New Year and New Administration: DOJ Races to Clear Its FCPA Docket Before the Trump Administration Begins

If past is prologue, one should look to what occurred after Donald Trump unexpectedly defeated Hillary Clinton for president in November 2016. During the approximately two-month period that followed between November 2016 and his inauguration in January 2017, DOJ resolved eight FCPA enforcement actions against corporations — a record-high figure in such a short period of time. To put this into perspective, DOJ secured 13 corporate resolutions for FCPA violations during the entirety of 2016.¹ In contrast, only two FCPA cases were resolved during President Biden’s transition period in 2020-2021. The concentrated activity in late 2016 highlighted DOJ’s focus on closing major cases before Trump took office, resulting in settlements totaling $1.22 billion. Among other notable matters, Teva Pharmaceutical Industries Ltd. agreed to pay nearly $520 million to U.S. criminal and regulatory authorities — the largest criminal fine ever imposed against a pharmaceutical company for FCPA violations,² and DOJ entered into a global resolution with Rolls-Royce plc for approximately $880 million in the first-ever coordinated FCPA enforcement action with the UK Serious Fraud Office and Brazilian authorities.³

Adding to this noteworthy period, on January 17, 2017 — literally in the final hours of the Obama administration — Las Vegas Sands Corporation (“Sands”) entered into a non-prosecution agreement with DOJ, resolving charges that the gaming and resort company violated the FCPA’s internal controls and books-and-records provisions in connection with business transactions in China and Macao, for just under $7 million.⁴ This resolution came nine months after Sands reached an FCPA-related settlement with the Securities and Exchange Commission (“SEC”), based on the same core conduct. While parallel DOJ and SEC FCPA enforcement actions arising from the same conduct are common, they are typically coordinated and announced simultaneously. The Sands resolution is believed to be the only instance in FCPA history where DOJ and SEC actions were separated in this manner.⁵

This pattern of increased enforcement activity by a Democratic administration with an incoming Trump administration now appears to be repeating itself. Early signs suggest a robust continuation of FCPA enforcement before the Biden team leaves office. Since Election Day on November 5, DOJ has already resolved four corporate FCPA actions, all through deferred prosecution agreements (“DPAs”), involving alleged bribery conduct in Venezuela, Japan, Nepal, and South Africa.

Telefónica Venezolana. On November 8, 2024, Telefónica Venezolana C.A. (“Telefónica Venezolana”), a subsidiary of the Spanish telecommunications giant Telefónica S.A., entered into a DPA with DOJ to resolve a criminal information filed in the Southern District of New York charging the company with conspiracy to violate the anti-bribery provisions of the FCPA.⁶ Under the terms of the DPA, Telefónica Venezolana agreed to pay over $85.2 million following a DOJ investigation into an alleged scheme in which the company bribed Venezuelan government officials to secure preferential access to U.S. dollars in a government-sponsored currency auction. In 2014, Telefónica Venezolana participated in the auction to exchange its Venezuelan bolivars for U.S. dollars, which were needed to purchase equipment from two suppliers who did not accept bolivars. DOJ alleged that, to ensure its success in the auction and to conceal the illicit bribes, Telefónica Venezolana purchased the equipment at inflated prices from the two suppliers, allowing them to funnel approximately $28.9 million in bribes on the company’s behalf. Telefónica Venezolana subsequently obtained more than $110 million from the currency auction, representing over 65% of the funds distributed by the Venezuelan government through the program that year.

BIT Mining Ltd. On November 18, 2024, BIT Mining Ltd. (formerly known as 500.com) resolved investigations with the Justice Department and the SEC over its involvement in a scheme to bribe Japanese government officials to secure a contract to develop a casino resort in Japan.⁷ BIT Mining entered into a three-year DPA with DOJ and agreed to settle the case for a total criminal penalty of $10 million, which was reduced from the initial $54 million fine due to DOJ’s application of its inability-to-pay guidance. DOJ also agreed to credit $4 million of the civil penalty BIT Mining agreed to pay the SEC to resolve a parallel investigation against the $10 million criminal fine. Between 2017 and 2019, 500.com, which at the time was an online sports lottery service provider headquartered in Shenzhen, China, paid approximately $2 million to intermediaries, knowing the money would be used to bribe Japanese government officials. 500.com also created a subsidiary, 500.com Nihon, to help orchestrate the bribery scheme. The company’s then-CEO was separately indicted for his alleged role in directing the illicit payments and the subsequent efforts to conceal them.

