You are on page 1of 6

ACI 8th Global Forum on Anti-Corruption in High Risk Markets

July 25, 2017


Sandra Moser remarks

Good morning everyone. I would like to thank the ACI and todays organizers for the
kind introduction, and thank all of you for allowing me the privilege of kicking off this
conference. It is heartening to see so many prominent legal practitioners and compliance
executives coming together to discuss the very important topic of anti-corruption compliance in
high risk markets.

We stand at a critical juncture in the fight against transnational corruption. And the
importance of this fight cannot be overstated. The impact of corruption is unambiguous.
Because of the efforts of prosecutors in countries across the globesome of them the very
definition of high riskthe curtain has been ripped back/ revealing deep-rooted and pervasive
corruption up to the highest levels of governance/ and putting on display for the world to see its
devastating effects:

The way that corruption undermines the rule of law and destabilizes economies; the link
between corruption and terrorism and the attendant threat to global security; the erosion of the
free and fair market and, with it, the publics confidence.

Here at home, foreign corruption puts American companies that are playing by the rules
at a competitive disadvantage, resulting in significant and tangible harm to business, employees
and shareholders.

Blunting corruptions corrosive effects depends on rigorous enforcement of anti-


corruption laws to be sure. But, of course, it also depends on you. Because just like the impact
of corruption, the impact of compliance is plain. So, today, I would like to talk to you about both
efforts.

Ill start by sharing that lately, my toddler sonwho is too young to know what mommy
does for a livinghas nonetheless begun to echo what I have heard far too many individuals and
companies raise their hands and say over my 11 plus years as a corruption prosecutor: But
everyone is doing it!; That is just the way things are done; It is what we have to do if we
want to do business in these markets! In my sons case, the world is small and everyone is his
little sister; in the case of Fortune 500 companies and financial institutions operating in or hoping
to expand into high risk markets, I understand that everyone primarily comprises competitors.

Consistency in parenting, much less law enforcement, is incredibly challenging but, in


this, I can and have always been clear everyone is doing it; this is just the way things are
done here is no defense. Its not a defense in Newark, New Jersey where I came up as an
AUSA, and it is not a defense across the globe in Uzbekistan when you seek to be the first to
enter a new, lucrative market as Vimpelcom did some years ago by paying more than $100
million in bribes.

1
Be better, do better. Invest in compliance now rather than using that would-be
investment to pay a criminal fine down the road. Empower your compliance executives by
giving them their rightful seat at the table and listening to what they have to say. Dont put them
in the awkward position of having to sit before the Department and defend a program that they
fought to make better and were denied the resources or backing to see through.

The Fraud Section is doing our part to try to be better and do better.

We are working harder than ever to coordinate with global partners and avoid
what some have termed piling on in attendant global resolutions.
We are taking additional steps to enhance our enforcement of the FCPA against
both corporate and individual actors, and to promote transparency in doing so.
And we are endeavoring to work smarter and more efficiently through increased
internal coordination to combat bribery and fraud regardless of the market or
industry.

From an enforcement perspective, I stand before you more confident than ever that we
are well-positioned to remain at the forefront of the fight against corruption. Not just because of
the efforts of our prosecutors and law enforcement agents, which Ill discuss in more detail, but
also because I can safely say we are not alone in this fight. Not even close. In the past,
commentators concluded that the U.S. was going it alone. That we were the worlds policeman.
That can no longer be said. Countries like Brazil, Switzerland, the Netherlands, Germany, the
United Kingdom, and many, many more are not just joining the fray but are taking a leading role.
These countries have watched the United States, they have worked with us, they have learned
from us, and they are now following the example we set, in some cases, actually adopting tools
that we employ. One need look no further than Brazil to see how far and how fast a country can
come in confronting corruption head on. It is truly remarkable what they have done, and they are
not slowing down.

Certain of these countries are also establishing their own mechanisms for reaching
resolutions with corporations. Countries like the United Kingdom, France, and Australia have
begun using deferred prosecution agreements and non-prosecution agreements as an alternative
to the binary choice of prosecuting a company or walking away from the case entirely. This
allows those countries to reward and incentivize good corporate behavior, like voluntarily self-
disclosing, cooperating and remediating by, among other things, making a real commitment to
compliance. Importantly, it also allows these countries to account for situations where there
might exist significant collateral consequences to a company if it were to plead guilty or be
indicted.

In 2016, the Fraud Sections FCPA Unit resolved 13 corporate matters with fines
exceeding $1.3 billion. Of the 13 corporate resolutions, five were coordinated with foreign
counterparts, which number exceeds all previous coordinated FCPA resolutions combined. For
example, in Odebrecht and Braskem, resolutions that resulted in combined global fines and
penalties of more than $3 billion, the FCPA Unit not only cooperated with Brazil and
Switzerland, but credited the fines paid to those countries. In Rolls Royce, the FCPA Unit

2
worked closely and coordinated the resolution with the United Kingdom and Brazil. And the list
goes on.

