Remarks of Acting Assistant Attorney General Brian C. Rabbitt at the ACI 37th Annual Conference on the FCPA

Remarks as Prepared for Delivery

Good morning and thank you for that kind introduction.  It is an honor to be here with you today, even if only virtually.  Just a year ago, addressing a conference of this size and importance via video would have seemed unthinkable.  Today, it is — unfortunately — normal.  I look forward to the time — hopefully, soon — when we can gather again in person.  In the meantime, I am grateful for this opportunity to speak with you, and I look forward to my discussion with Kim after my remarks conclude.  

It is hard to believe, but I have now led the Criminal Division for almost half a year.  When I took the helm in July from my predecessor, Brian Benczkowski, my goal was to ensure stability and continuity so that the talented men and women of the Division could continue their important work unimpeded.  With a once-in-a-lifetime pandemic raging, that was no small task. 

 But it was a critical one.  And I firmly believe that, by any measure, we in the Criminal Division have been successful.  Despite significant challenges, we have pressed forward over the past year and have enforced the federal criminal laws fairly, transparently, and independently.  This is true not only with respect to the Division’s white-collar enforcement work — which I will focus on today — but also in other notable areas, such as violent crime, opioids, and election integrity.  I am proud of all that the Division and its various sections have achieved over the past year, and I look forward to that work seamlessly continuing after I depart in January.

With our time today, I would like to focus more closely on the Division’s accomplishments over the past year in terms of white-collar enforcement and the FCPA in particular.  It is a body of work that would be significant in any year, but that is all the more impressive given the significant challenges we overcame in 2020. 

It is no exaggeration to say that the Criminal Division’s work in 2020 has been historic — both in terms of the results we have achieved and the circumstances under which we have achieved them.  Despite the significant obstacles presented by the pandemic, the Division has remained open for business.  Indeed, in many respects, our enforcement numbers are at an all-time high.  Of course, as I have said before, when it comes to a white-collar enforcement program, statistics can only tell you so much.  Numbers frequently vary from year to year based on factors that are often outside of our control, and they do not fully reflect the nature and quality of our cases.  But even with those caveats, the Criminal Division’s statistics over the past year demonstrate that our white-collar enforcement work — and our enforcement of the FCPA in particular — has been active and successful in 2020, even in the face of significant headwinds.

Turning first to our corporate enforcement work, as of November of this year, the Criminal Division’s Fraud Section had concluded resolutions with a dozen corporations.  While the Section resolved 15 corporate matters in 2019, this year is not yet over, and I expect at least several more significant corporate resolutions by year’s end — including one FCPA matter that we expect to announce later today.  Moreover, the Fraud Section’s resolutions so far this year have been significant in size, totaling approximately $8.75 billion in global monetary amounts paid by companies, a significant increase from $3.21 billion  in 2019 and one of the highest amounts ever achieved in a single year.  Notably, many of our corporate resolutions in 2020 included coordination with one or more foreign enforcement authorities — an increasingly important aspect of our work.  Nevertheless, of the nearly $9 billion companies paid to resolve matters involving the Fraud Section in 2020, almost half — $4.28 billion — was paid directly in penalties and restitution in the United States, which demonstrates our leading role in global white-collar enforcement.  This represents a marked increase from last year, when the comparable figure was approximately $2.96 billion. 

In addition to the Fraud Section, the Division’s Money Laundering and Asset Recovery Section (MLARS) has also had a productive year.  In 2020, MLARS resolved two significant corporate criminal matters — the same number as in 2019.  Notably, however, the criminal matters MLARS resolved this year amounted to over $2.3 billion in amounts paid to the U.S. — more than double the approximately $1 billion in amounts paid in connection with MLARS’ 2019 resolutions.  

And of course, in addition to corporate resolutions, MLARS continued its important work in other areas in 2020, identifying and forfeiting hundreds of millions of dollars in assets traceable to illicit activity.  For example, in connection with the Goldman Sachs 1MDB FCPA matter that I will return to shortly, MLARS has identified and forfeited over $1.1 billion in assets.  Of that, the Department has already returned, or assisted Malaysia in recovering, more than $600 million — and we are hopeful that hundreds of millions of dollars more will be returned in the near future.

The Criminal Division has been particularly active in 2020 when it comes to enforcing the FCPA.  Of the dozen corporate resolutions the Fraud Section has entered into so far in 2020, seven — and, after today, eight — have been FCPA matters — an amount on par with the seven FCPA matters we brought last year.  Like our other corporate resolutions, the Criminal Division’s FCPA resolutions in 2020 have been impressive in size and scope, involving approximately $7.76 billion in amounts paid worldwide—a significant increase from the approximately $2.83 billion paid in 2019.  Of that amount, approximately $3.21 billion was paid to U.S. authorities, up slightly from 2019.  Our FCPA resolutions this year have also involved almost $2.25 billion in U.S. criminal monetary penalties, another increase from 2019, when the comparable figure was $1.62 billion.

