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A Focus On DOJ FCPA Individual Prosecutions

Criminal Law

This post highlights certain facts and figures concerning the DOJ’s prosecution of individuals for FCPA offenses in 2014 and historically.

As highlighted in recent posts herehere, and here, the DOJ frequently talks about the importance of individual FCPA prosecutions. Assistant Attorney General Leslie Caldwell has stated that “certainly…there has been an increased emphasis on, let’s get some individuals” and that it is “very important for [the DOJ] to hold accountable individuals who engage in criminal misconduct in white-collar (cases), as we do in every other kind of crime.” DOJ FCPA Unit Chief Patrick Stokes has said that the DOJ is “very focused” on prosecuting individuals as well as companies and that “going after one or the other is not sufficient for deterrence purposes.”

Against this backdrop, what do the facts actually show?

Since 2000, the DOJ has charged 133 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
  • 2014 – 10 individuals

An analysis of the numbers reveals some interesting points.

Most of the individuals – 99 (or 74%) were charged since 2008.  Thus, on one level the DOJ is correct when it states that there has been an “increased emphasis” on individual prosecutions – 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 99 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 connection with the Control Components case;
  • 8 individuals were in connection with the Siemens case;
  • 5 individuals were associated with DF Group in the Indian mining licenses case;
  • 5 individuals were associated with Direct Access Partners;
  • 4 individuals were in connection with the Lindsey Manufacturing case;
  • 4 individuals were  in connection with the LatinNode / Hondutel case;
  • 4 individuals were in connection with the Nexus Technologies case;
  • 4 individuals were in connection with the BizJet case; and
  • 4 individuals were in connection with the Alstom case.

In other words, 58% of the individuals charged by the DOJ with FCPA criminal offenses since 2008 have been in just five cases and 78% of the individuals charged by the DOJ since 2008 have been in just eleven cases.

Considering that there has been 67 corporate DOJ FCPA enforcement actions since 2008, this is a rather remarkable statistic.  Of the 67 corporate DOJ FCPA enforcement actions, 50 (or 75%) have not (at least yet) resulted in any DOJ charges against company employees.  (See here for the chart with details – current when published in October 2014).

In short, and as demonstrated by the statistics, DOJ FCPA individual enforcement actions are significantly skewed by a small handful of enforcement actions and the reality is that 75% of DOJ corporate enforcement actions since 2008 have not (at least yet) resulted in any DOJ charges against company employees.

Another 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 99 individuals charged by the DOJ with FCPA criminal offenses since 2008, 71 of the individuals (72%) were employees or otherwise affiliated with private business entities.  This is a striking statistic given that 53 of the 67 corporate DOJ FCPA enforcement actions since 2008 (79%) were against publicly traded corporations.

In the 14 private entity DOJ FCPA enforcement actions since 2008, individuals were charged in connection with 7 of those actions (50%).  In contrast, in the 53 public entity DOJ FCPA enforcement actions since 2008, individuals were charged in connection with 10 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 75% 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.]

Year End Review Of Anti-Corruption Law North Of The 49th Parallel

Canada

A guest post  from Mark Morrison (Blake, Cassels & Graydon), the Canada Expert for FCPA Professor, and Blakes attorneys Michael Dixon and James Reid.

*****

This past year has been one of mixed results for Canadian authorities under Canada’s Corruption of Foreign Public Officials Act (CFPOA), Canada’s equivalent to the FCPA. On the one hand, Canada increased its rating on Transparency International’s well known Exporting Corruption: Progress Report 2014: Assessing Enforcement of the OECD Convention on Combating Foreign Bribery to a “Moderate Enforcement” rating from 2013’s classification of  a “Limited Enforcement” rating. In addition, 2014 saw precedent setting court decisions and sentencing of individuals.

Despite these developments, it has now been two full years since the last penalty was imposed on a corporate defendant under the CFPOA, that being Griffith’s Energy who was sentenced to a $10.35 million dollar fine in January 2013.  The lack of proceedings against corporations in 2014 may be reflective of the considerable resources being dedicated by the Royal Canadian Mounted Police (RCMP) to the ongoing, high profile investigation of Canada’s largest construction and engineering company, the resolution of which is widely anticipated to make headlines in 2015.  This post discusses some of the developments in Canada’s anti-corruption efforts in 2014 and what can be expected in the year ahead.

