When the Government launches an investigation into a company, the role of the Compliance Officer (CCO) is central. The COO may be familiar with conducting internal investigations, however, depending on the scope and subject of a Government investigation a CCO may lack the knowledge and capabilities to effectively handle the matters that are in question. The initial step is to analyze the allegation and determine the seriousness of the issues involved. If it is determined that there will be legal and/or financial implications, the assistance of in house and outside counsel will be imperative. Secondary is locating and locking down documentation. There is likely to be a request for communications, reports and documents. Having access to servers and email files will be critical. The US Department of Justice (USDOJ) released a manual in April 2019 titled Evaluation of Corporate Compliance Programs designed for Prosecutors and Government Agencies to implement during investigations. It offers three questions to be asked. From the manual it reads: "As the Justice Manual notes, there are three "fundamental questions" a prosecutor should ask during an investigation:" 1. "Is the corporation's compliance program well designed?" 2. "Is the program being applied earnestly and in good faith?" In other words, is the program being implemented effectively? 3. "Does the corporation's compliance program work" in practice? While the responses and supporting documents relating to these questions will most certainty fall under the umbrella of Compliance Officers duties day-to-day duties, it may be imperative to retain legal counsel with specialized knowledge to both navigate Government entities and protect the rights the COO and other Officers. Dealing with Government entities can be overwhelming and intimidating. Counsel can assist in navigating you and/or your company through the investigation. Attorney General Jeff Sessions recently announced the deployment of resources to investigated pharmaceutical companies and distributors in fighting the opioid epidemic. This initiative has and will continue to involve the investigation of companies involved in the selling and distribution of these and other controlled substances. Unfortunately COO's have found themselves the target of criminal investigations. Recently two executives of Miami-Luken, a pharmaceutical distributor, were charged with "conspiring to distribute controlled substances". From the DOJ:
"A federal grand jury has charged a pharmaceutical distributor, two of its former officials and two pharmacists with conspiring to distribute controlled substances in an indictment returned here yesterday. Four individuals have been charged, including Miami-Luken's former president and compliance officer and two West Virginia pharmacists."
Knowing the role and rights of a Compliance Office is critical to handling Government inquiries and investigation as smoothly as possible. Consulting with legal counsel may be the best course of action.
The Foreign Extortion Prevention Act was introduced in the House of Representatives on August 2, 2019. Similar to the Foreign Corrupt Practices Act (FCPA) the proposed bill will criminalize extortion by foreign officials and would allow the DOJ to indict those officials who demand or accept bribes in exchange for fulfilling, neglecting, or violating their official duties.
If you have made payments to government officials in other countries and are now being investigated, you may be in violation of the Foreign Corrupt Practices Act of 1977. While not all payments or entities are bound by the act, it's a good idea to understand what it is and what it aims to protect.
On Thursday the Justice Department, the SEC and the Fed jointly agreed to allow JPMorgan Chase to settle a case involving allegedly massive bribery of Chinese officials. The settlement will require the bank to pay penalties totaling $264 million but not to admit any wrongdoing. While critics including President-elect Trump called for executives to be charged criminally, the bank was able to achieve a nonprosecution agreement, which is unusual.
The main purpose of the Foreign Corrupt Practices Act (FCPA) is to eliminate bribery designed to influence foreign officials and negatively impact fair market competition.