Ensuring individual accountability for corporate wrongdoing has been a hallmark of our white-collar work in recent years, and 2020 was no exception.  This past year saw the Fraud Section publicly charge almost 300 individuals, including over 20 individuals charged in connection with corporate matters resolved during the year.  Some of our most-significant FCPA resolutions — such as Goldman Sachs, Herbalife, and Sargeant Marine — also included individual charges.  In fact, in 2020 the Fraud Section publicly charged 29 individuals in connection with FCPA matters — the third-highest number ever recorded in a calendar year, behind only the 34 individuals publicly charged in 2019 and the 31 individuals charged publicly in 2018.

Beyond numbers, what really stands out about our FCPA enforcement efforts in 2020 is the nature, quality, and scope of the cases we have resolved.  Indeed, 2020 was bookended by two of the most significant FCPA matters in the Department’s history — the Airbus resolution in January and the Goldman Sachs 1MDB matter that we resolved in October. 

The Airbus matter addressed an egregious, long-running scheme that involved hundreds of millions of dollars in bribes and profits, as well as conduct that spanned China, Malaysia, Sri Lanka, Taiwan, Indonesia and Ghana.  The resolution included coordination with our partners in the U.K. and France and was, at the time it was announced, the largest global foreign bribery matter ever brought by the Department of Justice. 

The Department’s recent Goldman Sachs 1MDB resolution was an equally important milestone in our FCPA enforcement efforts.  In connection with the resolution, the Malaysian arm of Goldman Sachs pleaded guilty to criminal FCPA charges.  The bank also agreed to pay over $2.9 billion and admit wrongdoing in connection with its role in a massive scheme that saw billions of dollars looted from the 1MDB fund and approximately $1.6 billion in bribes paid to corrupt foreign officials.  The case was record-setting in several respects.  In terms of FCPA cases, it involved: the largest-ever bribe amount paid; the largest-ever loss charged; one of the largest-ever profit amounts realized; the largest-ever monetary penalty paid to the United States; and coordination with the largest-ever number of foreign authorities.  

Any year that included landmark resolutions such as Airbus and Goldman Sachs would be a banner year for the Department’s FCPA enforcement program.  But the Criminal Division also resolved a number of other significant FCPA matters in 2020.  Taken together, these cases demonstrate our enduring commitment to combatting corruption around the world and the broad-ranging scope of our efforts — a commitment recently recognized by the OECD, which in a November 2020 report lauded our “strong enforcement of the . . . FCPA,” noted our “prominent role in the fight against transnational corruption,” and observed that U.S. FCPA enforcement “has increased remarkably” in recent years.

Indeed, our FCPA cases in 2020 spanned industries, covering everything from the Goldman Sachs and Airbus matters — which involved the financial services and aerospace industries, respectively — into the energy, construction, consumer products, agriculture, and healthcare industries.  Our cases were also geographically diverse.  Our FCPA enforcement efforts have, in recent years, focused on regions such as South America — and that remained true in 2020.  But our cases this year spanned the globe, touching the U.S., Europe, Africa, the Middle East, and Asia as well. 

I’d like to conclude by making two high-level observations about the Criminal Division’s work thus far in 2020. 

First, our results demonstrate that our white-collar enforcement efforts have remained quite active in 2020, despite the significant challenges presented by a once-in-a-generation global pandemic that has had profound effects on everything we do.  Despite this, our corporate enforcement results — and our FCPA results in particular — have met or exceeded our work from last year — both in terms of numbers and the nature and quality of the cases we have brought.  That would be a noteworthy achievement any year, but it is remarkable in 2020 given the challenges we have faced.  And it is due in no small part to the hard work and dedication of the women and men of the Criminal Division.     

Second, our results this year — and in prior years — should conclusively put to rest the canard that white-collar enforcement — and FCPA enforcement in particular — has been lackluster during this administration.  Nothing could be further from the truth. 

In the two years I have had the privilege of serving at the Justice Department, the Criminal Division’s Fraud Section has — so far — criminally resolved 27 white-collar corporate cases consisting of 9 corporate guilty pleas; 16 corporate deferred prosecution agreements; and 8 corporate non-prosecution agreements.  These cases collectively involved over $14 billion in charged losses and resulted in nearly $12 billion in global payments and amounts, over $7 billion in U.S. payments and amounts, and over $4.5 billion in U.S. criminal payments and amounts.  These results have been achieved in traditional areas, such as the FCPA, as well as new areas of focus, such as our initiative to combat the unlawful practice of “spoofing” in commodities markets. 

