The world of FCPA enforcement is always changing, and in this episode of Corruption, Crime and Compliance, Michael Volkov catches us up on three recent enforcement actions. From Corsa Coal's rare declination to SEC settlements with Flutter Entertainment and Rio Tinto, each case offers important insights into the current state of FCPA enforcement. He shares how voluntary self-disclosure, appropriate due diligence processes, and enhancements to compliance programs and accounting controls can help companies avoid penalties and strengthen their position.

You’ll hear Michael discuss these ideas:

• Companies are encouraged to voluntarily self-disclose bad behavior to the DOJ, which may result in a declination and significant reductions in penalties.
• Corsa Coal earned a rare declination from the DOJ after cooperating in the prosecution of two former executives and meeting their burden to establish inability to pay. Their disgorgement was significantly reduced from $31 million to $1.2 million.
• Flutter Entertainment, which acquired PokerStars, was fined $4 million by the SEC for improper payments to Russian-based consultants made by Stars Group, its previous owner. Stars Group failed to conduct due diligence or maintain appropriate written contracts for third parties, leading to bribery violations.
• Acquiring companies should conduct appropriate due diligence on the acquired company's FCPA compliance.
• Rio Tinto paid $15 million to settle FCPA violations arising from a bribery scheme involving a senior Ghanaian government official. Despite red flags indicating that the consultant was advising the Ghanaian official and preserving Rio Tinto's ability to operate in Guinea, Rio Tinto eventually approved two lump sum payments totaling $10.5 million.
• Companies should pay attention to red flags when paying high commissions to sales agents involved in extractive industries.
• Rio Tinto implemented enhancements to their compliance programs and accounting controls after FCPA violations.

KEY QUOTES:

"As part of DOJ's push on voluntary self-disclosures in changes to its corporate enforcement policy, they really are encouraging companies to come in and voluntarily disclose when they find bad behavior." - Michael Volkov

"...when acquiring a company, you've got to conduct due diligence and make sure that you do not find any FCPA violations or any problems like that." - Michael Volkov

"Rio Tinto strengthened its ethics and compliance organization, enhanced its code of conduct, as well as its policies and procedures, gifts and hospitality, due diligence, and use of third parties. In addition, Rio Tinto enhanced its whistleblower program and improved its monitoring systems and internal controls related to payments to third parties. Finally, Rio Tinto enhanced its anti-corruption risk assessments and transactions testing and increased training of employees and third parties." - Michael Volkov

Resources:

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group