Enforcement Proceedings

In 2014, Canadian authorities appear to have focused their attention on pursuing individuals who had violated the provisions of the CFPOA. Noteworthy for corporate officers, 2014 marked the first jail sentence for an individual, and several other individuals are being pursued by authorities in Canada. Notable enforcement proceedings are discussed below.

Karigar – On May 23, 2014, Nazir Karigar was sentenced to three years in prison for offering to bribe foreign officials.  This sentence was the most significant development in Canadian anti-corruption enforcement proceedings in 2014, as it marks the first time a jail term has been handed out to an individual convicted under the CFPOA. This case will likely stand as a precedent for sentencing in future corruption cases.

Karigar was convicted on August 15, 2013.  The case concerned an agreement to pay approximately US $450,000 in cash as well as certain shares to Air India officials and the Indian Minister of Civil Aviation to secure a contract.  At the time, Karigar was acting for Cryptometrics Canada.  Karigar was convicted despite Cryptometrics not being awarded the contract or there being any evidence the bribe was actually offered or paid to Indian officials, as the internal agreement amongst Karigar and Cryptometrics management to offer a bribe was held to be an offence.

In sentencing, Justice Hackland of the Ontario Superior Court took Karigar’s age (67) and other circumstances into account as mitigating factors.  However, the bribery scheme was viewed as a serious crime.  Accordingly, principles of denunciation and deterrence were placed at the forefront in administering the three year sentence.

It is also important to note, that at the time Karigar was charged, the maximum prison sentence for a CFPOA violation was only five years. Since then, the 2013 amendments to the CFPOA raised the maximum penalty from five years to 14 years.

Chowdhury – Five individuals were jointly charged with bribing a foreign public official to obtain a contract to provide consulting services for building the World Bank funded Padma Bridge Project in Bangladesh.  One of the individuals charged, Abdul Hasan Chowdhury, was a Bangladeshi citizen and resident who had never been to Canada.  On this basis, and without submitting to the jurisdiction of the Canadian Court, Chowdhury applied to prohibit the Crown from proceeding in Canada with the charge against him under the CFPOA.

Ultimately, the Court found that Canada did have jurisdiction over the offence since many of the acts making up the offence took place in Canada, the investigation was conducted in Canada and the bulk of the evidence was gathered in Canada. However, Justice Nordheimer held that the CFPOA does not give the Court jurisdiction over foreign nationals who do not reside, or are not otherwise present (such as through extradition or otherwise) in Canada.  The Court held that the mere fact Chowdhury was a party to the offence was not sufficient to give the Canadian courts personal jurisdiction over him unless he either physically came to Canada or Bangladesh offers to surrender him to Canada. Notably, Canada does not have an extradition treaty in place with Bangladesh.  In result, the charges against Chowdhury were stayed.

The allegations in question in this case pre-dated the 2013 amendments to the CFPOA which expanded the jurisdictional reach of the CFPOA from territoriality to nationality based jurisdiction.  Notwithstanding this expanded jurisdictional scope of the CFPOA, however, the key point to be taken from this case is that a Canadian court needs to have jurisdiction over both the offence and the person before it may exert jurisdiction.

Ongoing Cryptometrics Investigations – Following the Karigar sentencing in May, on June 4, 2014, the RCMP charged US nationals Robert Barra (former Cryptometrics CEO) and Dario Berini (former Cryptometrics COO) for bribery offences under CFPOA.  UK national Shailesh Govindia, an agent for Cryptometrics, has also been charged with bribery under CFPOA and with one count of fraud contrary to the Criminal Code of Canada.  Canada-wide warrants have been issued for all three accused.  These charges go to show that Canadian authorities will continue to pursue enforcement proceedings, even against foreign nationals, despite being unsuccessful in the Chowdhury case discussed above.  One key difference between these charges and Chowdhury, however, is that Canada does have extradition treaties in place with the US and UK, creating a potential avenue by which Canadian authorities could assume personal jurisdiction over these individuals.

Ongoing Investigations – The most significant Canadian anti-corruption enforcement action is the ongoing, high profile corruption investigation relating to allegations that Canada’s largest construction and engineering company (the Company) bribed foreign public officials to secure contracts in a number of foreign countries, including Libya, Bangladesh and Algeria (the Engineering Investigation).  Canadian authorities have been carrying out the Engineering Investigation since 2011 with the cooperation of others, including the World Bank and Swiss authorities.  It is reported that the Company is providing its full cooperation with authorities.

