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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.]

Like A Kid In A Candy Store

It is mid-January and, like every year around this time, I feel like a kid in a candy store given the number of FCPA year in reviews hitting my inbox.  This post highlights various FCPA or related publications that caught my eye.

Reading these publications are recommended and should find their way to your reading stack.  However, be warned.  The divergent enforcement statistics contained in them are likely to make you dizzy at times and as to certain issues.

Given the increase in FCPA Inc. statistical information and the growing interest in empirical FCPA-related research, I again highlight the need for an FCPA lingua franca (see here for the prior post), including adoption of the “core” approach to FCPA enforcement statistics (see here for the prior post), an approach endorsed by even the DOJ (see here), as well as commonly used by others outside the FCPA context (see here)

Gibson Dunn

The firm’s Year-End FCPA Update is a quality read year after year.

Consistent with this prior post “FCPA Settlement Amounts Have Come a Long Way In a Short Amount of Time,” the Update notes as follows.  “An unmistakable characteristic of the year in FCPA enforcement is that the market rate for resolving a corporate FCPA enforcement action spiked precipitously in 2013.”

Numerous previous posts have highlighted various double standards relevant to FCPA enforcement and the following passage from the Update is well-stated.

“The paradigm of international anti-corruption enforcement is frequently viewed, at least in the United States, through the prism of U.S. enforcers determined to root out the illicit dealings of corrupt foreign officials.  We speak of sovereign nations as “risky neighborhoods” in which to do business, denoted by dark shades of red on the ubiquitous Transparency International Corruption Perceptions Index (“CPI”).  So the authors frequently note the quizzical looks on the faces of audience members in training sessions when we reveal that the United States barely qualifies as a Top 20 country on the CPI, tied at 19 with South America’s Uruguay.  To be sure, the less-than-stellar CPI ranking of the United States has as much to do with an unparalleled domestic enforcement regime as any other factor, but the sad truth is that corruption is not a problem unique to government officials outside our borders.”

Gibson Dunn also released (here) its always informative “Year-End Update on Corporate Deferred Prosecution Agreements (DPAs) and Non-Prosecution Agreements (NPAs).”  The update: “(1) identifies the NPAs and DPAs announced in 2013 and the trends they reflect; (2) surveys the role NPAs and DPAs may play in federal civil litigation collateral to the criminal resolutions of the agreements themselves; (3) analyzes the challenges that non-contradiction clauses in NPAs and DPAs can present for companies when they address the underlying conduct and facts outside the context of the criminal settlement; and (4) discusses debarment and suspension implications of NPAs and DPAs.”

According to the Update, of the 28 NPAs or DPAs the DOJ (or SEC) entered into in 2013, 8 (28%) were in FCPA enforcement actions and the FCPA was the single largest source of NPAs and DPAs in 2013 in terms of primary allegation.

According to previous Gibson Dunn reports on this subject, in 2012 (a year in which saw a large number of trade sanctions, export controls, and money laundering enforcement actions resolved via NPAs or DPAs) 23% of all NPAs and DPAs were in FCPA enforcement actions; in 2011, approximately 40% of DOJ NPAs or DPAs were in FCPA enforcement actions; and in 2010, approximately 50% of DOJ NPAs or DPAs were in FCPA enforcement actions.

Shearman & Sterling

The firm’s “Recent Trends and Patterns in the Enforcement of the FCPA” is also another quality read year after year.

Consistent with Philip Urofsky’s previous critique of the Ralph Lauren Corporation enforcement action (see here), the report states as follows.

“We have previously highlighted the SEC’s disconcerting practice of charging parent companies with anti bribery violations based on the corrupt payments of their subsidiaries, even when the facts alleged in the pleadings do not establish any parental involvement in bribery. In the Ralph Lauren case, both the SEC and DOJ took an even larger leap, by seemingly imposing apparently strict criminal and civil liability on a parent company for the corrupt acts of its subsidiary. […] Neither agency … included any allegation of any authorization, direction, or control by RLC of its subsidiary’s corrupt conduct, or even its knowledge of such conduct.  […]  [T]he government apparently intends to treat a subsidiary as the parent’s agent by focusing not on the formal relationship, present in all cases, between a parent and a subsidiary, informed by the practical realities of how the parent and subsidiary interact, and then apply “traditional principles of respondeat superior” to hold the parent liable for bribery by the subsidiary, whether or not specifically authorized, directed, or controlled by the parent.  Under this theory, a subsidiary is virtually always an agent of its parent, and thus the parent is strictly liable for any acts ‘‘within the scope of [the agent’s] duties’’ and intended to benefit the parent—even if the parent had policies prohibiting bribery. This flagrantly disrespects the corporate form and the black letter rule that to ‘‘pierce the corporate veil’’ the parent must have operated the subsidiary as an alter ego and itself paid no attention to the corporate form.  Although we have noted elements of this approach in prior SEC actions, the DOJ’s espousal of such a theory is particularly worrisome, as it impacts non issuer domestic concerns and foreign companies —a much broader universe of companies.  […] The fact that the Ralph Lauren case was resolved through an NPA rather than a DPA (or a guilty plea) does not excuse this approach—when the DOJ announces it will not prosecute but requires the company to admit to facts establishing a criminal violation of the law, it is stating, as a fact, that the company committed a crime. In such case, it is obligated to demonstrate, through the pleadings, in whatever form they are presented, that it could, in fact, prove each and every element of the offense.”

