1. 1
Understanding and Preparing for an “Industry Sweep” under the
Foreign Corrupt Practices Act
By Zack Harmon and Amelia R. Medina, King & Spalding LLP1
I. Introduction
In recent years, the Department of Justice (DOJ) and Securities & Exchange Commission
(SEC) have embraced the use of so-called “industry sweeps” as an enforcement tool against
suspected violations of the Foreign Corrupt Practices Act (FCPA).2
Industry sweeps are wide-
ranging FCPA investigations into multiple companies within a particular industry based on the
government’s belief that corrupt conduct is or may be manifest across the industry. Thus far,
sweeps have been used to target a diverse array of businesses, from energy companies3
to
Hollywood movie studios.4
Industry sweeps are attractive to government authorities because, among other things,
they offer a uniquely efficient way of ferreting out FCPA offenses. As a threshold matter,
sweeps encourage companies to evaluate their own operations and disclose anti-corruption
issues, largely shifting the expense of a factfinding investigation from the government to the
private sector. Typically, the FCPA enforcement authorities initiate sweeps by sending out
letters of inquiry from the SEC – sometimes called “Hello There” letters – encouraging the
recipient companies to provide information about particular business practices and/or geographic
areas of their operations. These simple and oft vaguely-worded letters, backed as they are by the
implicit threat of an impending DOJ/SEC investigation, can yield disclosures from companies
that ultimately result in the payment of many millions of dollars in penalties, as well as new
compliance commitments and other remedial measures.
Of course, many of the FCPA issues disclosed pursuant to letters of inquiry might have
been discovered by the government in due course (or already were, thereby prompting the
industry sweep). On other occasions, though, this enforcement tool provides a mechanism by
which the government may leverage the expert skills and knowledge of private industry with
respect to complex financial transactions, technological innovation, and other modern
developments to uncover wrongful conduct. In those instances, DOJ and SEC are able to root
out unlawful conduct that might otherwise go undetected.

2. 2
Unfortunately, industry sweeps also risk ensnaring compliant companies, or those with
relatively minor and easily remedied FCPA issues, in expensive and time-consuming
investigations. The government is sensitive to that concern: indeed, SEC FCPA Unit Chief Kara
Brockmeyer remarked at a September 2013 conference that, for precisely this reason, the
government does not send out letters of inquiry “willy-nilly.”5
Nevertheless, sweeps are
inherently more likely to be overinclusive than other enforcement tools and practices. In short,
they are more of an axe than a scalpel.
Accordingly, even companies whose business models are not considered at high risk of
corruption should take reasonable precautionary steps to mitigate the disruptive impact of a
possible industry sweep. Those steps include: (1) establishing a corporate FCPA “early alert
system”; (2) selecting a possible response team and arming them with the information necessary
to deploy quickly; and (3) as always, maintaining good corporate hygiene through risk
assessments and an effective compliance program. Through these measures, companies can
better position themselves to meet the challenge of this potent new enforcement tool, which is
contributing to what DOJ FCPA Unit Chief Charles Duross recently described as a “tremendous
pipeline of [FCPA] cases.”6
II. A Brief History of Industry Sweeps: From Panalpina to the Present
Over the past decade, DOJ and SEC have dedicated significant resources to the pursuit of
FCPA industry sweeps. What is widely regarded as the first such sweep became publicized in
November 2010, when Panalpina World Transport (Holding), Ltd. and its U.S. subsidiaries
(collectively, “Panalpina”) settled with DOJ and SEC for alleged bribery of foreign officials on
behalf of customers in the oil and gas industry.7
The resulting industry sweep subjected several
Panalpina customers, as well as some of its competitors in the freight-forwarding industry, to
investigations yielding penalties and civil disgorgement of over $200 million.8
Since then, regulators have launched investigations into the medical device industry (e.g.,
alleged bribes for government-employed doctors to purchase medical device products), the
pharmaceutical industry (e.g., alleged bribes for government-employed doctors to purchase
drugs), and the financial services industry (e.g., alleged bribes paid to employees of sovereign
wealth funds), among others.