To date, at least three former executives of the Company and two others connected with the Padma Bridge Project in Bangladesh have been charged under the CFPOA and are awaiting trial. On the domestic front, the Company has also faced corruption allegations related to the construction of a $1.3 billion hospital in Montreal, regarding which several former executives are facing charges, including, fraud, conspiracy and breach of trust.

The allegations currently subject to the Engineering Investigation are the most serious to involve a Canadian company to date and onlookers are intently watching what will unravel in 2015, when it is expected that a resolution of this high profile case will likely occur.

New Legislation and Government Policy

Extractive Sector Transparency Measures Act – In October 2014, the Canadian Government introduced the Extractive Sector Transparency Measures Act (ESTMA) which will create mandatory public reporting of payments to governments and government officials by the extractive sector.  The reporting obligations in ESTMA will apply to companies that are engaged in the commercial development of oil, gas or minerals in Canada or abroad and are either listed on a stock exchange in Canada or have a place of business in Canada, do business in Canada or have assets in Canada, and meet certain size thresholds.

ESTMA, which is expected to come into force in the spring of 2015,  is designed to further Canada’s fight against corruption by enacting reporting obligations with respect to payments made to foreign and domestic governments (and government officials), and will eventually include aboriginal governments.  These proposed mandatory reporting requirements are in line with other countries implementing similar requirements, including the European Union and the United States.

Amendments to the Federal Government Integrity Provisions – In March 2014, the Federal Government announced it had made significant changes to its Integrity Provisions, which are incorporated in all solicitations administered by Public Works and Government Services Canada (PWGSC).  PWGSC handles the majority of Federal Government procurement transactions.  By adding a requirement that bidders certify that neither the bidder, nor any of the bidder’s affiliates, has been convicted of (or received an absolute or conditional discharge) under any foreign offense that PWGSC regards as having “similar constitutive elements” to listed Canadian offenses (including fraud, money laundering and bribing a foreign public official), the new Integrity Provisions establish rules for debarring corporations and individuals where they or their affiliates have committed an integrity offence.

The integrity provisions impose rigorous certification provisions, which, if not complied with can result in significant consequences including debarment from participating in Government procurements for 10 years from the date of conviction and the right for the Government to terminate a contract for default.  The Canadian Government also maintains the right to pursue other remedies available, including the ability to sue for damages that may occur as a result of termination.

Conclusion

The introduction of ESTMA and the new Integrity Provisions continue the trend towards a stronger legislative commitment to anti-corruption enforcement in Canada, which began with the 2013 amendments that strengthened the CFPOA.  Given this clear legislative direction and the likely freeing up of enforcement resources, expected after the imminent resolution of the Engineering Investigation, our forecast is that 2015 will be an active year for Canadian anti-corruption enforcement.

The “Foreign Officials” Of 2014

foreign official2

A “foreign official.”

Without one, there can be no FCPA anti-bribery violation (civil or criminal).  Who were the alleged “foreign officials” of 2014?

This post, describes the alleged “foreign officials” from 2014 corporate DOJ and SEC FCPA enforcement actions.

There were 10 core corporate enforcement actions in 2014.  Of the 10 enforcement actions, 6 (60%) involved, in whole or in part, employees of alleged state-owned or state-controlled entities (“SOEs”).  These entities ranged from power and electric companies, hospitals and labs, an oil and gas company, and an aluminium smelter.

By way of comparison, in 2013, 55% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here). 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).

In 2014, in an issue of first impression for an appellate court, the 11th Circuit set forth a control and function test for whether an alleged SOE can be “instrumentality” under the FCPA such that its employees are “foreign officials” under the FCPA.  As highlighted here and more extensively in my Supreme Court amicus brief supporting the cert petition, there were many flaws in the 11th Circuit’s reasoning.  The Supreme Court declined to hear the case.  As to whether Congress intended employees of SOEs to be “foreign officials” under the FCPA, see here for my “foreign official” declaration.

The remainder of this post describes (as per DOJ/SEC allegations) the “foreign officials” of 2014.  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.]

Alstom Entities

DOJ

Individuals associated with Indonesia’s alleged state-owned and state-controlled electricity company, Perusahaan Listrik Negara (“PLN”).  The alleged “foreign officials” are described as follows.