Hughes Hubbard

The firm’s Winter Alert is thick and comprehensive and begins in dramatic fashion:

“To paraphrase Mark Twain, reports of the FCPA’s death were greatly exaggerated.  Although at times many pillars of anti-corruption enforcement seemed to be crumbling or at least showing cracks, 2013 has seen a string of developments that reinforce that anti-bribery laws — and their vigorous enforcement — are here to stay. Where once we watched the Shot Show prosecution crumble, we now see indictments and plea deals for even non-U.S. citizens and non-U.S. issuers. Where once we saw monitorships seemingly falling into disfavor, we now see them restored and imposed in the most high-profile, high-stakes cases.”

Other Items for the Reading Stack

See here for “Mitigating Potential Bribery-Related Risks Associated With Minority Owned and Non-Controlled Joint Ventures” by Covington & Burling attorneys Robert Amaee, David Lorello, John Rupp and Ashely Sprague.

See here for “Top Ten Compliance Trends for the New Year” by Perkins Coie attorneys Markus Funk and Sambo Dul.

Canada 2013 Year In Review

Several recent posts have highlighted various 2013 Foreign Corrupt Practices Act enforcement statistics.  Future posts will continue the number crunching on individual FCPA enforcement statistics.

Today however, we pause and look north to Canada for a year in review by the Canada Expert for FCPA Professor, Mark Morrison (Blake, Cassels & Graydon), and Blake attorneys Matthew Huys and Michael Dixon.

*****

2013 was a bellwether year for Canadian anti-corruption law and enforcement. On June 19, 2013 the Canadian government passed into law amendments to the Corruption of Foreign Public Officials Act (CFPOA) that significantly strengthen Canada’s primary foreign anti-corruption legislation. Additionally, 2013 has seen a number of prominent enforcement proceedings, including Canada’s largest fine for a CFPOA conviction to date, as well as the first trial and conviction of an individual under the CFPOA.

This post discusses recent enforcement proceedings and amendments to the CFPOA in turn.

Recent Enforcement Proceedings

Canadian authorities continue to focus on enforcing the CFPOA. As noted above, 2013 has seen the largest fine to date for a conviction under the CFPOA, the first trial and conviction of an individual under the CFPOA, the ongoing investigations into SNC-Lavalin Group Inc. (SNC-Lavalin) and its affiliates, and the corruption allegations against a large number of municipal officials and members of the construction industry in Quebec. Notable enforcement proceedings are discussed below.

Griffiths Energy – The Griffiths Energy case is the second major conviction under the CFPOA.   In January 2013, Griffiths pled guilty to the bribery offence under section 3(1)(b) of the CFPOA and agreed to pay a fine of $9M, plus a 15% victim surcharge, for a total of $10.35M. This fine was in relation to consulting agreements that provided for payments in the amount of $2M to two entities owned and controlled by Chad’s ambassador to Canada and his spouse. In assessing the fine, the Court noted as mitigating factors that Griffiths had self-reported, taken the extraordinary step of sharing privileged materials, spent $5M conducting an internal investigation into the bribery, and had to postpone its planned IPO at a cost of $1.8M.

Karigar Conviction– On August 15, 2013 the Ontario Supreme Court released its decision in the trial of Nazir Karigar, the first individual charged under the CFPOA. Mr. Karigar was a former employee of Cryptometrics, a company developing facial recognition software for airports and governments. The RCMP laid charges against Mr. Karigar individually, alleging that he violated the CFPOA by paying bribes totalling $450,000 to an Indian minister and Air India officials in relation to a security system contract. Notably, the trial judge convicted Mr. Karigar notwithstanding that there was no evidence that bribes were actually offered or paid, holding that section 3 of the CFPOA also prohibits any conspiracy or agreement to bribe foreign public officials. A sentencing hearing in Mr. Karigar’s case is expected to be scheduled in the near future. A more detailed summary of the Karigar decision can be found here.

