More FCPA Enforcement Coming This Year, Former DOJ Official Says

Kahn, now a lawyer with Davis Polk, said several of his clients recently have been subpoenaed by DOJ “based on data analytics.” Although the agency has been previewing its data effort for years, Khan said, he’s “actually starting to see this take shape and form,” noting that DOJ recently hired an official within the FCPA unit dedicated to helping prosecutors “generate cases” based on public data.

“This is clearly something they're focused on,” Kahn said this week during the Bribe, Swindle or Steal podcast hosted by Trace, a nonprofit focused on anti-bribery compliance. “To have a data analyst assigned to the FCPA unit, it just means that they are invested in making this work. And so I think you're going to see cases.”

The agency is most likely devoting more time to scouring through data in “financial transactions,” Kahn said, including information submitted in suspicious activity reports that banks are required to send to the Treasury Department. He said DOJ has access to procurement information in countries where there's a higher risk of corruption, and agency officials are likely trying to “match that up with any allegations of corruption” in SEC filings or suspicious activity reports.

The Commerce Department already has partnered with Treasury on a new code for banks to include in those reports that signals the underlying activity may be connected to Russian sanctions evasion (see 2212160027). Officials have said that effort has led to more enforcement leads (see 2309110049 and 2311060055).

Kahn said he’s expecting a similar uptick in FCPA enforcement. “Data analytics is something that I'm sure everyone is getting tired of hearing about,” he said. But “we're starting to see cases being generated.”

Companies also should expect to see more corporate resolutions, including multiple resolutions that will “get across the finish line probably in the first half of the year.” Kahn’s comments came just before the U.S. announced German software company SAP SE agreed to pay more than $200 million for violating the FCPA (see 2401100069).

Kahn also is expecting “a lot of” FCPA litigation in 2024, saying five trials “have a really good likelihood of going this year,” which would be a record for trials in a year. “Trials lead to a lot of issues that are being litigated, and that always provides additional insight and interpretations of the statute by courts,” Kahn said, “which is really helpful because there's just not a lot of it.”

He also said defense attorneys will appreciate David Fuhr, who became DOJ’s permanent FCPA unit chief in October after serving on an acting basis. Although Fuhr will “undoubtedly be aggressive,” he’s also “someone who is willing to listen to arguments on both sides,” Kahn said. Fuhr is a “reasonable voice and someone who will give credence to good arguments that the defense makes.”

“I think that's a positive post for the Department of Justice,” he said, “but also for defense counsel and the business community more generally.”

As enforcement rises, Kahn said, companies likely will receive more guidance on FCPA compliance and various aspects of DOJ’s recently revised corporate enforcement policies, including DOJ’s definition of “extraordinary” cooperation. As part of policy changes announced last year, DOJ said companies with “aggravating” factors may avoid prosecution if they provide DOJ with extraordinary cooperation during the government’s investigation (see 2301190031), although lawyers have criticized that term for being too vague (see 2303080063, 2302060034 and 2306020042).

Companies this year likely will get a better understanding of “what is extraordinary cooperation,” Kahn said. He also said DOJ enforcement actions could give insight that may answer other pressing questions, such as: “What is considered an immediate disclosure? What is considered an effective compliance program?”

“I think as there are more enforcement actions,” he said, “we'll get some more data points around that.”