Importantly, our focus on corporate enforcement has not come at the expense of our other white-collar enforcement work.  During this same period, the Criminal Division has begun or continued several key initiatives intended to target widescale criminal conduct. 

For example, earlier this year, at the outset of the pandemic, the Criminal Division launched an initiative to combat fraud against the Paycheck Protection Program.  Our work has been enormously successful in protecting the U.S. fisc and ensuring the integrity of this critical program, resulting so far in 62 cases and charges against nearly 90 individual defendants involving over $130 million in actual losses.  

At the same time, the Criminal Division has also maintained our focus on other areas, such as fighting opioid abuse and healthcare fraud.  Earlier this fall, for example, we announced the largest-ever national healthcare fraud takedown, which involved charges against almost 350 individual defendants who collectively submitted more than $6 billion in false and fraudulent claims to health care programs. 

Put simply, our work this year — and in prior years — demonstrates that white-collar enforcement has remained a top priority for the Criminal Division.  This is true not only in terms of FCPA enforcement, but also in other key areas, where the Division has emerged as a clear leader within the Department in the white-collar enforcement space.  And while the Division’s areas of focus may change in the coming years, I expect that corporate enforcement will continue to be a priority for the Division and the Department of Justice, no matter who is in charge.

Thank you very much for the opportunity to be here with you today.  It has been the honor of a lifetime to serve at the Department of Justice and to lead the talented women and men of the Criminal Division.  It has also been a privilege to join you today to speak about their important work.  What the Division has achieved over the past year on behalf of the American people in the face of the pandemic has been truly remarkable, and I am proud to have played a very small part in it. 

