New FCPA Enforcement Trends In Latin America

Article by Latin America Practice

The second half of 2008 and first weeks of 2009 have proven to

be another groundbreaking period for the enforcement of the U.S.

Foreign Corrupt Practices Act ("FCPA"). Although the

breakneck pace of announced FCPA settlements and prosecutions has

ebbed slightly since September 2008, the sheer size of certain

settlements and their attendant implications may well alter the way

corporations, particularly multinational corporations, structure

their anti-corruption compliance programs.

The long-awaited December 2008 settlement with Siemens AG

resulted in over US$1.6 billion in combined penalties (taking into

account a previous settlement with German regulators), far

exceeding all previous FCPA-related sanctions. The more recent U.S.

enforcement activity, including the US$579 million penalty in

February 2009, confirms that the outsized corporate penalties

obtained in the Siemens settlement were not necessarily an

anomaly.

A number of lessons, implications and themes emerged from the

recent settlements and resolved actions, of which corporations

operating in today's enforcement environment should be aware,

as highlighted below.

Argentina and Venezuela

Importance of Foreign Investigations and Expansive

Jurisdictional Reach. The Siemens settlement confirms the U.S.

government's expansive jurisdictional view as to the

applicability of the FCPA, and clearly indicates that foreign

regulatory investigations and prosecutions can serve as the basis

for investigations by U.S. regulators.

In connection with the U.S. settlements, Siemens and three of

its subsidiaries – including Siemens Argentina and

Siemens Venezuela – incurred total fines of US$800

million. Siemens Venezuela was charged by the U.S. Department of

Justice with conspiracy to violate the FCPA's anti-bribery and

books-and-records provisions, while Siemens Argentina was charged

only with conspiracy to violate the FCPA's books-and-records

provisions.

The Siemens prosecutorial documents repeatedly emphasized that

non-U.S. corruption investigations and prosecutions constitute

significant red flags that the corporation may have violated the

FCPA. Although the documents applicable to the Siemens subsidiaries

detail some connections between the alleged improper conduct and

the United States, regulators (in what they deem to be appropriate

circumstances) will look carefully for any hooks to establish U.S.

jurisdiction over perceived violations of the FCPA.

Brazil

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