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Court In FCPA-Related Civil Claim – Causation Matters

Judicial Decision

Several prior posts (herehere, here and here) have focused on basic causation issues in connection with many Foreign Corrupt Practices Act enforcement actions.

The lack of causation between an alleged bribe payment and any alleged business obtained or retained may not be a legal defense because the FCPA’s anti-bribery provisions prohibit the offer, payment, promise to pay or authorization of the payment of money or anything of value.  Indeed, several FCPA enforcement actions have alleged unsuccessful bribery attempts in which no business was actually obtained or retained.

Nevertheless, causation ought to be relevant when calculating FCPA settlement amounts, specifically disgorgement. However, the prevailing enforcement theory often seems to be that because Company A made improper payments to allegedly obtain or retain Contract A then all of Company A’s net profits associated with Contract A are subject to disgorgement.

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Inability To Pay

inabilitypay

As highlighted in this post, the $2 million settlement amount in the recent Transport Logistics International enforcement action could have been much higher as the DOJ and the company agreed “based on the application of the Sentencing Guidelines, that the appropriate criminal penalty [was] $21,375,000.” However, as stated in the resolution documents, the DOJ “with the assistance of a forensic accounting expert, conducted an independent inability to pay analysis, [and] it was determined that a penalty greater than $2 million would substantially jeopardize the continued viability of the Company.”

According to some, this “appears to be a recent trend,” and “in prior years, the DOJ rarely cited a company’s inability to pay as a factor for a particular fine.” However, like much FCPA commentary these comments lack an appreciation for history (including not too distant history) because as highlighted below the “inability to pay” dynamic in the TLI matter is not a recent trend and “inability to pay” determinations, as previously highlighted in FCPA Professor posts, have been made in several FCPA enforcement actions going back several years (in addition to more recent examples involving SBM Offshore and Odebrecht).

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Issues To Consider From The Rolls-Royce Enforcement Action

Issues

This previous post went in-depth into the $170 million Foreign Corrupt Practices Act enforcement action against U.K. based Rolls-Royce announced on January 17th. This post continues the analysis by highlighting additional issues to consider.

Unusual Aspect of the DPA

The Rolls-Royce DPA contains an unusual feature. Of the approximate $170 criminal penalty “$30 million will be paid to the Consumer Financial Fraud Fund.”

This has never happened before in an FCPA enforcement and set forth below is my e-mail exchange with the DOJ press office on this issue.

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Issues To Consider From The Teva Enforcement Action

Issues

This previous post went in-depth into the $519 million Foreign Corrupt Practices Act enforcement action against Teva Pharmaecutical (the first-ever FCPA enforcement action against an Israeli company, by far the largest-ever FCPA enforcement action against a pharmaceutical company, and 4th largest FCPA settlement of all-time).

Set forth below are additional issues to consider.

Timeline

As highlighted in this prior post, Teva’s FCPA scrutiny began in July 2012. Thus from start to finish the company’s FCPA scrutiny lasted approximately 4.5 years. If the DOJ and SEC want the public to view its FCPA enforcement program as legitimate, credible, and effective, it must resolve instances of FCPA scrutiny much faster.

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Issues To Consider From The JP Morgan Enforcement Action

Issues

This previous post went in-depth into the recent Foreign Corrupt Practices Act enforcement action against JP Morgan based on its alleged improper hiring and internship practices that the U.S. government labeled bribery and corruption

This post continues the analysis by highlighting several additional issues to consider.

Other Internship / Hiring Enforcement Actions

While the JPMorgan hiring and internship enforcement action was the most high-profile based on the settlement amount, it certainly was not the first FCPA enforcement action based on alleged improper internship and hiring practices.

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