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2020 FCPA Enforcement Actions Suggest Industries Hit Hardest by Coronavirus May Face Increased Risk of Exposure to Anti-Corruption Enforcement


As countries across the globe begin lifting the social and economic restrictions put in place to help “flatten the curve” of the COVID-19 pandemic, companies must remain vigilant in their compliance efforts as they attempt to recoup the massive economic losses suffered as a result of the crisis. In this challenging and uncertain time, it is perhaps even more important that all companies follow the DOJ and SEC guidance regarding the Foreign Corrupt Practices Act (FCPA) compliance and enforcement and that compliance programs be put in place or re-evaluated to make certain that a company will not run afoul of the FCPA. Written compliance procedures, in the form of a general code of conduct and specific anti-corruption compliance policies and procedures, along with strong company-specific risk assessments are necessary. A commitment to continued compliance from senior management along with the establishment of procedures regarding third-party due diligence, confidential reporting of potential violations, as well as for conducting effective internal investigations are of critical importance.

In April, the Asian Development Bank projected that the global costs of the Coronavirus could reach $4.1 trillion – nearly five percent of global gross domestic product.[1] While the full impacts of the COVID-19 pandemic remain largely unknown, one thing is certain – the virus has had, and will continue to have, a devastating impact on the global economy with the energy and oil, travel and entertainment, and healthcare industries bearing the brunt of that burden. Undoubtedly, as world economies begin to reopen, companies in these industries and others will face new challenges as they seek ways to recover the losses they have suffered to date.

In addition to the economic challenges facing companies across these market industries, a review of 2020 enforcement actions brought under the Foreign Corrupt Practices Act (FCPA) suggests that these same industries remain the focus of federal regulators. With mounting pressures to gain traction in the newly reopened global market and the ever-watchful eye of federal regulators, companies must design, implement, and enforce anti-corruption policies which may assist in ensuring that the desire to regain profits and market share is not satiated through unscrupulous means. 

Energy / Oil

As citizens across the world shelter-in-place, the Coronavirus has had a devastating impact on the global demand for oil – with some experts suggesting the industry may never fully recover.[2]  As 187 countries and territories enacted efforts to flatten the curve, the International Energy Agency expects global oil demand to fall by a record 9.3 million barrels per day in 2020.[3]  This global lack of demand for crude oil, and its economic impact on energy companies, was only exacerbated by the temporary dispute between Russia and Saudi Arabia in the global oil market. In March, Russia refused to agree with OPEC’s proposal to cut production amid the Coronavirus pandemic and, days later, Saudi Arabia slashed its April official selling price by $6-$8 per barrel. All of these forces working in unison to depress global oil prices led, in April, to prices turning negative with the price of a barrel of West Texas intermediate, the benchmark for US oil, falling as low as minus $37.63 a barrel.

Given the impact of the global decrease in oil prices and the threat of a prolonged recovery in the energy markets, companies are now faced with the question of when, and through which methods, their revenues and markets will stabilize and, perhaps, even rebound. To that end, compliance departments across the energy sector must ensure that their methods, policies, and procedures are thorough and rigorous. 

This need for fulsome compliance policies and practices is highlighted by the recent FCPA enforcement action against Eni S.p.A., an Italian multinational oil and gas company, the FPCA charges brought by the SEC against former Goldman Sachs Executive Director Asanta Berko, the guilty pleas of Tulio Anibal Farias Perez and Armengol Alfonso Cevallos Diaz, and the sentencing of Juan Jose Hernandez Comerma. Each of these enforcement actions and guilty pleas suggest that federal anti-corruption regulators remain focused on the energy industry. 

Travel and Entertainment

One of the industries hardest hit by the impacts of the Coronavirus – and the natural victim of countries in lockdown – is the travel industry.  The U.S. Travel Association recently stated that the U.S. travel and tourism industry could lose upwards of $910 billion and 6 million travel-related jobs.[4] While nearly every travel-related sector of the economy – including auto-makers, vacation rentals, lodging, recreation and amusement – has seen the devastating impacts of the coronavirus, the airline industry, including the downstream manufacturers, have been hit particularly hard.  With passenger counts dropping by 96 percent and airlines cancelling more than 70 percent of their flights, airlines around the world are seeking alternative means to avoid bankruptcy. In an attempt to assist in this process, the United States Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which included $58 billion to prop up the aviation industry. 