3. 3
This trend of industry sweeps shows no sign of abating. Recent enforcement activities
that have the earmarks of sweeps include probes of the retail industry, the Hollywood movie
industry, and a probe of banks and hedge funds. The first of those three investigations is thought
to have been prompted by Wal-Mart Stores, Inc.’s high-profile disclosure in 2011 of alleged
bribes paid to Mexican officials for purposes of obtaining licenses and expediting the opening of
stores.9
The second involves alleged payments by multiple Hollywood movie studios to the
state-owned China Film Group,10
and the third appears to mark the spread of a government
inquiry initially focused on J.P. Morgan Chase for hiring practices regarding interns and other
employees in China.11
Unfortunately, it is difficult to generalize about preparing for an industry sweep, because
their triggers and growth patterns can be so different. One sweep might be triggered by a
company cooperating against a competitor; another by an investigative report in a newspaper;
and yet another by a tip received pursuant to the recent Dodd-Frank Act’s whistleblower
provision (which yielded 115 FCPA-related tips in Fiscal Year 2012 alone).12
Similarly, the perceived common threads that prompt FCPA enforcement authorities to
expand investigations from a single company to an industry also vary considerably. The
common denominator in the Panalpina investigation, for instance, was the customs broker
Panalpina. By contrast, in the medical device sweep, the authorities were drawn to what they
perceived as similar or identical business practices in particular geographies by the medical
device companies operating in those geographies.
It is difficult to predict when an isolated investigation may expand into a sweep, and
lessons learned from one investigation may be of limited utility with respect to the next. But
whatever the government’s impetus for initiating a sweep, there are certain steps that can
improve a company’s ability to respond.13
III. Ensuring Your Company is Well-Positioned for the Possibility of an Industry Sweep
a. Establishing a Corporate “Early Alert System”
A company is more vulnerable to negative repercussions from an industry sweep if the
government is able to catch it off-guard. Unanticipated, a blitz of letters of inquiry or other
simultaneous investigatory contacts can wreak psychological havoc on corporations, triggering
premature disclosures or turning companies within an industry against one another in an echo

4. 4
chamber of finger pointing. Although not all industry sweeps can be predicted, companies can
mitigate their risks by implementing an FCPA “early alert system.”
Logistically, an early alert system involves a company’s designation of internal and
external personnel responsible for scanning the horizon and keeping the company informed of
FCPA and other corruption investigations or risky practices that might attract attention from
either U.S. or non-U.S. authorities. Of course, many companies have already developed a
warning system within the United States; fewer, though, have afforded adequate attention to
creating those avenues of communication abroad. Coordination between foreign and U.S. anti-
bribery authorities is on the rise, and a warning system without a robust foreign presence is soon
to be obsolete. A U.K. probe of a company in China, for example, may quickly expand into a
multi-firm probe by DOJ and SEC.14
As part of the effort to construct an early alert system, companies should ensure that
senior leaders resident in countries with high degrees of real or perceived corruption (or whose
business functions are otherwise susceptible to corrupt payments) are trained to be on alert for
media reports or other indicators of corruption. Companies should also inform their law firms,
crisis management firms, and other third-party advisers that they are interested in hearing about
FCPA- and other corruption-related developments in their industry. Finally, companies should
take advantage of the opportunity to share information through trade organizations whose
members might be confronting identical compliance risks or government inquiries. Deceptively
simple, these measures may result in a company receiving advance notice of an industry sweep,
affording it the chance to accelerate preparations and to implement remedial adjustments.
It is equally important that a company’s FCPA and other corruption-related alarm system
continuously adapt to the changing landscape of government enforcement priorities. In some
ways, more informal systems may succeed here where formal ones fail, because boilerplate
definitions of the concerns that should be brought to a company’s attention often fail to keep
pace with the permutations of improper business practices. Instead, company leadership should
set an encouraging tone, in which the individuals who comprise the early alert system are told to
err on the side of coming forward with concerns or information about FCPA and other corruption
issues. Relatedly, the company’s outside advisers should be instructed to err on the side of over-
inclusion when bringing developments of note to the company’s attention.