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    In U.S GAO News
    The Department of Defense (DOD) has a long-standing material weakness related to intradepartmental transactions. Intradepartmental transactions occur when trading partners within the same department engage in business activities—such as the Department of the Army as a seller and the Department of the Navy as a buyer within DOD. As part of the standard process of preparing department-wide financial statements, intradepartmental transaction amounts are eliminated to avoid overstating accounts for DOD. For the fourth quarter of fiscal year 2019, DOD eliminated approximately $451 billion of net intradepartmental activity. Auditors continue to report a material weakness related to DOD's processes for recording and reconciling intradepartmental transaction amounts that are necessary to eliminate the transactions and prepare reliable consolidated financial statements. DOD has identified implementation of the Government Invoicing (G-Invoicing) system as its long-term solution to account for and support its intradepartmental activities. In fiscal year 2020, DOD issued a policy requiring all DOD components to use G-Invoicing's General Terms and Conditions (GT&C) functionality for initiating and approving GT&C agreements—a necessary step for using subsequent G-Invoicing functionalities (see figure). GAO found the use of this functionality varied among selected DOD components because of issues such as inconsistency in DOD policies and numerous changes to G-Invoicing system specifications. If DOD components do not implement the GT&C functionality, there is an increased risk of delay in full implementation of G-Invoicing to help remediate the intradepartmental eliminations material weakness. General Terms and Conditions Agreement Process in Government Invoicing Although DOD has identified G-Invoicing as its long-term solution, GAO found that DOD has not implemented an overall department-wide strategy to address its intradepartmental eliminations material weakness in the short term. Further, GAO found that while DOD issued a department-wide policy in May 2019 with new requirements for reconciling intradepartmental transactions, the Defense Finance and Accounting Service and selected DOD components have not updated their policies or implemented several of the new requirements. Without a short-term strategy that includes identifying the causes of issues and consistently implementing department-wide policies across DOD, DOD's efforts to resolve differences in intradepartmental transaction amounts—including its efforts in the long term—will likely be inefficient and ineffective. Since 1995, GAO has designated DOD financial management as high risk because of pervasive weaknesses in its financial management systems, controls, and reporting. DOD's long-standing intradepartmental eliminations material weakness reflects DOD's inability to adequately record and reconcile its intradepartmental transactions, and has affected DOD's ability to prepare auditable financial statements. GAO was asked to evaluate DOD's process for performing intradepartmental eliminations. This report examines the extent to which DOD has (1) identified and taken steps to address issues related to intradepartmental eliminations and (2) established and implemented policies and procedures related to intradepartmental eliminations. GAO interviewed DOD officials about intradepartmental eliminations processes and reviewed DOD policies and procedures to identify the extent to which procedures have been implemented to record and reconcile intradepartmental transactions. GAO is making five recommendations to DOD, including that DOD should (1) take actions to ensure that its components follow its policy for using G-Invoicing's GT&C functionality and (2) develop short-term solutions that address causes for trading partner differences before G-Invoicing is fully implemented. DOD agreed with all five recommendations and cited actions to address them. For more information, contact Kristen Kociolek at (202) 512-2989 or kociolekk@gao.gov.
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    In U.S GAO News
    According to data from the most recent Merit Systems Protection Board (MSPB) survey in 2016, an estimated 22 percent of Department of Veterans Affairs (VA) employees, and 14 percent of federal employees overall, experienced some form of sexual harassment in the workplace from mid-2014 through mid-2016. VA has policies to prevent and address sexual harassment in the workplace, but some aspects of the policies and of the complaint processes may hinder those efforts. Misalignment of Equal Employment Opportunity (EEO) Director position: VA's EEO Director oversees both the EEO complaint process, which includes addressing sexual harassment complaints, and general personnel functions. According to the Equal Employment Opportunity Commission (EEOC), this dual role does not adhere to one of its key directives and creates a potential conflict of interest when handling EEO issues. Incomplete or outdated policies and information: VA has an overarching policy for its efforts to prevent and address sexual harassment of its employees. However, some additional policies and information documents are not consistent with VA's overarching policy, are outdated, or are missing information. For example, they may not include all options employees have for reporting sexual harassment, which could result in confusion among employees and managers. Delayed finalization of Harassment Prevention Program (HPP): VA has not formally approved the directive or the implementing guidance for its 4-year-old HPP, which seeks to prevent harassment and address it before it becomes unlawful. Lack of formal approval could limit the program's effectiveness. VA uses complaint data to understand the extent of sexual harassment at the agency, but such data are incomplete. For example, VA compiles information on allegations made through the EEO process and HPP, but does not require managers who receive complaints to report them to VA centrally. As a result, VA is not aware of all sexual harassment allegations across the agency. Without these data, VA may miss opportunities to better track prevalence and to improve its efforts to prevent and address sexual harassment. VA provides training for all employees and managers, but the required training does not have in-depth information on identifying and addressing sexual harassment and does not mention HPP. Some facilities within VA's administrations supplement the training, but providing additional information is not mandatory. Requiring additional training on sexual harassment could improve VA employees' knowledge of the agency's policies and help prevent and address sexual harassment. In June 2020, GAO issued a report entitled Sexual Harassment: Inconsistent and Incomplete Policies and Information Hinder VA's Efforts to Protect Employees (GAO-20-387). This testimony summarizes the findings and recommendations from that report, including (1) the extent to which VA has policies to prevent and address sexual harassment of VA employees, (2) how available data inform VA about sexual harassment of its employees, and (3) training VA provides to employees on preventing and addressing sexual harassment. GAO made seven recommendations in its June 2020 report, including that VA ensure its EEO Director position is not responsible for personnel functions; require managers to report all sexual harassment complaints centrally; and require additional employee training. VA concurred with all but the EEO Director position recommendation, which GAO continues to believe is warranted. For more information, contact Cindy S. Brown Barnes at (202) 512-7215 or brownbarnesc@gao.gov.
