DIVINING THE WAYS OF LAW ENFORCEMENT: LESSONS FROM THE RALPH LAUREN FCPA CASE

On 22 April 2013 Ralph Lauren Corporation (RLC) settled its FCPA case with the US Department of Justice and the Securities and Exchange Commission in a manner that has left commentators and global companies confused and concerned about the SEC’s approach to imposing penalties and about the continued expansion of US jurisdiction under the FCPA, particularly criminal jurisdiction under the anti-bribery provisions.

The facts as set forth in the SEC and DOJ case resolution documentation are straightforward, but omit important details that have created confusion. According to the published SEC and DOJ case resolution documents, in 2010 RLC put in place an enhanced anti-corruption compliance program to supplement its previous policies. The facts as reported in these documents do not describe the company’s prior approach to anti-corruption compliance. Shortly after the enhanced program was rolled out in Argentina, local employees admitted to paying bribes to Argentine Customs officials totalling $568,000 over several years and providing expensive gifts to government officials valued at between $400 and $14,000 each. RLC promptly investigated and disclosed the violations to the DOJ and SEC within two weeks of uncovering the problem. The Statement of Facts annexed to the SEC’s Non-Prosecution Agreement specifies that bribes were paid through a Customs broker “to assist in obtaining paperwork necessary for RLC products to clear customs, to permit clearance of items without the necessary paperwork, to permit the clearance of prohibited goods and to avoid inspection of products by Argentine customs officials”. 

Jul-Sep 2013 Issue

Baker & McKenzie LLP