Matteson Ellis and Jacqueline Ferrand Comment on FCPA Enforcement Actions in Latin America in Latinvex

"Latin America:  FCPA Cases Grow"
08.28.13In this article, Matteson Ellis and Jacqueline Ferrand comment on the increase in FCPA enforcement actions in Latin America this year compared with last year. “There has been an increase in FCPA enforcement actions against individuals for conduct in Latin America for the first seven months of 2013 as compared to all of 2012,” they said. "Last year, there were no resolved FCPA cases against individuals for conduct in Latin America while, in contrast, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) resolved FCPA cases with three individuals for conduct in Argentina, Mexico, and Panama during the first half of 2013."

Meanwhile, there has only been one corporate resolution in 2013 involving FCPA violations in the region so far -- the SEC settlement with Ralph Lauren for improper payments to Argentine customs officials. However there are at least sixteen ongoing investigations by the DOJ and/or SEC of potential FCPA violations in Latin America, according to Ellis and Ferrand. Last year, the DOJ and the SEC settled enforcement actions involving conduct in Latin America with five companies. Two of the companies simultaneously settled enforcement actions with both agencies.

When asked about the FCPA outlook in Latin America, Ellis and Ferrand predict that despite the growing sanctions from both U.S. and Latin American governments, violations of the FCPA are likely to grow. “As multinational companies continue to enter booming markets like those of Colombia, Brazil, Mexico and Panama, risks will only increase. Every indication is that U.S. enforcement officials will continue to bring cases involving the region.”

The opposite is also true. U.S. FCPA investigations will involve improper payments not only by U.S. companies, but also by Latin American-based companies that are directly subject to the FCPA by virtue of their international presence. “The Embraer investigation is the one to watch right now,” they said. “It should serve as a wake-up call for companies in the region that are going global. All such companies must heed international compliance standards these days. There really is no exception.”

Another growing dynamic that is creating additional risk for companies is the parallel or follow-on investigations and prosecutions that are often conducted by domestic enforcement officials in local Latin American countries. “In the FCPA world, it is more and more common for domestic officials to begin their own investigations and/or prosecutions of multinational companies and their employees, whether local nationals or expatriates,” Ellis and Ferrand said. “Sometimes these arise after FCPA settlements with DOJ and/or the SEC and sometimes they occur in parallel to ongoing FCPA investigations.”
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