Investigation into SNC-Lavalin -The investigation into SNC-Lavalin and its subsidiaries remains ongoing. On September 1, 2011 the RCMP raided its offices in connection with a corruption probe into the bidding process for the World Bank funded Padma Bridge Project in Bangladesh.  On April 11, 2012, Ramesh Shah and Mohammad Ismail, two former executives of SNC-Lavalin, were charged with one count each of corruption under the CFPOA.  Another former executive of SNC-Lavalin, Kevin Wallace, was charged on September 18, 2013. In addition, two former executives, including a former CEO, are facing fraud charges relating to a contract for a multi-billion dollar health facility in Montreal.

Corruption Inquiry in Quebec The Charbonneau Commission inquiry into corruption in the management of public construction contracts in Quebec is ongoing. While the final report of the Charbonneau Commission Inquiry is not expected until Spring 2015, the inquiry has heard testimony of rampant corruption in municipal contracting in Quebec. There have been wide-ranging allegations against a large number of municipal officials, suggesting that they accepted bribes to award municipal construction contracts. Notably, allegations of corruption have resulted in the resignation of the former mayors of Montreal, Michael Applebaum and Gerald Tremblay, in addition to the resignation of the Mayor of Laval, Gilles Vaillancourt. Additionally, there have been allegations of collusion on the part of engineering and construction firms in bidding on municipal contracts.

Ongoing RCMP Investigations -In addition to the foregoing matters, the RCMP has also made it known that it has 34 active and ongoing CFPOA investigations.

Amendments to the CFPOA

The amendments to the CFPOA close significant loopholes, create new offences, and increase penalties for violating its provisions.  They include:

Nationality Jurisdiction – Prior to the amendments, the CFPOA contained a significant loophole with the application of territorial jurisdiction. Territorial jurisdiction created enforcement difficulties as there had to be a territorial nexus between Canada and the offence for the CFPOA to apply, meaning that some part of the formulation, initiation, or commission of the offence must have taken place within Canada. Considering that the CFPOA is directed at transactions that predominantly occur abroad, territorial jurisdiction hampered the ability of Canadian authorities to enforce the CFPOA in cases where the entire transaction occurs abroad.

The amendments closed the territorial jurisdiction loophole by employing nationality jurisdiction in a similar manner as other global anti-corruption legislation, such as the United States Foreign Corrupt Practices Act (FCPA). The relevant provision deems acts of Canadian citizens, permanent residents, corporations, societies, firms or partnerships on a worldwide basis to be acts within Canada for the purposes of the CFPOA. This provision essentially subjects all Canadian citizens and companies to global regulation by Canadian authorities under the CFPOA.

Increased Penalties – The amendments significantly increased the penalties for violations of the CFPOA. Maximum imprisonment for violation of the CFPOA is now 14 years, as opposed to five years prior to the amendments.

Books and Records Offence – New offences now exist for concealing bribery in accounting records. Pursuant to the new books and records provisions, it is an offence to keep secret accounts, falsely record, not record or inadequately identify transactions, enter liabilities with incorrect identification of their object, use false documents, or destroy accounting books and records earlier than permitted by law for the purpose of concealing bribery of a public official. Similar to the bribery offence under the CFPOA, the new books and records provisions carry a maximum sentence of 14 years’ imprisonment.

While this new offence has some similarity to the books and records provisions of the FCPA, it is not likely to have the same impact in Canada as it has had in the United States, as in Canada the new books and records provisions are criminal, meaning both that the authorities must prove an offence to the higher standard of proof, and also that there is no civil resolution option provided under the CFPOA.

No Facilitation Payments –Under the amendments, the current exception in the CFPOA for facilitation payments will be removed. The timing for removal of such exception is subject to a further order of the Governor in Council.

No For-Profit Requirement – Prior to the amendments, application of the CFPOA was restricted to for-profit transactions. This allowed for potential arguments that any particular payment did not violate the CFPOA because it was not directly tied to a for-profit purpose. Under the amendments, this potential argument is no longer available as the for-profit restriction has been removed.

