Record-Breaking FCPA Settlement in Record-Breaking Year Highlights International and Interagency Coordination in the Global Fight Against Corruption
On October 22, 2020, the US Department of Justice (DOJ) and US Securities Exchange Commission (SEC) announced that Goldman Sachs Group Inc. (Goldman) has agreed to pay more than $2.9 billion to resolve an enforcement action under the Foreign Corrupt Practices Act (FCPA). As part of a global settlement, Goldman admitted that it conspired to pay more than a billion dollars in bribes, directly and indirectly, to Malaysian and Abu Dhabi officials to obtain lucrative business opportunities, including the underwriting of bond deals for the Malaysian state-owned development fund known as 1MDB.
This settlement is remarkable for a number of reasons. First, the eye-popping price tag: The $2.9 billion sanction actually comes on top of the $2.5 billion Goldman already paid to settle with the Government of Malaysia. So, in total, Goldman has committed to pay $5.1 billion in sanctions relating to 1MDB—making this the most expensive foreign bribery settlement of all time.
Second, yesterday's settlement was the product of extraordinary international and interagency coordination. Goldman not only settled with the usual suspects in a foreign corruption case (the DOJ and SEC, which enforce the FCPA). Goldman also concurrently reached related agreements with an alphabet soup of authorities in the United States and other countries: The Board of Governors of the Federal Reserve System (Fed); the New York State Department of Financial Services (DFS); the United Kingdom's Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA); Singapore's Attorney-General's Chambers (ACC), Monetary Authority (MAS), and Police Force Commercial Affairs Department (CAD); and the Hong Kong Securities and Futures Commission (SFC). In its deferred prosecution agreement, the DOJ said that it would allow Goldman to satisfy over $1.6 billion of the $2.9 billion in FCPA sanctions through payments to these other authorities. The fallout from the 1MDB scandal has also led to several DOJ convictions, including the latest guilty plea related to the once-obscure Foreign Agents Registration Act (FARA).
While the magnitude (and complexity) of the settlement announced yesterday may set new records, it is not the first multi-billion-dollar, multi-jurisdictional settlement of an FCPA-related case—and not even the first this year. On January 31, 2020, aircraft provider Airbus SE agreed to pay combined global penalties of over $3.9 billion to resolve foreign bribery charges with the United States, United Kingdom, and its home country of France, as well as to resolve violations of US export control laws. These recent cases reveal the complex anti-corruption enforcement landscape for multinational companies—especially for companies in heavily regulated industries seeking to do business with government entities.
© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.