The impacts of the decline in travel have also been felt by downstream business, including manufacturers.  For example, Boeing reported a $641 million loss for the first quarter of 2020 and at its April 27, 2020 annual meeting, CEO David Calhoun told shareholders, “the health crisis is unlike anything we have ever experienced” and that “it will take two to three years for travel to return to 2019 levels and an additional few years beyond that for the industry’s long-term growth trend to return.”[5] All of these statements come as some of the largest airline manufacturers in the world – Boeing and McDonnell Douglas – halt production of commercial airliners and furlough workers until the pandemic subsides and/or a vaccine is developed. 

The increased focus on the travel industry by federal regulators is perhaps best exemplified by the DOJ’s recent settlement – the largest FCPA settlement in U.S. history – with an airline manufacturer that was able to enter into a deferred prosecution agreement.

As with the travel sector, COVID-19’s economic impact has devastated companies across the entertainment industry including, but not limited to, cruise lines, movie theaters, concert venues, amusement parks and, notably, sports. Beginning in early March, major sporting leagues – including the NBA, PGA, NHL and MLB – both in the United States and across the globe have seen their seasons postponed or cancelled in an effort to avoid the large gatherings that accompany these sporting events and curb the further spread of the virus.  In addition to these closures and postponements, on March 24, 2020, Japanese Prime Minister Shinzo Abe and Olympic Committee President Thomas Bach agreed to postpone the 2020 Summer Olympics in Tokyo to 2021 – marking the first time that the Olympic Games have been postponed or cancelled other than during the course of a world war.

In addition to the cultural impacts that the loss of live sporting events has had on the global conscious, the closure of major sporting leagues and the postponement of the 2020 Olympic Games has had a devastating financial impact for both the leagues themselves and the broadcasters and marketers which rely on these events to reach potential clients. By way of example, the organizers of the Tokyo Olympics estimate the cost of the delay at approximately $12.6 billion, while other experts claim that number to be closer to $25 billion. These figures include the billions of dollars spent by sponsors and broadcasters on the Games.  Additionally, financial experts have estimated the cost of cancelling the remainder of the NBA season at approximately $650 million in ticket and non-ticket revenue to the league – with the potential loss of television and marketing rights for March Madness alone to total approximately $870 million dollars.[6]

With such staggering figures, the ground remains fertile for potential FCPA violations as sponsors and organizers attempt to regain some of the financial ground they have lost.  This is perhaps best exemplified by the April 6, 2020 indictment of two former 21st Century Fox Inc. executives, a former co-CEO of Sanish media company Imagina Media Audiovisual SL, and Uruguayan sports marketing company Full Play Group S.A. for their alleged role in the long-running corrupting investigation surrounding the Fédération Internationale de Football Association (FIFA).


While FCPA enforcement actions in the healthcare industry are not novel (e.g., Fresenius Medical Care, Johnson & Johnson), the flurry of activity in this sector due to COVID-19 likely increases the FCPA risk exposure for healthcare providers, medical device companies, and pharmaceutical companies. 

As the healthcare industry around the world rushes to develop therapeutics and a potential vaccine for the Coronavirus, it is vital that companies implement, maintain, and enforce their anti-corruption policies and procedures in an effort to avoid potential FCPA risks. This exposure is driven in large part by the federal agencies enforcement theory that employees (e.g., physicians, nurses, lab personnel) of certain foreign health care systems are considered to be “foreign officials” under the FCPA. The effects of the broad enforcement theory are on full display in the SEC’s recent FCPA enforcement action against Cardinal Health, Inc. for allegedly directing certain marketing funds to Chinese government-employed healthcare workers and state-run retail companies who had influence over purchasing decisions.


As countries and economies across the world begin to reopen, compliance departments must remain vigilant as those sectors hit hardest by the economic impacts of the COVID-19 pandemic now seek to recoup their economic losses. Strong compliance policies and procedures become even more critical as 2020 FCPA enforcements, indictments, and sentencings show that federal regulators remain focused on the travel and entertainment, energy/oil and healthcare sectors.

To this end, it is important that all companies follow the DOJ and SEC guidance regarding FCPA compliance and enforcement and that any compliance program include, among other elements:

Written compliance procedures, in the form of a general code of conduct and specific anti-corruption compliance policies and procedures;

  • Strong company-specific risk assessments;
  • Commitment to continued compliance from senior management;
  • Procedures regarding third-party due diligence;
  • Procedures and processes to allow and encourage confidential reporting of potential FCPA violations; and
  • Procedures for conducting internal investigations.

For more information on the FCPA implications of the COVID-19 recovery or for assistance in addressing your FCPA compliance, Buchanan’s white collar defense, compliance & investigations professionals are here to assist.

For more cutting-edge perspectives on legal and business implications of COVID-19, visit our COVID-19 resource center.