCPA enforcement likely would not change significantly under his administration. In our view, this was largely because of factors such as historic bipartisan support for FCPA enforcement and the fact that the DOJ prosecutors, SEC enforcement attorneys, and federal law enforcement agents who do the daily work to build FCPA cases are career officials. Our prediction proved largely correct. In fact, as we noted in October 2020, rather than decreasing, FCPA settlement amounts broke successive records in 2019 and 2020. Whether past is prologue or no guarantee for future results is hard to say. Neither Trump’s current nominee for U.S. Attorney General, Pamela J. Bondi, nor current nominee for SEC Chair, Paul S. Atkins, has an extensive record of commenting publicly on the FCPA. Moreover, Bondi has not enforced the FCPA in her previous prosecutorial positions, and Atkins, although having previously served as an SEC commissioner, left that position in 2008, just as SEC was starting to ramp up its FCPA enforcement efforts. Here is our take: Given the structural factors that led to the increase in, and sustainability of, FCPA enforcement in the past, combined with new efforts by DOJ to increase whistleblowing and self-reports, we should expect that FCPA enforcement will continue in the same trajectory—until it doesn’t. Of course, if Trump follows through on some of his more extreme threats to dismantle DOJ, then all bets may be off. But even if FCPA enforcement maintains its current level, FCPA enforcement could change. Trump’s primary criticism of the FCPA in 2012 was that it disadvantaged U.S. companies in international trade, and his first administration had a stated goal of using the FCPA against Chinese companies that compete with American businesses. (See our November 2018 Top 10 regarding DOJ’s “China Initiative” for more.) Then again, DOJ and SEC already use the FCPA against non-U.S. companies, including in several of the FCPA enforcement actions discussed below, which involved Chinese and Venezuelan companies. Will this record of FCPA enforcement against foreign companies mitigate Trump’s concerns, or will it serve as a blueprint for a more targeted and trade-based approach to enforcement? Again, our answer is to expect that FCPA enforcement will remain the same—unless and until it changes.

2. DOJ Criminal Division Issues Report Lauding Pilot Program for Compensation Incentives and Clawbacks

On November 22, 2024, DOJ’s Criminal Division released a status report on its Pilot Program Regarding Compensation Incentives and Clawbacks (Pilot Program). The Pilot Program, which began in March 2023, requires that corporations resolving Criminal Division investigations implement compliance-related incentives into their compensation programs and offers fine reductions for corporations that voluntarily claw back compensation from culpable employees. The report stated that, as of November 22, 2024, 16 companies had entered into agreements requiring compliance-promoting criteria in compensation systems as part of corporate resolutions with the Criminal Division, three companies had received fine reductions for withholding compensation, and one company had received a deferral of a portion of its fine while it attempts to withhold additional funds. According to the report, these instances are evidence that the Pilot Program “is generating positive results,” leading the Criminal Division to “direct[] our prosecutors to highlight the Compensation Pilot [Program] and other compliance-related policies early in an investigation, which ensures that companies that have not yet incorporated compliance into their core compensation or review metrics have the opportunity to start that process during our investigations and allows companies that have such metrics to consider the effectiveness of these metrics and other compliance-related policies.” In published remarks, Principal Deputy Assistant Attorney General Nicole M. Argentieri highlighted the Pilot Program as one of DOJ’s key policy changes in her time leading the Criminal Division. She called the Pilot Program a success in DOJ’s effort to improve corporate transparency and compliance, while also noting that its three-year term is only halfway complete.

3. China-Based Online Sports Lottery Provider Resolves Japan Bribery Allegations with DOJ and SEC

On November 18, 2024, DOJ and SEC announced resolutions with BIT Mining Ltd. (formerly 500.com) for alleged violations of the FCPA’s anti-bribery and accounting provisions, while DOJ also announced the unsealing of FCPA charges against the company’s former CEO, Zhengming Pan. According to the agencies, between 2017 and 2019, Pan and others agreed to pay, through third party intermediaries, approximately $2 million in bribes to Japanese government officials in a failed bid to win a contract to open a resort and casino in Japan. The bribes allegedly consisted of cash, gifts, travel, and entertainment, falsely recorded as legitimate expenses such as management advisory fees. The company entered into a three-year deferred prosecution agreement (DPA) with DOJ, filed in the District of New Jersey, under which it agreed to pay a total criminal penalty of $10 million, a reduction of $44 million off of the penalty calculated under the U.S. Sentencing Guidelines based on its inability to pay. The company will further receive a $4 million credit for the civil penalty it agreed to pay under the SEC order. The indictment against Pan, filed under seal in the District of New Jersey on June 18, 2024, charges Pan with conspiring to violate, and violating, the FCPA’s anti-bribery and books-and-records provisions. Pan, a Chinese national, does not appear to be in U.S. custody. Former Japan House of Representatives member Tsukasa Akimoto was sentenced to four years in prison in Japan related to, among other things, accepting bribes totaling 7.6 million yen from 500.com from September 2017 to February 2018 in connection with an integrated resort and casino project. (For a detailed timeline of the “casino bribery scandal” from 2016 through September 2021 from a Japanese perspective, see here.)

