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Corruption Won’t Take a Time-out During the COVID-19 Crisis

Finding Key Documents Fast Can Ward Off FCPA Woes

Before the COVID-19 crisis, experts predicted that Foreign Corrupt Practices Act (FCPA) enforcement would remain active in 2020. Even if the pandemic slows down initiation of FCPA government investigations, there’s certainly no guarantee that corrupt agents/intermediaries will stop engaging in risky behavior while attempting to secure business overseas. Here are a few things to keep in mind regarding FCPA monitoring and investigations during the COVID-19 crisis.

Remain Vigilant During COVID-19 Crisis

During this global health crisis when more employees than ever are working from home offices, it’s important to keep a vigilant eye on FCPA compliance across your organization. Without co-workers in the next cubicle or office, bad actors may be emboldened to engage in corrupt activities, speaking freely on the phone or even having home meetings with agents and intermediaries out of the sight of co-workers.  In addition, employees have ready access to their personal laptops in home offices where they may attempt to hide communications with intermediaries while plotting and executing potential bribery schemes.

As developing countries start to reopen vital industries  such as oil, construction and agriculture you’ll want to keep alert to FCPA transgressions. The competition to win business in the stifled COVID-19 economy will be intense, creating an environment ripe for corruption.

Conduct Rapid Internal Investigations and Disclosure to Minimize Risks

During the COVID disruptions, the SEC continues to reward companies that conduct effective internal investigations and voluntarily disclose potential violations of the FCPA. Just last week, the SEC announced charges against a former foreign subsidiary executive — but not the parent Wall Street firm. The government elected not to prosecute the parent firm because it had conducted due diligence and compliance investigations into the subsidiary’s corrupt activities.

If you detect even a hint of potential bad behavior it’s important to quickly start an investigation. Early detection and disclosure to the FCPA unit at the SEC can help you avoid or limit charges and hefty penalties.


In 2019 the SEC and DOJ collected over $2.6 billion in criminal and civil penalties and restitution for 14 FCPA enforcement actions.


When you want to do a rapid, efficient FCPA investigation of suspect activity, linear review of all the suspected employee’s data associated is not a wise approach.  Instead, use of customized linguistic search models, analytics, and expert-driven advanced search technology can help you more rapidly discover the key documents hidden in mountains of data. With FCPA investigations, the number of incriminating documents and emails can actually be relatively small. Thus, a highly targeted search approach is important for quick assessments and decisions on whether the conduct merits discussions with FCPA regulators to ward off potential problems and penalties.

Be Aware of Privacy Laws

Global privacy laws such as the EU General Data Protection Regulations (GDPR) can be a major complication in FCPA internal investigations. For example, under  GDPR definitions, virtually all employee data contains protected personal data. This means you must obtain consent from a suspected employee before you can process and review their data.  Even if given, the employee consent may not be sufficient as the power relationship between the employer and employee may mean the consent does not meet the “freely given” consent requirement. However, the “legitimate interest” exception may still provide grounds for processing and reviewing the data under the “reasonable level of suspicion of misconduct based on specific, documented facts” factor in the balancing test. Cross border transfers of personal data are also restricted under the GDPR, so in-country review of data on potential FCPA violations is sometimes necessary if a safe harbor or other exception is not available.

Make no mistake — the COVID-19 crisis is no time to become lax on FCPA monitoring and investigations. An increase in remote work makes hiding bad behavior easier. The SEC continues to reward companies that find bad behavior and collaborate with enforcement authorities, making rapid internal investigations a must-have. Finally, you must account for global privacy laws as you conduct investigations.

 


H5 has supported clients in many Foreign Corrupt Practices Act matters with expertise, Key Document IdentificationSM, and responsive review services. Learn more about how we can help in your next investigation.

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