Measure Twice: Compliance in the time of falling commodity prices

By Aaron Katz, Nicholas Berg and Yana Grishkan

With the price of oil and gas still anemic many oil and gas companies remain confronted with difficult decisions about how to allocate their resources. Over the past year, oil and gas companies have laid off hundreds of thousands of workers, decommissioned a substantial proportion of their rigs, and slashed investment in exploration and production.[1] When its core business operations are faced with such budgetary constraints, an oil and gas company’s legal compliance programs, including anti-bribery compliance programs, are certain to face severe budgetary constraints as well — and understandably so.[2]

Yet, at the same time that oil and gas companies’ anti-bribery compliance budgets are shrinking as a consequence of falling commodity prices, the Department of Justice (“DOJ”) continues to pour more resources into its Foreign Corrupt Practices Act (“FCPA”) enforcement efforts. Last year, the DOJ added ten new prosecutors to the FCPA Unit, increasing its size by more than half,[3] and the Federal Bureau of Investigation more than tripled the number of its agents focused on overseas bribery.[4] The FBI, in conjunction with the DOJ, also added three dedicated international corruption squads to focus on FCPA matters.[5] The DOJ recently stated that it is investigating “a lot” of FCPA cases,[6] and oil and gas companies presumably will remain one of the key targets of government inquiries.[7]

Moreover, the DOJ continues to raise its expectations about what corporations should be doing to self-police their FCPA compliance, and whether a company has satisfied the DOJ’s expectations in this regard is critical in how the DOJ will respond to evidence that a company engaged in putative violations of the FCPA. In November 2015, the DOJ Fraud Section announced that it hired Hui Chen to fill a newly created position of a “compliance counsel expert.”[8] Chen is a former in-house counsel for leading pharmaceutical and financial companies, and she has significant experience developing, implementing, and overseeing corporate FCPA compliance programs. In her new role at the DOJ, Chen will be helping the DOJ’s FCPA Unit develop benchmarks for evaluating corporate anti-bribery compliance programs, as well as the companies’ claims about their programs.[9] This, in turn, will directly impact the FCPA Unit’s charging decisions when it has evidence that a company may have engaged in FCPA violations: the U.S. Attorney’s Manual expressly lists, as one of the factors relevant to a corporate charging decision, “the existence and effectiveness of the corporation’s . . . compliance program” at the time of the alleged misconduct.[10]

Although the DOJ and SEC remain the toughest enforcers of anti-corruption laws globally, the oil and gas sector is also facing increased scrutiny from enforcement authorities around the world.[11] Numerous countries — including the United Kingdom, Germany, South Korea, China, and even Brazil — have either stepped up their enforcement activity or recently enacted new anti-corruption legislation,[12] and cracking down on global corruption was the topic of a recent international summit in London. Some of these foreign countries’ anti-corruption statutes expressly provide that the strength of a company’s anti-bribery compliance programs is a factor in determining what penalties (if any) a company will be subject to in the event of a legal violation,[13] similar to how the DOJ considers a strong compliance program to be a mitigating factor.

All of this creates a real dilemma, both for oil and gas companies and the DOJ. First, with compliance program budgets falling, how can oil and gas companies stay ahead of, or even just keep pace with, the DOJ’s increasingly aggressive FCPA enforcement? Second, how, if at all, will the DOJ take into account today’s depressed commodity prices (and thus constrained corporate compliance budgets) when, for example, it examines several years from now the adequacy of the FCPA compliance program that an oil and gas company had in place in 2016?

This second question is especially salient for oil and gas companies. FCPA investigations typically take place several years after the alleged misconduct occurred. In fact, in the twelve actions that the DOJ brought last year, the misconduct began on average nearly ten years prior to resolution with the government.[14] Thus, an alleged bribe paid to a foreign government official in 2016 might not come onto the DOJ’s radar screen until, say, 2020 or even later. By that time, commodity prices – and, by extension, compliance program budgets – may have increased to “normal” levels.

If, when conducting an FCPA investigation of an oil and gas company in 2020, the DOJ sees that the company dramatically cut its compliance program budget in 2015 and 2016 in response to depressed oil and gas prices, will the DOJ be receptive to the company’s argument that those budget cuts were a necessary response to the depressed commodity prices at that time? Or will it take the position that an oil and company’s compliance budget should be relatively insulated from the peaks and valleys in oil and gas prices? These are questions to which the DOJ has not yet provided any answers, or even meaningful guidance. In the midst of this uncertainty, an oil and gas company must make pragmatic, strategic, and defensible decisions with respect to its allocation of scarce compliance resources.

About the Authors

When core business operations are faced with such budgetary constraints, an oil and gas company’s legal compliance programs, including anti-bribery compliance programs, are certain to face severe budgetary constraints.

Aaron Katz, partner, Ropes & Gray, government enforcement practice

When core business operations are faced with such budgetary constraints, an oil and gas company’s legal compliance programs, including anti-bribery compliance programs, are certain to face severe budgetary constraints.

Nick Berg, partner, Ropes & Gray, business & securities litigation practice

When core business operations are faced with such budgetary constraints, an oil and gas company’s legal compliance programs, including anti-bribery compliance programs, are certain to face severe budgetary constraints.

Yana Grishkan, associate, Ropes & Gray, government enforcement practice


[1] Clifford Krauss, Oil Prices: What’s Behind the Drop? Simple Economics, N.Y. Times, Feb. 16, 2016,

[2] Michael Schwartz & Nicholas D’Ambrosio, KPMG Survey: Oil Price Collapse Drains Funding for FCPA Compliance, The FCPA Blog (Feb. 4, 2016),

[3] Leslie R. Caldwell, Assistant Attorney General, Remarks at American Conference Institute’s 32nd Annual International Conference on Foreign Corrupt Practices Act (Nov. 17, 2015),

[4] Joel Schectman, FBI to Bulk Up Foreign Bribery Efforts, Wall St. J., Jan. 14, 2015,

[5] FBI, FBI Establishes International Corruption Squads: Targeting Foreign Bribery, Kleptocracy Crimes, Mar. 30, 2015,

[6] Ben DiPietro, DOJ’s Caldwell: Plenty of FCPA Cases in Pipeline, Wall St. J., Feb. 23, 2016,

[7] From 2013 to 2015, about a third of DOJ’s FCPA enforcement actions were against companies and individuals in the energy sector. See Fraud Section, Criminal Div., Dep’t of Justice, Foreign Corrupt Practices Act: Related Enforcement Actions (2013-15),

[8] Press Release, Dep’t of Justice, New Compliance Counsel Expert Retained by DOJ Fraud Section (Nov. 3, 2015),

[9] Id.

[10] Dep’t of Justice, U.S. Attorneys’ Manual § 9-28.300(A)(5),

[11] The Anti-Bribery Business, The Economist, May 9, 2015, available at

[12] Id.

[13] See, e.g., Freshfields Bruckhaus Deringer, Anti-Bribery & Corruption: Global Enforcement and Legislative Developments 2016 (2016), at 31 (noting that, under Brazil’s new anti-corruption law, an effective compliance program is a mitigating factor), available at

[14] See Fraud Section, supra note 7.

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