These cases are not an aberration. Coordination with foreign countries will continue, and
that number of coordinated resolutions will grow, including with new countries. This is
important for several reasons. First and foremost, it is fair to companies. It encourages
companies to cooperate across the board, because we understand that, at the end of a case,
money paid out is derived from one pie. A resolving company should not have piled upon it
duplicative fines via separate resolutions that do not credit one another. Although the piling on
problem is not entirely solved by doing this (other countries may certainly try to reach additional
resolutions), our efforts do mitigate this problem, and we are trying to do better in this regard.

Coordination, of course, signals strong relationships between the United States and global
partners. Such coordination should also clearly signal to companies doing business on the
international stage the necessity for consistent rules of the road when it comes to compliance.
Anti-corruption policies should apply with equal force across a business, no matter what its size
and regardless of the perceived local practices of high risk markets. Without such consistency
there cannot be real confidence in compliance efforts. Employees left to their own devices,
especially in high risk markets, leave themselves and their companies exposed and vulnerable.

Indeed, more than ever before, we are prosecuting and convicting employees and officials
involved in transnational corruption, including in high risk markets. Just last Wednesday, a
former director of a telecom company pleaded guilty in the Southern District of Florida to
conspiring to violate the FCPA. His is just one of the many guilty pleas announced by the Fraud
Section this year, and we will be announcing numerous additional pleas in the coming months.
Although sometimes we charge or plead out individuals under seal in furtherance of our ongoing
investigations, I can share that the number of just those pleas which will be publicly-announced
this year will still far exceed totals in past years.

We are also convicting individuals at trial. In May of this year, the FCPA Unit, together
with the U.S. Attorneys Office for the Southern District of New York, convicted the former
minister of mines of Guinea for accepting bribes and then laundering them through the United
States. The former minister took more than $8 million in bribes from a Chinese conglomerate
and used those corrupt proceeds flowing into the U.S. to buy a home and luxury goods, among
other things.

And just over a week ago, the FCPA Unit together with the U.S. Attorneys Office for the
Central District of California secured another guilty verdict, this time against a Korean official
who accepted more than $1 million in bribes from a U.S. and U.K. companies. The defendant
then laundered those bribes through various U.S. bank accounts.

These convictions makes clear we are taking cases to trial no matter how challenging
and make no mistake, FCPA cases are rife with difficulties. We are nonetheless securing guilty
verdicts. And it makes clear that we are not just going after the bribe payors, but also the foreign
government officials who receive the bribes whenever the law permits. They are not passive
spectators in these corruption schemes, but are often the instigators and at the very least active

3
participants. The Kleptocracy prosecutors in the Money Laundering and Asset Recovery Section
of the Department have done tremendous work seizing these officials corrupt proceeds wherever
possible, but the FCPA Unit will not be content with limiting corrupt officials exposure to their
wallets. I believe that prosecuting, convicting and securing appropriate sentences for these
officials, remains the most critical deterrent. My hope is that these cases and the incredible
amount of effort that goes into holding individual actors accountable also serves to highlight the
need for increased compliance.

How else are we trying to do better? Over the course of the last 15 months, the Fraud
Sections FCPA Unit also has done better at making transparent those considerations that color
corporate resolutions. Through the pilot program announced in April 2016, we offered clearer
guidelines not only internally to our own prosecutors, but to companies and their employees,
regarding what is required to receive full credit under its auspices. What it means to timely
voluntarily self-disclose misconduct, to fully cooperate and to remediate. We continue to
evaluate the virtue of the program but certain of the limited data available is striking: Of the
companies that resolved during the first year of the pilot program, those that voluntarily self-
disclosed obtained either a declination with disgorgement of illicit profits or a non-prosecution
agreement with no less than a 50% reduction off of the low end of the Guidelines range. To say
it another way: Of these resolving companies, none entered a guilty plea, none entered into a
DPA and none had a monitor appointed. By contrast, of those companies that did not voluntarily
self-disclose, roughly 80% resolved through a guilty plea or DPA, none received more than 25%
off of the low end of the Guidelines, and about 72% had a monitor appointed. This is powerful
information to consider when it comes time for a company to weigh carrots and sticks.

Importantly, we are also working to do and be better by becoming smarter and more
efficient in our internal approach to anti-corruption enforcement. This conference is all about
high-risk regions and high risk industries. As you know, health care cuts across both.

On the international side, in recent years healthcare companies have come before the
Fraud Section in connection with FCPA violations. Investigations have revealed that healthcare
companies operating overseas frequently interact with state-employed doctors and foreign public
officials who work for government-owned hospitals and medical institutions. In addition,
publicly funded and administered foreign health care programs are invariably run by government
officials, which means that, to do business in these countries, a company must deal with
government officials. As a result, we have seen a number of significant FCPA cases involving
the payment of bribes and kickbacks by healthcare companies to foreign officials to obtain a
wide variety of improper business advantages.

