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Navigating the Turbulent Waters of Cross-Border White Collar and Antitrust Issues (Part 1)

On May 19, 2014, I participated on a panel entitled “Cross-Border Investigations Involving Multiple Agencies” at the New York City Bar Association’s Third Annual White Collar Crime Institute. The moderator of the panel was Bruce Yannett from Debevoise & Plimpton and my co-panelists were Denis J. McInerney, the former chief of the Fraud Section at DOJ; David Meister, the former Director of Enforcement at the Commodity Futures Trading Commission; and Aaron R. Marcu of Freshfields. Our discussion addressed a variety of hot-button topics that have arisen in the benchmark and other financial fraud investigations including dealing with prosecutors and regulators from multiple jurisdictions such as the DOJ (Antitrust and Criminal Divisions), CFTCSECFCA (formerly the FSA) and SFO, navigating agencies’ policies and practices regarding corporate cooperation, determining the risk of individual employees’ criminal exposure in different jurisdictions and evaluating the impact of compelled statements and recording of interviews by the FCA. It became readily apparent from our discussion that the different enforcement agencies and regulators deal with corporate cooperation very differently and that a practitioner representing financial institutions or other companies in this arena must navigate the myriad land mines very carefully.

One of the most salient differences between agencies is the existence of the Antitrust Division’s Leniency Program, which has been the prototype for leniency programs around the globe. In 1990 there was 1 jurisdiction with an amnesty program; there are over 50 today.  Jurisdictions with a program include the U.S., EU, Canada, Australia, Brazil, Japan, Korea, Poland, and the UK. (See “The Evolution of Criminal Antitrust Enforcement Over the Last Two Decades,” speech by Scott D. Hammond before the ABA Criminal Justice Section’s National Institute on White Collar Crime (February 25, 2010).) When representing a client in a complex cartel fraud investigation, assessing your client’s exposure in each of these jurisdictions and applying for amnesty, if appropriate, can be a very time-consuming and costly endeavor. The stakes are even higher for your company if the jurisdiction criminalizes cartel offenses. In addition to the U.S., the UK, Canada, Japan, and Korea, many EU Member States (including the Czech Republic, Estonia, France, Greece, Hungary, Ireland, Slovakia and Slovenia) have the power to apply criminal sanctions, which they retain in parallel with the European Commission. More countries continue to criminalize cartel offenses. Australia’s criminal cartel statute took effect in 2009 and Mexico criminalized cartel behavior in 2011. Assessing up front what your company’s exposure is and applying for leniency in the appropriate jurisdictions is essential if you want to maximize your client’s benefits under the respective leniency programs.

Our discussion highlighted the different approaches to corporate cooperation taken by the different regulatory and enforcement agencies, most notably the different factors used by the Antitrust and Criminal Divisions of the DOJ to assess cooperation and the heightened requirements under the Antitrust Division’s Leniency Program with respect to the cooperation of the company’s directors, officers and employees. Under the requirements of the U.S. Leniency Program, for example, in order for the confession of wrongdoing to be a “corporate act” and in order for the cooperation to be considered “full, continuing, and complete,” the corporation must, in the Division's judgment, be taking all legal, reasonable steps to cooperate with the Division's investigation. The model corporate conditional leniency letter requires the company to use “its best efforts to secure the ongoing, full, and truthful cooperation of [its] directors, officers, and employees.” A corporation’s failure to secure the full and truthful cooperation of one or more individuals would not necessarily prevent the Division from granting the leniency application. However, the number and significance of the individuals who fail to cooperate, and the steps taken by the company to secure their cooperation, is relevant to the Division's determinations of whether there is a corporate confession, whether the corporation's cooperation is truly “full, continuing, and complete,” and whether the Division is receiving the benefit of the bargain.

Read part 2 here.