4. Venezuelan Telecom Resolves Venezuela Bribery Allegations with DOJ

On November 8, 2024, DOJ announced that Telefónica Venezolana, a subsidiary of Madrid-headquartered Telefónica S.A., had agreed to pay over $85.2 million to resolve allegations that it bribed Venezuelan government officials to receive preferential access to U.S. dollars in a 2014 currency auction. According to DOJ, to ensure its success in the currency auction, the company paid two suppliers almost $29 million, at least a portion of which was intended for two high-ranking Venezuelan government officials and was routed through correspondent bank accounts at financial institutions in New York. The bribery proceeds were allegedly generated by inflating the price of equipment purchased from the suppliers. The company allegedly received over $110 million through the currency auction. The company entered into a DPA with DOJ, filed in the Southern District of New York, related to an information charging it with conspiring to violate the FCPA’s anti-bribery provisions.

5. DOJ and SEC Charge Several Individuals in Connection with an Alleged Indian Bribery Scheme

On November 20, 2024, DOJ and SEC announced enforcement actions related to an alleged bribery scheme involving a large solar energy project in India. According to the agencies, between 2020 and 2024, several individuals associated with two Indian renewable energy companies, Adani Green Energy Ltd. and Azure Power Global Ltd, agreed to pay more than $250 million in bribes to Indian government officials to obtain lucrative solar energy supply contracts with the Indian government, which were projected to generate more than $2 billion in after-tax profits over a 20-year period. The agencies further allege that several executives made materially false and misleading statements to investors about their conduct and that several others obstructed a grand jury investigation into the alleged bribery scheme by, among other things, deleting emails and electronic messages and making false statements at meetings with DOJ, SEC, and the Federal Bureau of Investigation (FBI). An indictment returned in the Eastern District of New York charges Ranjit Gupta, Cyril Cabanes, Saurabh Agarwal, Deepak Malhotra, and Rupesh Agarwal with conspiring to violate the FCPA’s anti-bribery provisions; Gautam Adani, Sagar Adani, and Vneet Jaain with conspiring to commit securities fraud and wire fraud and committing securities fraud; and Cabanes, Malhotra, and both Agarwals with conspiring to obstruct justice. SEC filed two complaints in the Eastern District of New York, alleging in one that the Adanis violated various provisions of the Securities Act and the Exchange Act and in the other that Cabanes violated the FCPA’s anti-bribery provisions.

6. Ex-Banker Pleads Guilty in International Bribery and Money Laundering Scheme Involving Former Comptroller General of Ecuador

On November 13, 2024, DOJ announced that John Polit had pleaded guilty in the Southern District of Florida to one count of conspiracy to commit money laundering for allegedly laundering bribe proceeds paid for the benefit of his father, Carlos Ramon Polit Faggioni, the former Comptroller General of Ecuador, through the U.S. financial system and into various investments in South Florida, between 2010 and 2018. The elder Polit, who allegedly received the bribes from a Brazil-based construction company and from an Ecuadorian businessman, was indicted on money laundering charges in March 2022, convicted by a jury in April 2024, and sentenced to 10 years’ imprisonment in October 2024. The younger Polit is scheduled to be sentenced on January 30, 2025, and faces a maximum penalty of 10 years of imprisonment.

7. SEC Submits Annual Whistleblower Report to Congress

On November 15, 2024, SEC released its annual Report to Congress regarding its Whistleblower Program. According to the report, SEC received almost 30,000 tips in FY2024, up from more than 18,000 tips in FY2023, although over 14,000 of the FY2024 tips came from just two individuals. SEC reported that it awarded over $255 million across 47 individual whistleblowers in FY2024, a notable drop from the nearly $600 million awarded in FY2023 but roughly on par with the $229 million awarded in FY2022. According to the report, SEC received 557 FCPA-related tips in FY2024, up from 237 FCPA-related tips received in the previous fiscal year. (Similar to FY2023, the most common complaint category reported by whistleblowers was manipulation (9,195), with municipal securities and public pension (47) being the least common.) The annual Whistleblower Report serves to remind companies about the importance of ensuring their reporting mechanisms, anti-retaliation policies, and investigation procedures are up to date and equipped to handle whistleblower reports.

