FCPA Enforcement Is Happening!
Who says FCPA enforcement has flat-lined under the Trump Administration? Well, pretty much everyone, including the Administration itself — but apparently not! Prosecutors settled FCPA charges on Monday with Millicom Cellular, which is paying $118.2 million and entering a two-year deferred-prosecution agreement for corruption payments in Guatemala.
The news comes from Millicom itself, which issued a press release on Monday announcing the settlement. The Justice Department hasn’t said anything about the deal, perhaps because most folks at the department are still furloughed as part of the government shutdown. Nevertheless, we have an honest to goodness corporate FCPA enforcement action, just like old times. Let’s take a look.
The case involves Comunicaciones Celulares, more commonly known as Comcel. These days Comcel is a wholly owned subsidiary of Millicom, but at the time of the misconduct in the 2010s it was a joint venture between Millicom and a local business partner in Guatemala, “over which Millicom lacked operational control,” the company emphasized in its press release.
Millicom discovered that Comcel was paying bribes to government officials in Guatemala, and voluntarily self-disclosed the offense to the Justice Department in 2015. By 2018 the department had decided to close its investigation without action.
Then came a plot twist in 2021. Millicom finally gained full control of Comcel at that time, and apparently matters were worse than people originally understood in the 2010s — a time when Millicom had voluntarily self-disclosed the FCPA offenses, but “continued to lack operational control over and visibility into the actions of Comcel.” So the Justice Department re-opened its investigation into Comcel, and that re-opened investigation is what was resolved this week.
This appears to be the first corporate FCPA settlement we’ve seen since the Justice Department unveiled its new enforcement priorities earlier this year, promising a more constrained approach to FCPA enforcement with ample opportunity for companies to receive declinations.
A Lesson on Joint Ventures
We don’t yet have copies of the deferred-prosecution agreement or the criminal information against Comcel (they’re under seal), which would recount the corruption misconduct and Millicom’s remediation work in more detail.
For now we can only work with Millicom’s own press release, and the key passage in that document for compliance officers seems to be this:
Even after the voluntary self-disclosure, and until the 2021 acquisition, Millicom continued to lack operational control over and visibility into the actions of Comcel. As previously disclosed, Millicom received a subpoena in April 2022.
As reflected in today’s agreement, Millicom and Comcel cooperated fully and extensively with the DOJ’s [re-opened] investigation and provided to the DOJ information and access in a way that was not possible in 2015, when Millicom lacked operational control of Comcel. The company also took major remediation steps, including exiting the general manager and other personnel at Comcel who were involved in misconduct.
So Millicom had first self-disclosed its FCPA troubles in 2015, which is good — but then the company lingered in a compliance purgatory for years, unable to gain sufficient transparency into Comcel’s activities until Millicom gained full control in 2021.
That’s painful. That’s the sort of joint venture companies should strive to avoid, because it leaves you with no good choices. Either you exit the venture entirely, possibly at a loss; or you live with the lurking compliance risk; or you buy out the venture partner and then inherit the compliance risk anyway, with no clear sense of how prosecutors might want to resolve the case. Yuck.
I don’t recall a prior FCPA enforcement action with such a tortured joint-venture relationship — and let’s remember, Millicom is paying a $60 million fine, plus $58.2 million in disgorged profits, plus two years of progress reports to the Justice Department during the company’s deferred-prosecution agreement. That’s a lot of money.
Other compliance officers could use this case to remind your senior management teams that this is why companies need strong joint-venture agreements, giving your company — through you, the compliance function — wide ranging due diligence and monitoring capabilities. That’s how you avoid the six years of compliance purgatory (2015 to 2021) that Millicom had to endure.
Remediation Efforts
Millicom did secure a 50 percent discount on the possible criminal penalty it was facing, a reflection of the company’s extensive cooperation and remediation efforts. So yet again we see that if you follow the three prongs of the Corporate Enforcement Program (voluntary self-disclosure; cooperation; and remediation of the underlying control failures) you can win significant benefits.
Then again, everyone started 2025 believing that the Trump 2.0 Administration would never prosecute the FCPA again. Clearly we were wrong. Maybe we’ll even see more FCPA enforcement actions in the future.
Meanwhile, we can close with this quote from Salvador Escalon, chief legal and compliance officer at Millicom: “Although this misconduct occurred when we lacked operational control of Comcel, Millicom has consistently taken all possible actions to remediate and correct it. As soon as we gained control of Comcel, we were finally able to build a stronger, more transparent operation, just as we have been doing for many years in our other markets.”
I would just point out there’s a difference between operational control, which lots of joint venture partners don’t have; and transparency into the joint venture’s activities. Millicom had neither with Comcel. The latter is what left Millicom in a vulnerable position, and that’s what other compliance officers want to avoid.