SocGen-Type Bribery Probes Are Long, Despite Streamlining


• New DOJ policy encourages stronger coordination between agencies
• Bribery cases are hallmark investigations, likely unable to follow new procedures


The Justice Department’s efforts to avoid repetitive enforcement actions from multiple agencies won’t shorten massive anti-bribery investigations such as those involving Société Générale S.A. and Legg Mason Inc., white collar crime attorneys said.

DOJ Deputy Attorney General Rod Rosenstein announced a new policy May 9 that requires better coordination between his agency and other enforcers when investigating and imposing penalties on a company for the same conduct.

Multiple enforcement actions by different agencies, referred to as “piling on” by Rosenstein, deprive companies of a sense of certainty and finality and can be major resource drain for the DOJ.

That’s not going to fix complex cases such as SocGen’s, which was resolved June 4 after nearly seven years of DOJ investigation into illegal bribes and interest-rate manipulation.

“Rosenstein’s anti-piling on policy would have minimal impacts on the length of Foreign Corrupt Practices Act investigations,” Roberto Braceras, a partner at Goodwin Procter LLP in Boston, told Bloomberg Law. “The policy could help on the margins, but large, complex FCPA cases will still take extensive time to complete,” said Braceras, a former DOJ prosecutor.

SocGen, a French bank, entered into a settlement with both the DOJ and French regulators over its role in manipulating interest rates and paying some $90 million in bribes to Libyan officials. Maryland-based money management firm Legg Mason was penalized the same day for its part in the same bribery scheme. Both companies are still waiting for the Securities and Exchange Commission to wrap up its separate investigation in the matter.

Not Applicable

The new coordination policy should alleviate “a risk of repeated punishment that goes beyond what is necessary to rectify and deter future violations,” Rosenstein said.

FCPA cases, which routinely take several years to resolve, present unique challenges because of their international nature, said Alexandra Wrage, president of TRACE, an organization that consults with companies on anti-bribery compliance.

“The policy itself seems to acknowledge that attempting to ‘pile on’ can be a source of delay,” Wrage told Bloomberg Law. The policy could have the reverse effect of slowing FCPA investigations down more “by requiring a heightened degree of coordination with other authorities,” she added.

The DOJ is often delayed in gaining access to documents because foreign statutes block them. Rosenstein acknowledged in announcing the policy that the timing of other agency actions and diplomatic relations between countries make FCPA resolutions trickier.

Delay Games

Companies can “short-cut” drawn-out FCPA investigations if they acknowledge liability and pay fines early in an investigation, William Jacobson, a white collar attorney at Orrick, Herrington & Sutcliffe in Washington, told Bloomberg Law.

It’s a route rarely taken, said Jacobson, former assistant chief of FCPA enforcement at the DOJ. “Most companies, however, understandably want to put the government through its paces a bit and do their best to convince DOJ to agree to more lenient settlements or even to decline prosecution.”

The DOJ’s FCPA corporate enforcement policy attempts to reward companies that self-disclose bribery and cooperate in an investigation, but it’s a relatively young policy, so it’s difficult to tell whether it’s speeding up the process.

The DOJ’s attempt to stop “piling on” could help the speed of cases because defendants might be less resistant to cooperation, Wrage said. In the past, they “have used the actuality or likelihood of other duplicative penalties to argue in favor of a lower DOJ penalty,” she said.

High Settlements

The new coordination policy also is designed to give DOJ officials the freedom to choose which matters to focus on instead of involving the agency in every issue. The DOJ may turn its attention away from corruption cases involving smaller settlement amounts and less significant charges, leaving such matters primarily with the SEC, Braceras said.

But FCPA investigations, even though they are known to take years, aren’t going away, he added. “These types of cases will always be a big focus,” Braceras said.

The DOJ “invests a lot of time into these cases, and they won’t abandon them,” Jacobson added.

Bribery cases typically result in massive settlements for the DOJ, which can make time-intensive investigations worth it. The U.S. government has received more than $11 billion in all FCPA-related settlements, according to the Foreign Corrupt Practices Act Clearinghouse, a database run by Stanford Law School. The SocGen case resulted in $860 million in criminal penalties for the DOJ and French authorities, one of the highest ever in an FCPA matter. Legg Mason will pay $64 million.

Although that case took nearly a decade to close, there was a strong evidence trail of misconduct that kept investigators engaged. “These types of cases will not be terminated and will be seen to conclusion,” even though they “take so long to wrap up,” Braceras said.

To contact the reporter on this story: Victoria Graham in Washington at vgraham@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com