By way of example, earlier this month, a federal judge formally imposed sentence in
connection with the Departments resolution with Teva Pharmaceuticals, the worlds largest
manufacturer of generic pharmaceutical products. Teva the parent company resolved with the
DOJ and SEC for a combined $520 million relating to bribes paid in Russia, Ukraine, and
Mexico. In addition, Tevas Russian subsidiary pled guilty to violating the anti-bribery
provision of the FCPA. Other resolutions have been reached in recent years with Biomet, Pfizer,
BK Medical, and Bio-Rad, demonstrating the real challenges faced by health care related entities
in the international anti-corruption and compliance space.

4
For several years now, the Fraud Section has also been the national leader in prosecuting
domestic offenses in the health care spacecrimes that involve the payment of bribes and
kickbacks to doctors, medical professionals, and medical service and device companies right
here in the U.S. In these cases, instead of a public officials decision making, its the
independent medical judgment of physicians and health care companies that become corrupted
by the payment of bribes. These actions, judgments, and decisionswhether in the form of
patient referrals or medically unnecessary prescriptions or treatmentsplace the personal,
financial interest of the physician or company above the individualized best interests of their
medical patients. This is unacceptable and dangerous. These crimes corrupt our health care
industry, erode public confidence in our health care programs, discourage Americans from
seeking medical care, and lead to overutilization and rampant fraud.

Earlier this month, our expertise was on display as the Fraud Sections Medicare Strike
Forces coordinated and spearheaded the largest national healthcare fraud law enforcement
operation in American history. Criminal charges were filed against more than 400 individuals for
healthcare-related offenses including, most prominently, bribes and kickbacks paid to medical
professionals including more than 50 physicians. The loss alleged exceeds 1.3 billion dollars,
much of it US taxpayer money.

And on the domestic corporate side, in the last year, Tenet Healthcare Corporation
resolved with the Fraud Section and our civil partners, agreeing to pay more than $513 million
for defrauding the United States and paying bribes and kickbacks in exchange for patient
referrals. A former Senior Vice President of Tenet was indicted and is facing trial for the leading
role he is alleged to have played in the bribery and fraud scheme.

So the healthcare industry is one that faces serious compliance and corruption challenges
not only in high risk markets overseas but right here at home, as well. Last years resolution of
the case against Olympus Corporation is emblematic. The case, which was handled by the Fraud
Sections FCPA Unit and the U.S. Attorneys Office for the District of New Jersey, my old
office I note with pride, saw a health care company struggling with anti-corruption and
compliance issues on both foreign and domestic fronts. Indeed the criminal complaint filed by
the USAO, which provides support for the imposition of a monitor in the matter, specifically
calls out the companys need to enhance and maintain an effective compliance program.

And it goes on to require what should be among the basics for such a program when
operating a large international corporation things like maintaining a confidential employee
hotline, enhancing training, having those at the top of the food chain certify to the effectiveness
of the compliance program, and adopting guidelines to claw back bonuses and the like from
those executives that engage in misconduct or who simply fail to promote compliance within
their organization.

So, to become better and more efficient, it makes sense that we would formalize the
Fraud Sections commitment to investigating and prosecuting domestic and foreign bribery and
kickback cases involving health care companies and their executives as a coordinated, unified
effort. And today, I am pleased to announce that we are doing just that. Prosecutors from our

5
Healthcare Fraud Units Corporate Strike Force will begin working hand in hand with FCPA
prosecutors on select criminal investigations in the health care fraud space. Together they will
investigate and prosecute matters relating to health care bribery schemes, both domestic and
abroad. This increased coordination will ensure that companies, their executives, employees,
and agents are held to account for the payment of bribes and kickbacks to foreign and domestic
officials and actors regardless of the market.

The reality is that the Fraud Section stands uniquely positioned to investigate and
prosecute cases involving both domestic bribery and kickback schemes AND FCPA anti-bribery
violations in the healthcare industry and beyond.

In none of the cases that I have noted today was compliance where it needed to be, which
is, in part, why the associated companies and individuals are where they are. So, the message
should be clear Wherever the locus of misconduct and whatever the industry, compliance must
continue to play an increased role. Law enforcement and regulators dont want to be going at
this alone.

As I said on the onset of my remarks, the impact of corruption is glaring but, so too, is the
impact of compliance when taken seriously and approached with sincerity and commitment.
Lets all continue to strive to be better and do better in the struggle to combat global corruption.

It has been my privilege to speak to you this morning. I thank you for your kind
reception and attention and wish you success with the remainder of the conference.