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A Focus On DOJ FCPA Individual Prosecutions

Some have proclaimed 2013 to be the year of the individual.  (See here and here).

Yes, in 2013 FCPA criminal charges were filed or announced against 12 individuals and this figure was higher than in 2012 and 2011.  Yet at the same time, 0 of the 8 DOJ corporate FCPA enforcement actions in 2013 have resulted (at least yet) in any related charges against company employees.  Going back to 2012, only 1 of the 9 DOJ corporate FCPA enforcement actions (11%) in 2012 have resulted (at least yet) in any related charges against company employees.

Certain individual FCPA enforcement actions filed or announced in 2013 (see here for the individual actions announced in connection with the 2012 BizJet enforcement action and here for the individual action announced in connection with the 2011 Maxwell Technology enforcement action) remind us that there can be a lag time between a corporate FCPA enforcement and any related individual enforcement action.

Nevertheless, the statistics are what they are at the present moment and this post highlights certain facts and figures concerning the DOJ’s prosecution of individuals for FCPA offenses.

Since 2000, the DOJ has charged 123 individuals with FCPA criminal offenses.  The breakdown is as follows.

  • 2000 – 0 individuals
  • 2001 – 8 individuals
  • 2002 – 4 individuals
  • 2003 – 4 individuals
  • 2004 – 2 individuals
  • 2005 – 3 individuals
  • 2006 – 6 individuals
  • 2007 – 7 individuals
  • 2008 – 14 individuals
  • 2009 – 18 individuals
  • 2010 – 33 individuals (including 22 in the Africa Sting case)
  • 2011 – 10 individuals
  • 2012 – 2 individuals
  • 2013 – 12 individuals

An analysis of the numbers reveals some interesting points.

Most of the individuals – 89 (or 72%) were charged since 2008.  Thus, on one level the DOJ is correct when it states that individual prosecutions are a “cornerstone” of its FCPA enforcement strategy and that it has been “vigorous about holding individuals accountable” – at least as measured against the historical average given that between 1978 and 1999, the DOJ charged 38 individuals with FCPA criminal offenses.

Yet on another level, a more meaningful level given that there was much less overall enforcement of the FCPA between 1978 and 1999, the DOJ’s statements about its focus on individuals represents hollow rhetoric as demonstrated by the below figures.

Of the 89 individuals criminally charged with FCPA offenses by the DOJ since 2008:

  • 22 individuals were in the Africa Sting case;
  • 9 individuals (minus the “foreign officials” charged) were in the Haiti Teleco case;
  • 8 individuals were in the Control Components case;
  • 8 individuals were in the Siemens case;
  • 4 individuals were in the Lindsey Manufacturing case;
  • 4 individuals were  in the LatinNode / Hondutel case;
  • 4 individuals were in the Nexus Technologies case;
  • 4 individuals were in the BizJet case; and
  • 4 individuals were associated with Alstom (the company’s FCPA scrutiny is still ongoing).

In other words, 53% of the individuals charged by the DOJ with FCPA criminal offenses since 2008 have been in just four cases and 75% of the individuals charged by the DOJ since 2008 have been in just nine cases.

Considering that there has been 60 corporate DOJ FCPA enforcement actions since 2008, this is a rather remarkable statistic.  Of the 60 corporate DOJ FCPA enforcement actions, 44 (or 73%) have not (at least yet) resulted in any DOJ charges against company employees.

This FCPA specific figure is higher than the general 66% figure calculated by Professor Brandon Garrett and recently profiled in this Wall Street Journal article (“The Justice Department hasn’t charged employees at two-third of nearly 400 companies that have settled criminal investigations or been convicted of crimes in recent years.”)

In short, and as demonstrated by the statistics, DOJ FCPA individual enforcement actions are significantly skewed by just a few enforcement actions and the reality is that 73% of DOJ corporate enforcement actions since 2008 have not (at least yet) resulted in any DOJ charges against company employees.

A very interesting and significant picture emerges when analyzing DOJ individual prosecution data based on whether the corporate entity employing or otherwise involved with the individual charged was a public or private entity.

Of the 89 individuals charged by the DOJ with FCPA criminal offenses since 2008, 61 of the individuals (69%) were employees or otherwise affiliated with private business entities.  This is a striking statistic given that 48 of the 60 corporate DOJ FCPA enforcement actions since 2008 (80%) were against publicly traded corporations.

In the 12 private entity DOJ FCPA enforcement actions since 2008, individuals were charged in connection with 7 of those cases (58%).  In contrast, in the 48 public entity DOJ FCPA enforcement actions since 2008, individuals were charged in connection with 9 of those cases (19%).  In short, and based on the data, a private entity DOJ FCPA enforcement is approximately three times more likely to have a related DOJ FCPA criminal prosecution of an individual than a public entity DOJ FCPA enforcement action.

Are other factors at play when it comes to the fact that 73% of DOJ corporate enforcement actions since 2008 have not (at least yet) resulted in any DOJ charges against company employees?  A future post will highlight a relevant datapoint.

[Notes – the above data was assembled using the “core” approach – see this prior post for an explanation.  The term “public entity”  is not limited to “issuers” under the FCPA, but rather a public entity regardless of which market it shares trade on.  Thus, for instance, JGC Corp. of Japan and Bridgestone are both public entities even though its shares are not traded on a U.S. exchange.]

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