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    In U.S GAO News
    Although more than one-third of adults aged 50 or older have experienced divorce, few people seek and obtain a Qualified Domestic Relations Order (QDRO), according to large plan sponsors GAO surveyed. A QDRO establishes the right of an alternate payee, such as a former spouse, to receive all or a portion of the benefits payable to a participant under a retirement plan upon separation or divorce. There are no nationally representative data on the number of QDROs, but plans and record keepers GAO interviewed and surveyed reported that few seek and obtain QDROs. For example, the Pension Benefit Guaranty Corporation administered retirement benefits to about 1.6 million participants, and approved about 16,000 QDROs in the last 10 years. GAO's analysis of other survey data found about one-third of those who experienced a divorce from 2008 to 2016 and reported their former spouse had a retirement plan also reported losing a claim to that spouse's benefits. Many experts stated that some people—especially those with lower incomes—face challenges to successfully navigating the process for obtaining a QDRO, including complexity and cost. Individuals seeking a QDRO may be charged fees for preparation and review of draft orders before they are qualified as QDROs and, according to experts GAO interviewed, these fees vary widely. These experts cited concerns about QDRO review fees that they said in some cases were more than twice the amount of typical fees, and said they may discourage some from pursuing QDROs. Department of Labor (DOL) officials said the agency generally does not collect information on QDRO fees. Exploring ways to collect and analyze information from plans on fees could help DOL ensure costs are reasonable. Divorcing parties who pursue QDROs often had orders not qualified due to lacking basic information, according to plans and record keepers we surveyed (see figure). Plan Administrators and Record Keepers Reported Reasons for Not Qualifying a Domestic Relations Order (DRO) DOL provides some information to help divorcing parties pursue QDROs. However, many experts cited a lack of awareness about QDROs by the public and said DOL could do more to make resources available to divorcing parties. Without additional outreach by DOL, divorcing parties may spend unnecessary time and resources drafting orders that are not likely to be qualified, resulting in unnecessary expenditures of time and money. A domestic relations order (DRO) is a court-issued judgment, decree, or order that, when qualified by a retirement plan administrator, can divide certain retirement benefits in connection with separation or divorce and as such provide crucial financial security to a former spouse. DOL has authority to interpret QDRO requirements. GAO was asked to review the process for obtaining QDROs. This report examines what is known about (1) the number of QDRO recipients, (2) the fees and other expenses for processing QDROs, and (3) the reasons plans do not initially qualify DROs and the challenges experts identify regarding the QDRO process. To conduct this work, GAO analyzed available data, and a total of 14 responses from two surveys of large private sector plans and account record keepers, and interviewed 18 experts including practitioners who provide services to divorcing couples. GAO is recommending that DOL (1) explore ways to collect information on QDRO-related fees charged to participants or alternate payees, and (2) take steps to ensure information about the process for obtaining a QDRO is accessible. DOL generally agreed with our recommendations. For more information, contact Kris Nguyen at (202) 512-7215 or NguyenTT@gao.gov.
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    In U.S GAO News
    In April 2020, the Small Business Administration (SBA) moved quickly to implement the Paycheck Protection Program (PPP), which provides loans that are forgivable under certain circumstances to small businesses affected by COVID-19. Given the immediate need for these loans, SBA worked to streamline the program so that lenders could begin distributing these funds as soon as possible. For example, lenders were permitted to rely on borrowers' self-certifications for eligibility and use of loan proceeds. As a result, there may be significant risk that some fraudulent or inflated applications were approved. Since May 2020, the Department of Justice has publicly announced charges in more than 50 fraud-related cases associated with PPP funds. In April 2020, SBA announced it would review all loans of more than $2 million to confirm borrower eligibility, and SBA officials subsequently stated that they would review selected loans of less than $2 million to determine, for example, whether the borrower is entitled to loan forgiveness. However, SBA did not provide details on how it would conduct either of these reviews. As of September 2020, SBA reported it was working with the Department of the Treasury and contractors to finalize the plans for the reviews. Because SBA had limited time to implement safeguards up front for loan approval, GAO believes that planning and oversight by SBA to address risks in the PPP program is crucial moving forward. SBA's efforts to expedite processing of Economic Injury Disaster Loans (EIDL)—such as the reliance on self-certification—may have contributed to increased fraud risk in that program as well. In July 2020, SBA's Office of Inspector General (OIG) reported indicators of widespread potential fraud—including thousands of fraud complaints—and found deficiencies with SBA's internal controls. In response, SBA maintained that its internal controls for EIDL were robust, including checks to identify duplicate applications and verify account information, and that it had provided banks with additional antifraud guidance. The Department of Justice, in conjunction with other federal agencies, also has taken actions to address potential fraud. Since May 2020, the department has announced fraud investigations related to the EIDL program and charges against recipients related to EIDL fraud. SBA has made or guaranteed more than 14.5 million loans and grants through PPP and EIDL, providing about $729 billion to help small businesses adversely affected by COVID-19. However, the speed with which SBA implemented the programs may have increased their susceptibility to fraud. This testimony discusses fraud risks associated with SBA's PPP and EIDL programs. It is based largely on GAO's reports in June 2020 (GAO-20-625) and September 2020 (GAO-20-701) that addressed the federal response, including by SBA, to the economic downturn caused by COVID-19. For those reports, GAO reviewed SBA documentation and interviewed officials from SBA, the Department of the Treasury, and associations that represent lenders and small businesses. GAO also met with officials from the SBA OIG and reviewed OIG reports. In its June 2020 report, GAO recommended that SBA develop and implement plans to identify and respond to risks in PPP to ensure program integrity, achieve program effectiveness, and address potential fraud. SBA neither agreed nor disagreed, but GAO believes implementation of this recommendation is essential. For more information, contact William B. Shear at (202) 512-4325 or shearw@gao.gov.
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    In Crime News
    A Florida recording artist and a Pennsylvania towing company owner have been charged for their alleged participation in a scheme to file fraudulent loan applications seeking more than $24 million in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
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