Some Vague Hints on Analytics, FCPA

The Justice Department is stepping up its own use of data analytics to identify instances of corporate misconduct, and will boost its cooperation with overseas law enforcement to bring more anti-corruption cases as well, a senior department official said this week.

The remarks came from Nicole Argentieri, acting assistant attorney general for the Criminal Division, speaking Wednesday at an FCPA conference in Washington. Argentieri’s speech was more about reviewing recent Justice Department enforcement action than unveiling new policy, but she still dropped a few morsels worth a compliance officer’s attention.

We can begin with data analytics, since the Justice Department has been lecturing compliance officers on better use of data analytics for years. The department has been improving its own analytics game, Argentieri said, and using those skills to find new cases.

“From health care fraud to procurement fraud to our use of 10b5-1 data and trading plans in the securities space, the Criminal Division has long been an innovator in using data to enhance its investigations and prosecutions,” Argentieri said. “I am proud to announce that we are taking that experience and expertise with data analysis and applying these tools to our FCPA investigations.” 

I don’t doubt that’s true. Last year the Justice Department hired Matt Galvin, former top compliance executive and data analytic whiz at AB InBev, specifically to boost the analytics expertise at the Fraud Section. Galvin works with Glenn Leon, head of the Fraud Section and former top compliance executive at Hewlett-Packard. Together, they can bring considerable expertise to sniffing out corporate misconduct through clever data analytics. 

Still, Argentieri didn’t give any specific example of corporate FCPA misconduct the department has identified through data analytics. She only cited the case of an individual (former government minister in Bolivia) whose FCPA crimes had been uncovered by careful analysis of financial records. That’s interesting to prosecutors and defense attorneys, but less so to corporate compliance officers. 

Data Analytics That Does Matter to CCOs

On the other hand, Argentieri did warn the audience that, “Just as we are upping our game when it comes to data analytics, we expect companies to do the same.” That is interesting to compliance officers, because it leads to an important implication.

The better you are at data analytics, the more pressure your company will feel for voluntary self-disclosure. 

That is, the better you are at data analytics, the better you’ll be at identifying troublesome patterns and outlier events indicative of misconduct — and once those previously hidden insights come to light, you won’t be able to un-know them. They’ll be staring you in the face, and the company will need to do something about it.

analyticsSure, keeping quiet about the misconduct is one possible way to “do something about it.” That’s just going to be a high-risk course of action, both for the company and potentially for the compliance officer personally. The Justice Department might discover the misconduct anyway (either through a whistleblower or its own data analytics), and then you’d be on a terrible back foot trying to explain away what you knew, when you knew it, and why your company didn’t self-disclose.

Argentieri even alluded to this tension. “Companies have better and more immediate access to their own data,” she said, “and you can be sure that, if misconduct occurs, our prosecutors are going to ask what the company has done to analyze or track its own data — both at the time of the misconduct and when we are considering a potential resolution.” 

Something to think about as you watch those “How to Use Excel” tutorials online.

More International Cooperation

Argentieri also announced a new task force to work on cross-border prosecutions: the International Corporate Anti-Bribery Initiative, driven by three prosecutors with extensive international experience, “who will build on our existing bilateral and multilateral partnerships, as well as form new partnerships.”

These prosecutors will work within the FCPA team of the Fraud Section, and pair up as needed with other teams working on anti-money laundering, data analytics (there it is again!), and other investigations. I guess their role is to accelerate cooperation with foreign governments when the need arises?

Empowering experienced anti-bribery prosecutors to build critical relationships with our international counterparts in key parts of the world will result in enhanced information sharing, cooperation, and case development with our foreign partners,” Argentieri said. “This is yet another reason companies considering whether or not to disclose misconduct should take note — call us before we, or our foreign partners, call you.”

Oh, OK. That clarifies things somewhat. Regardless, the pace of cross-border investigations can be glacially slow, so any effort to thaw those procedural ice dams is welcome news. And as always, the department ties it back to voluntary self-disclosure.

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