Double Jeopardy – Previously, the CFPOA did not specifically address the potential availability of double jeopardy protection in circumstances involving prosecutions for the same conduct in different jurisdictions (for instance, in the United States under the FCPA). While common law arguments for such protection did exist, the availability of a double jeopardy defence based on the principles of autrefois acquit or autrefois convict was by no means certain. The amendments now clarify this uncertainty and ensure that Canadian companies and individuals tried in another jurisdiction cannot be convicted for the same conduct in Canada.

For a further summary of the amendments to the CFPOA, please see here.

Conclusion

The trend of increased focus on anti-corruption compliance and enforcement in Canada has continued in 2013. This trend will likely continue with the recent amendments to the CFPOA, active investigations by the RCMP, and the continued emphasis on anti-corruption compliance in the media and in Canadian board rooms.

From Healthcare Providers To Customs Officials To SOE Employees – The “Foreign Officials” Of 2013

A “foreign official.”

Without one, there can be no FCPA anti-bribery violation (civil or criminal).  Who were the “foreign officials” of 2013 (at least from an enforcement perspective – recognizing of course that the meaning of this key FCPA element is the subject of on-going dispute including a historic appellate court challenge – see here for links to the briefing).

This post, describes the alleged “foreign officials” from 2013 corporate DOJ and SEC FCPA enforcement actions.

There were 9 core corporate enforcement actions in 2013.  Of the 9 enforcement actions, 5 (55%) involved, in whole or in part, employees of alleged state-owned or state-controlled entities (“SOEs”).  These entities ranged from oil and gas companies to banks .

In 2012, 42% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 348-353).  In 2011, 81% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 29-41).  In 2010, 60% of corporate FCPA enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 108-119).  In 2009, 66% of corporate FCPA enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 410-44).  As to whether Congress intended employees of SOEs to be “foreign officials” under the FCPA, see here for my “foreign official” declaration.

Another notable “foreign official” enforcement theory from 2013 was that various foreign health care providers are “foreign officials” under the FCPA.  Of the 9 core corporate enforcement actions in 2012, 2 (22%) involved, in whole or in part, foreign health care providers.  In 2012, 50% of corporate enforcement actions involved, in whole or in part, this enforcement theory.  See here for a prior post on the origins and prominence of this enforcement theory.

Combining enforcement actions that involved, in whole or in part, SOE employees with enforcement actions that involved, in whole or in part, foreign health care providers, the result is 7 of 9 corporate enforcement actions (78%).   Last year, this figure was 10 of 12 (83%).

The remainder of this post describes (as per DOJ/SEC allegations) the “foreign officials” of 2013.  As is apparent from the specific descriptions below, in certain instances the enforcement agencies describe the “foreign official” with reasonable specificity; in other instances with virtually no specificity.

[Note:  certain of the enforcement actions below technically only involved FCPA books and records and internal control charges.  As most readers know, actual charges in most FCPA enforcement actions hinge on voluntary disclosure, cooperation, collateral consequences, and other non-legal issues.  Thus, even if an FCPA enforcement action is resolved without FCPA anti-bribery charges, the actions remain very much about the “foreign officials” involved.  As I’ve said before, if an employee of a U.S. company consistently entertains his brother-in-law in the corporate suite and seeks reimbursement for “client entertainment” you will not be reading about this FCPA books and records and internal controls violation]

Philips Electronics

SEC

“public officials of Polish healthcare facilities”

Parker Drilling

DOJ

Employees of the Nigerian Customs Service (“NCS”)

Employees of the “Panel of Inquiry for the Investigation of All Cases of Temporary Import Permits Issued Between 1984 to Year 2000 (the “TI Panel”) (a board empanelled for the purpose of examining certain duties and tariffs that the NCS collected or failed to collect; the TI Panel was presidentially appointed, operated under the auspices of the Nigerian President’s office, and possessed the power to issue subpoenas and levy fines)”

Employees of “Nigeria’s State Security Service, a Nigerian intelligence and law enforcement agency that operated as a department within the Nigerian government’s executive”

SEC

Employees of the Nigerian Customs Service (“NCS”)

Employees of the “Panel of Inquiry for the Investigation of All Cases of Temporary Import Permits Issued Between 1984 to Year 2000 (the “TI Panel”) (a board empanelled for the purpose of examining certain duties and tariffs that the NCS collected or failed to collect; the TI Panel was presidentially appointed, operated under the auspices of the Nigerian President’s office, and possessed the power to issue subpoenas and levy fines)”

Employees of “Nigeria’s State Security Service, a Nigerian intelligence and law enforcement agency that operated as a department within the Nigerian government’s executive”