8. OECD Working Group on Bribery Releases Anti-Corruption Reports for Portugal and Several Central Asian Countries

• OECD Working Group Expresses Concern at Portugal’s Failure to Implement Anti‑Corruption Recommendations. On November 15, 2024, the OECD Working Group on Bribery announced the results of its Phase 4 Two-Year Follow-Up evaluation of Portugal’s implementation of the OECD Anti-Bribery Convention. All parties to the Convention are subject to a rigorous peer-review process, Phase 4 of which focuses on the evaluated country’s enforcement of the Convention and considers the country’s particular challenges and positive achievements. The Working Group expressed urgent concern that Portugal had failed to correct concerns voiced as far back as the country’s 2007 Phase 2 evaluation. Portugal has failed to make financial penalties an available punishment for natural persons convicted of foreign bribery offenses and still allows organizations to argue that an employee or agent was “acting against express orders” as a defense against foreign bribery liability. These legislative issues, along with a slow pace in foreign bribery enforcement actions, gave the Working Group serious pause about Portugal’s implementation of the OECD Anti-Bribery Convention. (For more on Portugal’s Phase 4 evaluation, see our October 2022 Top 10.)
• Istanbul Anti-Corruption Action Plan (IAP) Issues Monitoring Reports for Five Countries. Between November 18 and 20, 2024, the IAP announced results of the fifth round of peer‑review anti-corruption monitoring for Tajikistan, Kyrgyzstan, Kazakhstan, Uzbekistan, and Mongolia. The IAP is the sub-regional peer review program for the Anti‑Corruption Network for Eastern Europe and Central Asia (ACN), which is a regional outreach program of the OECD Working Group on Bribery. The IAP’s fifth round of monitoring was launched in 2022 and introduced a more normative peer-review framework than previous monitoring efforts. The process measures country performance against a set of uniform benchmarks, with the goal of achieving higher objectivity, consistency, and transparency. Notably, the U.S. Department of State’s Bureau of International Narcotics and Law Enforcement affairs provided support for the latest round of review. While the five new reports commend the reviewed countries for taking strides towards combatting high-level corruption, the reports also emphasize that each country requires further legislative and enforcement-related reforms.

9. UK Publishes Guidance on Failure to Prevent Fraud Offense

On November 6, 2024, the UK government issued highly anticipated guidance on the new failure to prevent fraud offense. Under the new offense, which was part of the Economic Crime and Corporate Transparency Act enacted in October 2023 and will come into effect on September 1, 2025, companies must prove that they had “reasonable fraud prevention procedures in place” to avoid liability for the acts of related culpable individuals. The UK government’s 44-page guidance document sets out six principles that companies should follow to ensure their fraud prevention procedures are “reasonable,” including: (1) top level commitment, (2) risk assessments, (3) proportionate risk-based prevention procedures, (4) due diligence, (5) communication and training, and (6) monitoring and review. These principles are largely the same as the six principles enumerated in the UK government’s Bribery Act 2010 guidance, published in February 2012, in connection with the UK Bribery Act 2010’s failure to prevent bribery offense. (For more on the UK’s new guidance, see our client alert.)

10. South African Political Party Introduces Constitutional Amendment to Establish Independent Anti-Corruption Commission

On November 3, 2024, the South African political party Democratic Alliance (DA) introduced a bill that would amend the country’s constitution to create an independent “Anti-Corruption Commission.” The new commission would have independent authority to investigate and prosecute complex corruption and high-level crime. The bill responds to concerns that South Africa’s National Prosecuting Authority (NPA) lacks the necessary independence to effectively prosecute corruption. On November 26, 2024, the bill was presented to the Portfolio Committee on Justice and Constitutional Development, through which it must pass to reach the South African National Assembly. If passed, the amendment would fulfill a key recommendation from South Africa’s Judicial Commission of Inquiry into Allegations of State Capture, Corruption, and Fraud in the Public Sector including Organs of State, commonly referred to as the Zondo Commission after its chairperson, Acting Chief Justice Raymond Zondo, which was established in January 2018. Another key recommendation of the Commission, the creation of a failure to prevent corrupt activities offense, was implemented in April 2024.