McKinsey & Company. On December 5, 2024, DOJ announced that McKinsey and Company Africa (Pty) Ltd (“McKinsey Africa”), a South African wholly owned subsidiary of global consulting firm McKinsey & Company Inc. (“McKinsey”), had agreed to pay over $122 million to resolve DOJ’s longstanding investigation into its bribes to South African government officials.⁸ Between at least 2012 and 2016, McKinsey Africa, acting through a senior partner and for the benefit of McKinsey, allegedly agreed to bribe then-officials at South Africa’s state-owned entities to obtain confidential and non-public information about the awarding of lucrative consulting contracts. McKinsey Africa then submitted proposals for multimillion-dollar consulting engagements, while knowing its South African partner consulting firms would divert a portion of their fees as bribes to those officials. The scheme enabled McKinsey and McKinsey Africa to repeatedly get awarded consulting business that generated approximately $85,000,000 in profits. McKinsey Africa entered into a three-year DPA, and DOJ has agreed to credit up to one-half of the criminal penalty against amounts McKinsey pays to South African authorities in related proceedings. The former senior partner implicated in the case previously pleaded guilty to one count of conspiracy to violate the FCPA.

AAR CORP. Lastly, on December 19, 2024, AAR CORP. (“AAR”), a publicly traded aviation services company headquartered in Wood Dale, Illinois, entered into an 18-month DPA with DOJ and agreed to pay over $55 million to resolve investigations by the Justice Department and SEC into various FCPA violations arising from AAR’s bribery scheme in Nepal and South Africa that occurred between 2015 and 2020.⁹ According to AAR’s admissions, the company conspired to bribe high-ranking government officials through intermediaries and third-party agents to secure business contracts with state-owned airlines in Nepal and South Africa, reaping approximately $24 million in illicit profits. DOJ’s resolution includes a $26.4 million criminal penalty and $18.6 million in administrative forfeiture, while the SEC imposed $29.2 million in disgorgement and prejudgment interest. Earlier this year, a former executive of an AAR subsidiary and a third-party agent of AAR pleaded guilty for their respective roles in the bribery schemes in Nepal and South Africa.

With one month left before President-elect Trump assumes office again, we should expect to see even more enforcement actions by DOJ. On a superficial level, it may seem reasonable that current Biden officials in DOJ’s Criminal Division would harbor concerns about the future for anti-corruption enforcement. After all, in 2012, Trump described the FCPA as a “terrible law,” suggesting it should be replaced.¹⁰ However, FCPA enforcement under the first Trump administration reached record levels over a four-year period, not only in terms of the quantity of corporate cases brought by DOJ and the SEC and the fines that were recovered, but also in terms of the number of individuals who were prosecuted.¹¹ In contrast, enforcement under the Biden administration has not kept up pace. This slowdown could be attributable to several factors, not the least of which was the impact of the COVID-19 pandemic and the adverse effects it had on prosecutors and agents working cases that required substantial on-the-ground activity, both domestically and abroad. But the slowdown could also have resulted from the fact that the Biden administration made anti-corruption a “national security” priority. Paradoxically, this then required more political involvement and oversight of FCPA cases, which appears to have contributed to the slowdown. While it is true that the priorities of the next Trump administration will likely focus largely on immigration, sanctions, and drugs and human trafficking, being a lower priority may actually result in career prosecutors having more freedom to build their cases and obtain authority to bring additional enforcement actions.¹²

Conclusion

As President Biden’s term comes to a close, DOJ leadership will likely seek to close out additional longstanding FCPA investigations. Corporations should give serious consideration to whether this motivation by DOJ to finalize resolutions could present opportunities to get closure on cases at a lower cost than they previously expected. Of course, such a major decision requires careful consideration. Companies would be smart to continue to engage experienced counsel who understand the Department and the U.S. Attorneys’ Offices, and have experience in presidential transitions. And attorneys with such practical expertise and experience represent a sound investment for any company, whether facing an ongoing investigation or not.