5. 5
This approach will help counteract the diagnostic problem that industry sweeps come in a
wide variety of shapes and sizes. As previously noted, some are relatively predictable, such as
the pharmaceutical industry sweep that emerged shortly after DOJ and SEC began a probe of
medical device companies engaged in similar practices. But, as a general matter, industry
sweeps are as diverse as the individual FCPA investigations that underlie them. They can cover
vertical relationships (e.g., supply chains, customers) as well as horizontal ones (e.g., partners,
competitors). To the same point, their scope may expand as the government’s investigation
continues, meaning that a company that did not receive an initial letter of inquiry cannot assume
that it has escaped scrutiny. In sum, a company’s early alert system must be adaptable, or it may
fail to detect activities by aggressive government authorities attempting new strategies of
enforcement.
b. Selecting and Preparing a Response Team
A second precaution in preparing for the possibility of an industry sweep is to identify
local law firms and crisis management firms in high risk geographies that are competent in anti-
bribery matters. An industry sweep focused on business practices in a particular country can
elicit a competition among companies for the best local advisers and resources, but not all
jurisdictions have more than a handful (or even fewer) professionals with meaningful and
practical experience concerning corruption issues and other aspects of government investigations
and enforcement activities.
While having a firm on retainer is ideal, preemptively hiring and paying advisers is not
necessary. A company benefits merely from considering, in advance, which local professionals
might best serve its interests. That way, valuable time that could be directed towards developing
a company’s response to a government inquiry is not wasted on evaluating firms and soliciting
proposals. Time is of the essence during an industry sweep: for instance, a company must move
quickly to implement whatever document and data preservation measures are appropriate under
the circumstances. Perhaps even more importantly, a company that ultimately elects to make a
disclosure may be better situated to argue for cooperation credit from the government if the
disclosure is made early in the course of the sweep.15
Companies also should ensure that, with respect to high risk geographies, their
anticipated response team includes personnel or third party advisers who are well-versed in the
local attorney-client privilege rules and data privacy rules. Again, these issues can create

6. 6
tremendous headaches and delay at the outset of an investigation. Moreover, those missed
opportunities at the outset can easily result in privilege litigation and other problems that persist
well into the investigation. Simple workarounds to these legal obstacles are often available if
planned in advance. Among other possibilities, retaining confidential materials in a particular
location can help protect the attorney-client privilege in certain jurisdictions, and executing
intercompany agreements or providing certain notice to employees can ameliorate data privacy
issues.
Finally, while companies typically encounter fewer problems and delays engaging U.S.-
based professional firms to assist with a sweep and interact with DOJ and SEC authorities,
companies obviously should not overlook the risk of wasting precious time in this facet of their
response, too. Among other things, it behooves a company to consider in advance whether it
would draw solely on internal resources in triaging corruption issues and responding to the
government’s outreach. If the company anticipates that it would want to turn to outside
professionals (outside counsel, forensic accountants, media relations professionals, etc.), then
there is value in at least identifying a list of potential candidates in advance.
c. Maintaining an Effective Compliance Program
Finally, and unsurprisingly, having an effective FCPA compliance program in place –
and working hand-in-hand with the “early alert system” described above – before an FCPA
probe begins is crucial to minimizing a company’s exposure to an industry sweep. A fulsome
discussion of the components of an effective compliance program exceeds the scope of this
article; for our purposes here, it suffices to point out that a compliance program that includes risk
assessments of internal vulnerabilities may better position a company to determine whether the
issues raised and questions posed in an SEC “Hello There” letter are applicable to the company’s
business.