“Official 1 … a member of Parliament in Indonesia [who] had influence over the award of contracts by PLN, including on the Tarahan Project”

“Official 2 … a high-ranking official at PLN [who] had broad decision-making authority and influence over the award of contracts by PLN, including on the Tarahan Project”

“Official 3 … an official at PLN [who] was a high-ranking member of the evaluation committee for the Tarahan Project. Official 3 had broad decision-making authority and influence over the award of the Tarahan contract.”

Individuals associated with Saudi Electric Company (“SEC”), Saudi Arabia’s alleged state-owned and state-controlled electricity company.

Individuals assocaited with the Egyptian Electricity Holding Company, the alleged state-owned and state-controlled electricity company in Egypt. Individuals associated with the Egyptian Electricity Transmission Company, the alleged state-owned and state-controlled electricity transmission company. Asem Elgawhart (an employee of Bechtel Corporation a U.S. company) who was assigned by Bechtel to be the General Manager of Power Generation Engineering and Services Company (PGESCo), a joint venture between Bechtel and the Egyptian Electricity Holding Company.

Individuals associated with the Bahamas Electricity Corporation, the alleged state-owned and state-controlled power company.

Individuals associated with Taipei’s Department of Rapid Transit System.

Avon Entities

DOJ

Government officials in China including officials from the Guandong Food and Drug Administration.

SEC

Same as above.

Various Chinese government officials, including government officials responsible for awarding a test license, and subsequently a direct sales business license, that would allow a company to utilize direct door-to-door selling in China. Certain of the Chinese “foreign officials” are alleged to be individuals associated with the Ministry of Commerce and the State Administration for Industry and Commerce.

Dallas Airmotive

DOJ

Official 1 (a Sub-Officer in the Brazilian Air Force – BAF), Official 2 (a Sergeant in the BAF), Official 3 (a Captain for the Governor of the Brazilian state of Roraima).

Officials of the Peruvian Air Force and the office of the Governor of the Argentinean State of San Juan.

Bio-Rad

DOJ

Individuals associated with government customers in Russia, including the Russian Ministry of Health

SEC

Same as above.

Officials at government-owned hospitals and laboratories in Vietnam.

Government officials in Thailand.

Bruker

SEC

Individuals employed by state owned entities (“SOEs”) in China.

Layne Christensen

SEC

Tax officials in Mali, Guinea, and the Democratic Republic of the Congo.

Customs officials in Burkina Faso and the Democratic Republic of Congo.

Police, border patrol, immigration officials, and labor inspectors in Burkina Faso, Guinea, Tanzania, and the Democratic Republic of Congo.

Smith & Wesson

SEC

Pakistani police officials.

Indonesian police officials.

Attempts to make improper payments to Turkish police and Turkish military officials, as well as foreign officials in Nepal and Bangladesh.

HP Entities

DOJ

Individuals associated with the Russian Office of the Prosecutor General of Russia (“GPO” or “GP”).  As alleged, the Russian government used a state-owned entity organized under the Department of Affairs of the President of the Russian Federation, to manage the GPO project tender and execution. “Russian Official A,” a director of a Russian government agency who assumed responsibility for the GPO Project as well as “Individual A,” an associate of Russian Official A.

A Polish Official (the Director of Information and Communications Technology within the Polish National Police Agency (“KGP”) which was part of the Polish Ministry of the Interior and Administration.

Individuals associated with Pemex, Mexico’s alleged state-owned petroleum company.  Official A is described as Pemex’s Chief Operating Officer and Official B is described as Pemex’s Chief Information Officer.

SEC

Same as above.

Marubeni

DOJ

Individuals associated with Indonesia’s alleged state-owned and state-controlled electricity company, Perusahaan Listrik Negara (“PLN”).  The alleged “foreign officials” are described as follows.

“Official 1 … a member of Parliament in Indonesia [who] had influence over the award of contracts by PLN, including on the Tarahan Project”

“Official 2 … a high-ranking official at PLN [who] had broad decision-making authority and influence over the award of contracts by PLN, including on the Tarahan Project”

“Official 3 … an official at PLN [who] was a high-ranking member of the evaluation committee for the Tarahan Project. Official 3 had broad decision-making authority and influence over the award of the Tarahan contract.”

Alcoa

DOJ

Individuals associated with Aluminium Bahrain B.S.C. (Alba), an aluminium smelter operating in Bahrain.  Alba is described as follows.