Ralph Lauren

DOJ

“customs and other government officials [in Argentina] to assist in improperly obtaining paperwork necessary for goods to clear customs, to permit clearance of items without the necessary paperwork, to permit the clearance of prohibited items, and to avoid inspection”

SEC

 “Argentine customs officials to secure the importation of RLC’s products into Argentina”

 “Argentine government officials to improperly secure the importation of RLC’s products into Argentina”

Total

DOJ

An Iranian Official described as “the Chairman of an Iranian engineering company that was more than 90% owned by the Government of Iran and substantially controlled by the Government of Iran” and also described as follows.  “The Iranian Official was [also] the head of an Iranian organization concerned with fuel consumption, which was a wholly  owned subsidiary of NIOC, and was a government advisor to a high-ranking Iranian  official.”  NIOC is described as a “government-owned corporation operating under the direction and control of the Ministry of Petroleum of Iran.”

SEC

An Iranian Official described as follows. “Between 1995 and 2004 the Iranian Official was first the head of one wholly owned subsidiary of the National Iranian Oil Company (“NIOC”) and later the head of another NIOC wholly owned subsidiary. The Iranian Official was also a government advisor to a high-ranking Iranian official.”

Diebold

DOJ

Employees of Bank 1 and Bank 2 described as follows.  “[The Banks] were controlled and approximately 70% owned by the [Chinese government] … and were [two] of several state-owned banks in [China] that together maintained a monopoly over the banking system in [China] and provided core support for the government’s projects and economic goals.  The government retained a controlling right in [the Banks], including appointing or nominating a majority of board of directors and top managers at the bank.  [The Banks] were an ‘instrumentality’ of a foreign government [under the FCPA].”

Inferences to employees of banks owned or controlled by the government of Indonesia

SEC

Employees of banks owned or controlled by the government of China

Employees of banks owned or controlled by the government of Indonesia

Stryker

SEC

“various government employees including public health care professionals in Mexico, Poland, Romania, Argentina, and Greece”

“foreign officials employed by a Mexican governmental agency responsible for providing social security for government employees”

“foreign official then employed as the director of a public hospital in Poland,” “a state-employed healthcare professional” in Poland

a person “waiting to be confirmed as chief physician” at a public hospital in Romania

“physicians employed in the public healthcare system” of Argentina

“a foreign official who served as a prominent professor at the Greek University, and was the director of medical clinics at two public hospitals affiliated with the Greek University”

Weatherford

DOJ

Employees of Sonangol, a company wholly owned, controlled, and managed by the Angolan government

Angolan Officials 1, 2, and 3 (described as “high-level, senior officials of Sonangol” with influence over contracts), a “relative of Angolan Official 4 (described as a “high-level, senior official of Angola’s Ministry of Petroleum” with influence over contracts entered into by the Angolan government), Angolan Official 5 (described as “a Sonangol official with decision-making authority in Angola’s Cabinda region”), Angolan Official 3′s wife, Angolan Official 4′s daughter and son-in-law.”

“Decision makers at the national oil company” in the Middle East

SEC

A Sonangol Drilling Manager, Sonangol officials

“Decision makers at the national oil company” in the Middle East

Employees of Sonatrach, an Algerian state-owned company

Albanian tax auditors

the tax director and two members of Albania’s National Petroleum Agency

Bilfinger

DOJ

Employees of the Nigerian National Petroleum Corporation (NNPC), employees of National Petroleum Investment Management Services (a subsidiary of NNPC), the dominant political party in Nigeria, and an official in the executive branch of the Government of Nigeria

ADM

DOJ

Ukrainian government officials in exchange for those officials’ assistance in obtaining VAT refunds

An employee of Industrias Diana (an oil company headquartered in Venezuela that was wholly owned by Petroleos de Venezuela, Venezuela’s state-owned and controlled national oil company)

SEC

Ukrainian government officials in exchange for obtaining VAT refunds

Corporate FCPA Enforcement Was Down In 2013, Or Was It Up, Or Was It Down?

I am no different from the other FCPA aficionados.

I maintain and publish yearly FCPA statistics even though I fully acknowledge that year-to-year FCPA enforcement statistics, and the arbitrary cutoffs associated with such statistics, may be of marginal value given that many non-substantive factors can influence the timing of an actual FCPA enforcement action.

For instance, was the individual FCPA enforcement action announced earlier this week against former executives of PetroTiger a 2013 enforcement action (when the criminal charges were filed) or a 2014 enforcement action (when the criminal charges were unsealed and announced)?