This evaluative capability has become especially salient in light of recent public remarks
made by Kara Brockmeyer, SEC FCPA Unit Chief.16
Brockmeyer has explicitly acknowledged
a phenomenon about which FCPA practitioners had hypothesized for some time – namely, that
industry sweeps are usually but not always predicated on a specific tip as to the industry in
question.17
Thus, while a company should never assume that the government lacks evidence
about a problem merely because the company’s own compliance program did not uncover the

7. 7
issue, it is equally important for companies to arm themselves with the information needed to
tailor their internal investigations and avoid needless expenditure of resources.
An unfortunate but significant reality for companies caught up in industry sweeps is that
it is difficult to emerge from these investigations quickly. The enforcement authorities (U.S. and
non-U.S.) typically want to hear at least the preliminary responses from all of the companies to
the questions posed and issues raised before deciding how they will proceed with respect to any
one company. From the authorities’ perspective, this approach makes sense. If one company
describes improper payments in connection with a business practice, then the authorities
naturally want to know whether the other companies have engaged in the same practice. This
creates a snowball effect that can prolong and expand these investigations significantly, but there
is little reason for the authorities to excuse any company from the exercise until it has
sufficiently run its course.
Nonetheless, companies can save resources and minimize internal disruption if – based
on reliable information arising from a well-vetted compliance program – they can quickly
diagnose potential issues relevant to the authorities’ concerns and questions. For example, if the
authorities have inquired about a business practice related to which the company has strong
compliance procedures, positive findings from a recent and thorough internal audit, few or no
complaints from a hotline system that is clearly effective in eliciting concerns, etc., then the
investigation should not be as daunting. Moreover, while an initial response to the authorities
describing such a strong compliance environment is unlikely to result in a quick exit from the
investigation, it may make a well-deserved, positive first impression on the authorities.
Finally, an effective compliance program will enable a company to hone in quickly on
areas of potential concern, including issues that the authorities have not already raised but that
the company may nonetheless elect to bring to the authorities’ attention (e.g., in a situation where
the company anticipates that the government will eventually ask about or otherwise discover the
problem). This early diagnosis of peripheral issues is important because FCPA enforcement
authorities have repeatedly made public statements to the effect that companies that “discover
problems before [the government] do[es], and then work to fix them, [ ] will receive a benefit for
having done so.”18

8. 8
IV. Conclusion
Some aspects of a company’s preparation for an industry sweep require consideration
beyond that associated with a one-off investigation. Certainly, a unique aspect of industry
sweeps is the government’s ability to pit industry members against one another, despite the fact
that these companies may have shared interests as an industry over the long term. Those macro
strategic problems, in combination with the other issues discussed in this article, are precisely the
sorts of matters that should not be considered for the first time in the heat of an ongoing
government probe. The steps recommended in this article are intended to better position
companies for their turn under an industry-wide microscope.
In the meantime, practitioners and their clients will continue to venture educated guesses
about where the government will focus its attention next. While these guesses are just that –
guesses – a consensus has emerged that industry sweeps are likely here to stay. Indeed, referring
to the Panalpina investigation, Cheryl J. Scarboro, then-Chief of the SEC’s FCPA Unit, once
said: “The FCPA Unit will continue to focus on industry-wide sweeps, and no industry is
immune from investigation.”19
Thus far, her words have proved prescient.
1
Zack Harmon is a partner in King & Spalding LLP’s Washington, D.C. office and is Deputy Leader of the firm’s
60+ attorney Government Investigations Practice Group. His practice focuses on FCPA-related litigation,
government investigations, internal investigations, due diligence and compliance programs. Prior to rejoining King
& Spalding in 2003, Mr. Harmon served as Special Assistant U.S. Attorney in the District of Columbia, as a
prosecutor in the Tax Division of the Department of Justice, as a team lead on the Presidential commission
(“Webster Commission”) that investigated FBI Special Agent Robert Hanssen’s espionage, as a trial attorney on the
Enron Task Force, and finally as Counsel to U.S. Deputy Attorney General Larry D. Thompson. Mr. Harmon is a
regular speaker and author on the FCPA and other enforcement issues.
Amelia R. Medina is an associate in King & Spalding LLP’s Government Investigations Practice Group. Her
practice focuses on white-collar criminal defense, government investigations, internal investigations, and complex
civil litigation.
