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Inability To Pay

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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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