Zach Terwilliger Joins Top Government Alums to Discuss the Future of FCPA Compliance and Enforcement

This was the main takeaway at the American Conference Institute’s 15^th Forum on the Foreign Corrupt Practices Act in Houston. G. Zachary Terwilliger, partner at Vinson & Elkins, former Associate Deputy Attorney General and former United States Attorney for the Eastern District of Virginia, joined a panel of other government alumni to share key insights into the present and future of FCPA compliance and enforcement.

Terwilliger was joined by Sandra Moser, former Chief, Fraud Section, U.S. Department of Justice (“DOJ”); Chris Cestaro, former Chief, FCPA Unit, Fraud Section, Criminal Division, DOJ; and Steven Peikin, former Co-Director, Division of Enforcement, U.S. Securities and Exchange Commission.

Panelists pointed out that courts and the government are experiencing their own form of “long Covid” with respect to prosecuting complex international fraud cases. Terwilliger stated four reasons for this. First, after the initial impact of the pandemic, there was a prioritization to address detained defendants pending trial so they could be given a speedy trial and a resolution. Second, though judges restarted jury trials, they have emphasized relatively shorter trials, and fewer documents, lawyers and defendants, which, according to Terwilliger, is not in line with a typical fraud case. Third, the synergy between investigative case agents and prosecutors has been interrupted by disruptions to international travel, and limits on the number of people allowed to enter U.S. Attorneys’ offices. Finally, the government has prioritized smaller Covid fraud cases and, as a result, Terwilliger observed that it is “harder to put together those larger, international long-form fraud cases.”

According to the panel, however, the return to monitorships previewed in Deputy Attorney General Lisa O. Monaco’s keynote address (also discussed here) at the American Bar Association’s 36th National Institute on White Collar Crime in October 2021 will have a significant impact on compliance procedures and policies. The Benczkowski Memo (which was the Trump-era guidance regarding the imposition of monitors) states that “where a corporation’s compliance program and controls are demonstrated to be effective and resourced at the time of resolution, a monitor will likely not be necessary.” That language has now shifted under the current administration to state that the same quality of compliance program “may not” merit a monitorship. “There is so much in that ‘likely not’ and ‘may not’ distinction,” Terwilliger said, “and following government’s guidelines for a successful compliance program is crucial” given the increased emphasis on the imposition of a monitor.

The panelists agreed that the government’s ability to evaluate the effectiveness of compliance programs has increased, and that such programs are no longer “show ponies” used to avoid government scrutiny.

In sum, Terwilliger states, “If anyone is on the fence about investing in compliance or wondering about the right allocation of resources, it is time to focus on these government guidelines to make company compliance programs robust. Otherwise, the likelihood of a monitorship being imposed as part of a resolution with the government is much higher.”