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The U.S. Securities and Exchange Commission’s new chief of enforcement for its Foreign Corrupt Practices Act unit is an experienced member of the group, and enforcement levels aren’t expected to change much under his leadership, observers say.
In announcing the appointment last week of Charles E. Cain, the SEC said he has been acting chief of the unit since April 2017. Prior to this appointment, he had been its deputy chief since 2011.
At the time, the San Francisco-based law firm Morrison Foerster observed that “with his substantial policy and enforcement experience, as well as his long tenure with SEC, Cain will be an able steward of the FCPA Unit.”
The SEC said Mr. Cain directly supervised several matters such as the investigations that led to charges against such companies as Sweden-based telecommunications provider Telia Co. A.B., which agreed to pay $965 million to resolve FCPA charges of trying to win business in Uzbekistan; according to the SEC’s order, Telia entered the Uzbek telecommunications market by offering and paying at least $330 million in bribes to a shell company under the guise of payments for lobbying and consulting services that never actually occurred.
Mr. Cain also supervised the investigation into Hungary telecommunications provider Magyar Telecom P.L.C. and three of its former top executives with bribing government and political party officials in Macedonia and Montenegro to win business and shut out competition in the telecommunications industry.
Additionally, Mr. Cain in 2013 received the Irving R. Pollack Award recognizing his scholarship and professional expertise in co-authoring the Resource Guide to the U.S. Foreign Corrupt Practices Act, which provided an analysis of the FCPA and insight into SEC and U.S. Department of Justice enforcement practices, the SEC said.
“Charles is a well-respected and experienced member of the SEC’s FCPA Unit and represents a solid choice,” said Mike Koehler, a law professor at Southern Illinois University School of Law in Carbondale, Illinois, and the founder and editor of the FCPA Professor website.
In the first eight months of the Trump administration, Mr. Koehler said, there have been five corporate FCPA enforcement actions with over $535 million in aggregate FCPA settlement amounts. The settlement amount exceeds aggregate FCPA settlement amounts secured during three years of the Obama administration — 2015, 2012 and 2011 — he said.
Mr. Koehler said that the fourth quarter of each year has traditionally been an active quarter for FCPA enforcement, noting that enforcement in this area under the Trump administration “appears to be following a normal path.”
Mr. Koehler said he does not believe that any material changes will be made at Mr. Cain’s level, as “these programs are largely on auto-pilot.”
Jeffrey Harfenist, Houston-based leader of the global forensics practice in the Southwest for BDO USA L.L.P. and co-leader of the firm’s anti-corruption practice, said that when it comes to anti-corruption risk, “you need to identify issues early rather than later because the way that fines are assessed, the longer prohibitive practices go on, the more liability you accrue.”
“For people whose function is to deal with risk, what we advise is to form a periodic risk assessment,” Mr. Harfenist said. “This is where companies look to determine how the FCPA might impact their operations, then look at the controls and processes they have that are responsive to those risks, determine if there are any gaps, and then test those processes and controls periodically to determine if they’re effective.”
Mr. Harfenist said the old adage about an ounce of prevention being better than a pound of cure is applicable in FCPA cases.
“Do your homework,” he said, “make sure you understand your risks, and be vigilant.”
(Reuters) — U.S. securities regulators on Thursday accused two former executives at hedge fund Och-Ziff Capital Management Group of masterminding a far-reaching scheme to pay tens of millions of dollars in bribes to African officials.