The Revival Of Corporate Monitorships In Global FCPA Resolutions

• Published date: 28 June 2022
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Criminal Law, Financial Services, Compliance, Corporate and Company Law, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Winston & Strawn LLP
• Author: Ms Pam Davis, Johanna Rae Hudgens and David A. Kolansky

The U.S. Department of Justice's latest Foreign Corrupt Practices Act ("FCPA") resolution with Glencore plc and related entities raises new questions about independent compliance monitors, and whether they are back to stay. In October 2021, Deputy Attorney General Lisa Monaco announced revised DOJ guidance on corporate monitorships.¹ The DOJ's announcement suggested a reversal of a trend seen over the past few years—specifically, a declining use of monitorships in FCPA resolutions. As Monaco explained, "the decision to use monitors must also include consideration of how the monitorship is administered and the standards by which monitors are expected to do their work," but the Department will "study how we select corporate monitors, including whether to standardize our selection process across the divisions and offices."² Indeed, in 2020 and 2021, the Justice Department did not impose any independent compliance monitors despite its FCPA enforcement action.³

Fast-forward to spring 2022, and there appears to be somewhat of a revival in the use of corporate monitorships. On April 20, 2022, the DOJ announced that as part of its FCPA resolution with Stericycle Inc., the U.S.-based waste management company would pay more than $84 million and be required to retain an independent compliance monitor.⁴ Then, just a month later on May 24, 2022, the DOJ again imposed a corporate monitorship.

This time, the DOJ announced that Swiss-based mining and commodities trading company Glencore pleaded guilty, and as part of its coordinated solution with U.S., U.K., and Brazilian authorities, agreed to pay over $1.1 billion to settle FCPA violations and conspiracy to engage in commodity price manipulation.⁵ As part of this resolution, Glencore would be required to retain an independent compliance monitor for three years.⁶

Glencore's guilty plea arises out of a decades-long scheme by Glencore and its subsidiaries to pay more than $100 million to third-party intermediaries, with a significant portion of the payments used to pay bribes to officials in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea, Brazil, Venezuela, and the Democratic Republic of Congo. Between 2007 and 2018, Glencore paid approximately $79.6 million through intermediary companies in order to retain business and secure advantages with state-owned and controlled entities in these countries. The payments were concealed by entering into sham consulting agreements, paying inflated invoices, and using intermediary...