Accepting year-to-year FCPA statistics for what they are, the issue remains:  how does one best analyze and interpret these statistics over time?

Consider the following hypothetical.  In year 1, a city issues 100 speeding tickets and collects $20,000 in fines associated with those tickets.  In year 2, a city issues 90 speeding tickets, but because certain drivers were going really fast, the city collects $25,000 in fines associated with those tickets.  Was there less enforcement in year 2 compared to year 1?  I assume most of you would say that enforcement in year 2 was less than in year 1 even though in year 2 the city collected more money.

The some logic applies to year-to-year FCPA statistical data and for this reason I believe it is most accurate to conclude that corporate FCPA enforcement in 2013 was down from historical averages.

Previous posts this week (here and here) provided various facts and figures from 2013 DOJ FCPA enforcement and SEC FCPA enforcement.   Viewing FCPA enforcement statistics this way is useful and informative given that the DOJ and SEC are separate law enforcement agencies and different issues arise in DOJ and SEC FCPA enforcement actions.

As indicated by the below charts and by using the “core” approach to FCPA enforcement statistics (an approach the DOJ endorses), both DOJ and SEC corporate enforcement in 2013 was down from historical averages

Corporate DOJ FCPA Enforcement Actions

Year

Core Actions

2013

7

2012

9

2011

11

2010

17

Corporate SEC FCPA Enforcement Actions

Year

Core Actions

2013

8

2012

8

2011

13

2010

19

However, if one analyzes corporate FCPA enforcement statistics based on settlement amounts, corporate FCPA enforcement was up in 2013.

Corporate DOJ FCPA Enforcement Action Settlement Amounts

Year

Settlement Amounts

2013

$420 million

2012

$142 million

2011

$355 million

2010

$870 million

Corporate SEC FCPA Enforcement Action Settlement Amounts

Year

Settlement Amounts

2013

$300 million

2012

$118 million

2011

$148 million

2010

$530 million

Viewing FCPA enforcement in the aggregate (DOJ and SEC combined) is of course also useful and informative and in 2013 the DOJ and SEC combined collected approximately $720 million in 9 corporate FCPA enforcement actions.  The below chart provides a summary of corporate FCPA enforcement data (DOJ and SEC combined) for the years 2007-2013, as well as notable circumstances that significantly skewed enforcement data statistics for a particular year (an occurrence that happens in most years including 2013).  The below chart has been updated since its first publication here.

Corporate FCPA Enforcement Actions (2007-2013)

Year

Core Actions

Settlement Amounts

Of Note

2007

15

$149 million

Six enforcement actions involved Iraq   Oil for Food conduct and these enforcement actions comprised 40% of all   enforcement actions and approximately 50% of the $149 million amount.

2008

10

$885 million

The $800 million Siemens enforcement   action comprised approximately 90% of the $885 million amount.

2009

11

$645 million

The $579 million KBR / Halliburton   Bonny Island, Nigeria enforcement action comprised approximately 90% of the   $645 million amount.

2010

21

$1.4 billion

Six enforcement actions, all resolved   on the same day, centered on various oil and gas companies use Panalpina in   Nigeria. Panalpina also resolved an enforcement action on the same day.Two   enforcement actions (Technip and Eni / Snamprogetti) involved Bonny Island   conduct. In other words, there were 14 unique corporate enforcement actions   in 2010. Of further note, the two Bonny Island enforcement actions,   Technip($338 million) and Eni/Snamprogetti ($365 million) comprised   approximately 50% of the $1.4 billion amount.

2011

16

$503 million

The $219 million JGC Corp. Bonny   Island, Nigeria enforcement action comprised approximately 44% of the $503   million amount

2012

12

$260 million

None that significantly skewed the   statistics

2013

9

$720 million

The $398 million Total enforcement   action comprised approximately 55% of the $720 million amount

  TOTALS

94

$4.63 billion

In short, the number of core corporate FCPA enforcement actions in 2013 was the lowest in seven years.

Thus, corporate FCPA enforcement in 2013 was down.  Yet, the amount collected in these FCPA enforcement actions in 2013 was more than in 2012 and 2011.  Thus, corporate FCPA enforcement in 2013 was up.

In closing, have it your way.

However, the way I believe is the more accurate and reliable way to keep and analyze FCPA enforcement statistics is by focusing on unique instances of FCPA scrutiny (not settlement amounts) and tracking enforcement actions using the “core” approach.

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