¹ U.S. Dep’t of Justice, FRAUD SECTION YEAR IN REVIEW 2016, https://www.justice.gov/criminal/criminal-fraud/page/file/929741/dl.

² Press Release, U.S. Dep’t of Justice, Teva Pharmaceutical Industries Ltd. Agrees to Pay More Than $283 Million to Resolve Foreign Corrupt Practices Act Charges (December 22, 2016), https://www.justice.gov/opa/pr/teva-pharmaceutical-industries-ltd-agrees-pay-more-283-million-resolve-foreign-corrupt.

³ Press Release, U.S. Dep’t of Justice, Rolls-Royce plc Agrees to Pay $170 Million Criminal Penalty to Resolve Foreign Corrupt Practices Act Case (January 17, 2017), https://www.justice.gov/opa/pr/rolls-royce-plc-agrees-pay-170-million-criminal-penalty-resolve-foreign-corrupt-practices-act.

⁴ Press Release, U.S. Dep’t of Justice, Las Vegas Sands Corporation Agrees to Pay Nearly $7 Million Penalty to Resolve FCPA Charges Related to China and Macao (January 19, 2017), https://www.justice.gov/opa/pr/las-vegas-sands-corporation-agrees-pay-nearly-7-million-penalty-resolve-fcpa-charges-related.

⁵ Mike Koehler, Foreign Corrupt Practices Act Continuity in a Transition Year, 70 S.C. L. Rev. 143, 152 (2018).

⁶ Press Release, U.S. Dep’t of Justice, Telefónica Venezolana to Pay Over $85M to Resolve Foreign Bribery Investigation (November 8, 2024), https://www.justice.gov/opa/pr/telefonica-venezolana-pay-over-85m-resolve-foreign-bribery-investigation.

⁷ Press Release, U.S. Dep’t of Justice, Former CEO Indicted for Role in Bribing Japanese Officials and BIT Mining Ltd. Resolves Foreign Bribery Investigation (November 18, 2024), https://www.justice.gov/opa/pr/former-ceo-500com-now-bit-mining-ltd-indicted-role-bribing-japanese-officials-and-bit-mining.

⁸ Press Release, U.S. Dep’t of Justice, McKinsey & Company Africa to Pay Over $122M in Connection with Bribery of South African Government Officials (December 5, 2024), https://www.justice.gov/opa/pr/mckinsey-company-africa-pay-over-122m-connection-bribery-south-african-government-officials.

⁹ Press Release, U.S. Dep’t of Justice, AAR CORP to Pay Over $55M To Resolve Foreign Corrupt Practices Act Investigation (December 19, 2024), https://www.justice.gov/opa/pr/aar-corp-pay-over-55m-resolve-foreign-corrupt-practices-act-investigation.

¹⁰ Peter W. Klein, How will a new Trump administration prosecute corruption? (Nov. 16, 2024), https://www.nbcnews.com/politics/national-security/trump-administration-prosecute-corruption-rcna179281.

¹¹ Vinson & Elkins Partner Ephraim Wernick on FCPA Enforcement, Corporate Crime Reporter (July 29, 2019), https://www.corporatecrimereporter.com/news/200/vinson-elkins-partner-ephraim-wernick-on-fcpa-enforcement/

¹² G. Zachary Terwilliger, Ephraim (Fry) Wernick & Peter T. Thomas, White Collar and Corporate Criminal Enforcement in the Trump 2.0 Era, Vinson & Elkins LLP (November 19, 2024), https://www.velaw.com/insights/white-collar-and-corporate-criminal-enforcement-in-the-trump-2-0-era/.