“The state holding company of the Kingdom of Bahrain, the Mumtalakat, which was controlled by the Ministry of Finance, held 77% of the shares of Alba.  The Saudi Basic Industries Corp. (SABIC), which was majority-owned and controlled by the government of the Kingdom of Saudi Arabia, held a 20 percent minority stake in Alba, and three percent of Alba’s shares were held by a German investment group.  The majority of profits earned by Alba belonged to the Mumtalakat, through part of the profit was permitted to be used by Alba for its operations.  The Ministry of Finance had to approve any change in Alba’s capital structure and had to be consulted on any major capital projects or contracts material to Alba’s operations.  Members of the Royal Family of Bahrain and representatives of the government sat on the Board of Directors of Alba, controlled its board, and had primary authority in selecting its chief executive and chief financial officer.”

The alleged “foreign officials” are described as follows.

“Official A was a member of Bahrain’s Royal Family and served as a member of the board of directors of Alba from 1982 to 1997.  From 1988 to 1990, Official A was also a member of Alba’s tender committee, which was responsible in part for awarding major contracts to Alba’s suppliers, such as Alcoa entities supplying alumina to Alba.”

“Official B served on Alba’s board from at least 1986 to 2000 as a representative of SABIC.  From 1988 to 1990, Official B also served on Alba’s tender committee with Official A.”

“Official C was a senior member of Bahrain’s Royal Family, a senior government official of Bahrain from at least 1995 to 2005, and served as a high-ranking officer of Alba from 1995 to 2005.  As a high-ranking officer of Alba, Official C was extremely influential over the assignment of contracts to Alba’s suppliers.  Official C relied on Consultant A to assist him in opening international bank accounts using various aliases or shell entities for the purpose of receiving corrupt funds from kickbacks from Alba’s suppliers.”

“Official D was a senior member of Bahrain’s Royal Family and a senior government official of Bahrain for many decades.  Official C was a close associate of Official D.  Official D’s office was required to be consulted before Alba could commit to a long term alumina supply contract with Alcoa.”

SEC

Same as above.

Corporate FCPA Enforcement In 2014 Compared To Prior Years

Survey Results

I am no different from the other Foreign Corrupt Practices Act aficionados.

I maintain and publish yearly FCPA statistics even though I fully acknowledge that year-to-year 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, if the Alcoa enforcement action happened 10 days earlier (instead of January 9, 2014) or if the Alstom enforcement action happened 10 days later (instead of December 22, 2014), 2014 FCPA enforcement settlement amounts would be materially different.

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

Here is how I see it through reference to another example.  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?  Depends on what you are measuring – the number of infractions or amount of fines.

The some logic applies to year-to-year FCPA statistical data and I believe that the best way to track yearly enforcement is through the number of “core” enforcement actions.

By this measure, although 2014 witnessed two very large settlement amounts, FCPA enforcement in 2014 was below historical averages.

Previous posts (here and here) provided various facts and figures from 2014 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 may 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 2014 was down from recent historical averages

Corporate DOJ FCPA Enforcement Actions

Year

Core Actions

2014 7

2013

7

2012

9

2011

11

2010

17

Corporate SEC FCPA Enforcement Actions

Year

Core Actions

2014 7

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 2014 compared to recent historical averages.

Corporate DOJ FCPA Enforcement Action Settlement Amounts

Year

Settlement Amounts

2014 $1.25 billion

2013

$420 million

2012

$142 million

2011

$355 million

2010

$870 million

Corporate SEC FCPA Enforcement Action Settlement Amounts

Year

Settlement Amounts

2014 $327 million

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 2014 the DOJ and SEC combined collected approximately $1.6 billion in 10 corporate FCPA enforcement actions.  The below chart provides a summary of corporate FCPA enforcement data (DOJ and SEC combined) for the years 2007-2014, as well as notable circumstances that significantly skewed enforcement data statistics for a particular year (an occurrence that happens in most years including 2014).

Corporate FCPA Enforcement Actions (2007-2014)

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

2014 10  $1.6 billion Two enforcement actions (Alstom – $772 million and Alcoa – $384 million) comprised approximately 72% of the $1.6 billion amount.
  TOTALS

104

$6.23 billion

In short, the number of core corporate FCPA enforcement actions in 2014 was tied for the second lowest in seven years.

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.

DOJ Enforcement Of The FCPA – Year In Review

DOJ2

This previous post highlighted facts and figures from SEC enforcement of the FCPA in 2014.

This post highlights facts and figures from DOJ FCPA enforcement in 2014.

(See here for a similar post from 2013, here for a similar post from 2012, here for a similar post from 2011, and here from 2010).