2
Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§ 78dd-1, et seq. (as amended in 1988 and 1998).
3
See Palmina M. Fava et al., Energy Sector Faces Greater FCPA Scrutiny, Oil & Gas Fin. J. (September 1, 2008),
available at http://www.ogfj.com/articles/print/volume-5/issue-9/features/energy-sector-faces-greater-fcpa-
scrutiny.html.
4
See Michael Cieply, Inquiry into China Film Trade Unnerves Hollywood, N.Y. Times (February 17, 2013),
available at http://www.nytimes.com/2013/02/18/business/sec-inquiry-into-china-film-trade-unnerves-
hollywood.html?_r=0.
5
Remarks of Kara Brockmeyer, SEC FCPA Unit Chief, at the American Bar Association’s National Institute on the
Foreign Corrupt Practices Act, Washington, D.C. (September 19, 2013).
6
Remarks of Charles Duross, DOJ FCPA Unit Chief, at the American Bar Association’s National Institute on the
Foreign Corrupt Practices Act, Washington, D.C. (September 19, 2013).

9. 9
7
DOJ Press Release, Oil Services Companies and a Freight Forwarding Company Agree to Resolve Foreign Bribery
Investigations and to Pay More than $156 Million in Criminal Penalties; SEC and Companies Agree to Civil
Disgorgement and Penalties of Approximately $80 Million (November 4, 2010), available at
http://www.justice.gov/opa/pr/2010/November/10-crm-1251.html.
8
Id.
9
Aruna Viswanatha, U.S. Weighs Retail Sweep after Wal-Mart Bribery Scandal, Reuters News (July 26, 2012),
available at http://www.reuters.com/article/2012/07/27/us-usa-retail-bribery-idUSBRE86P1TZ20120727.
10
Studios’ Dealings in China Said to Be Subject of SEC Questions, L.A. Times (April 24, 2012), available at
http://latimesblogs.latimes.com/entertainmentnewsbuzz/2012/04/studio-dealings-in-china-subject-of-sec-
questions.html.
11
Robin Sidel & Cynthia Koons, U.S. Overseas Hiring Probe Has Wide Net: Scrutiny Goes Beyond Probe
Disclosed by J.P. Morgan, Wall St. J. (August 29, 2013), available at http://online.wsj.com/news/articles/
SB10001424127887324324404579043382418965094.
12
U.S. Securities & Exchange Commission, Annual Report on the Dodd-Frank Whistleblower Program: Fiscal Year
2012, Appendix A (November 2012), available at http://www.sec.gov/about/offices/owb/annual-report-2012.pdf.
13
See, e.g., Remarks of Assistant Attorney General Lanny A. Breuer at the 24th National Conference on the Foreign
Corrupt Practices Act, National Harbor, MD (November 16, 2010), available at http://www.justice.gov/
criminal/pr/speeches/2010/crm-speech-101116.html (“There are many steps that you can be taking that would put
your organization in a better position for the day we do come knocking, or that could prevent us from coming at
all.”).
14
See Brockmeyer, supra note 5 (stating that an “increasing number of referrals” come from foreign law
enforcement authorities).
15
See Breuer, supra note 13 (“[W]e are increasingly able to take an industry-wide approach to our FCPA
investigations. That’s because one way in which corporations obtain credit for their cooperation is by providing us
with information about their competitors and their clients. . . . As a former defense lawyer, I understand that the
question of whether to self-report is a difficult one. But I can assure you that if you do not voluntarily disclose your
organization’s conduct, and we discover it on our own, or through a competitor or a customer of yours, the result
will not be the same.”).
16
See Brockmeyer, supra note 5.
17
Id.
18
See Breuer, supra note 13.
19
SEC Press Release, SEC Charges Seven Oil Services and Freight Forwarding Companies for Widespread Bribery
of Customs Officials (November 4, 2010), available at http://www.sec.gov/news/press/2010/2010-214.htm.