 

Settlement Amounts and Specifics

In 2014, the DOJ brought 7 corporate FCPA enforcement actions.  By comparision, in 2013 the DOJ brought 7 corporate enforcement action; in 2012 the DOJ brought 9 corporate FCPA enforcement actions; in 2011 the DOJ brought 11 corporate enforcement actions; and in 2010 the DOJ brought 17 corporate enforcement actions.  (Note:  these figures  use the “core” approach to FCPA statistics – see here for the prior post – an approach also endorsed by the DOJ – see here).

In the 7 corporate FCPA enforcement actions from 2014, the DOJ collected approximately $1.25 billion in criminal fines, an all-time record in terms of yearly FCPA settlement amounts. By way of comparison, in the 7 corporate FCPA enforcement actions from 2013, the DOJ collected approximately $420 million in criminal fines; in 2012, the DOJ collected approximately $142 million in criminal fines; in 2011, the DOJ collected approximately $355 million in criminal fines ($504 million including the $149 million forfeiture in the Jeffrey Tesler individual enforcement action); and in 2010, the DOJ collected approximately $870 million in criminal fines.

DOJ FCPA enforcement in 2014 ranged from $772 million in criminal fines (Alstom) to $14 million in criminal fines (Dallas Airmotive).  3 FCPA enforcement actions in 2014 were DOJ only (Alstom, Dallas Airmotive and Marubeni).

Of the approximate $1.25 billion the DOJ collected in 2014 corporate FCPA enforcement actions, $772 million (62%) was in one enforcement action (Alstom) and $981 million (78%) was in two enforcement actions (Alstom and Alcoa).

In 4 of 6 corporate FCPA enforcement actions where an analysis was possible, the DOJ agreed to a criminal fine below the minimum range suggested by the sentencing guidelines.  In these 4 actions, the average was approximately 29% below the minimum guidelines range and the distribution range was 9% below the minimum guidelines range (Avon) to 53% below the minimum guidelines range (Alcoa).  In 2 corporate FCPA enforcement actions in 2014 (Alstom and Marubeni), the company paid a criminal fine within the guidelines range.

[Note – why are only 6 of the 7 corporate enforcement actions included in the above analysis? 1 corporate enforcement action (Bio-Rad) was resolved via an NPA and the DOJ does not set forth a guidelines range in NPAs]

Corporate vs. Individual Prosecutions

How many corporate FCPA enforcement actions in 2014 involved related individual prosecutions of company employees by the DOJ (recognizing that such prosecutions may be forthcoming in the future)?  Of the 7 corporate DOJ enforcement actions in 2014, 1 (14%) has thus far resulted in related DOJ prosecutions of company employees. This action was the Alstom action (in which the DOJ alleged conduct concerning Indonesia, Saudi Arabia, Egypt, the Bahamas, and Taiwan) and the related individual prosecutions related only to the Indonesia conduct alleged by the DOJ.

The DOJ brought or announced 10 individual FCPA enforcement actions in 2014 in 3 core actions (5 individuals associated with DF Group in connection with Indian mining licenses, 2 individuals associated with Direct Access Partners and 3 individuals associated with PetroTiger).

Stay tuned for future posts specifically about DOJ and SEC individual FCPA enforcement actions.

NPAs / DPAs

What about non-prosecution and deferred prosecution agreements vs. old fashioned law enforcement (i.e. if a company committed a crime the DOJ charged it and if the company did not commit a crime the DOJ did not charge it)?  In 2014, 5 of the 7 (71%) corporate enforcement actions included an NPA or DPA.  Marubeni and Alcoa were plea agreements only. [Note, the Alstom enforcement action involved two plea agreements and two DPAs; the Avon enforcement action involved  a plea agreement and DPA; and the HP enforcement action involved a plea agreement, DPA and NPA].

By way of comparison, in 2013, 100% of corporate DOJ enforcement actions involved either an NPA or DPA; in 2012 100% of corporate DOJ enforcement actions involved either an NPA or a DPA;  in 2011 82% of corporate DOJ enforcement actions involved either an NPA or DPA; and in 2010 94% of corporate DOJ enforcement actions involved either an NPA or DPA.

Since 2010, 86% of corporate DOJ enforcement actions have involved either an NPA or DPA.

Voluntary Disclosures

Of the 7 corporate DOJ FCPA enforcement actions in 2014, 2 enforcement actions (29%) were the result of corporate voluntary disclosures (Avon and Bio-Rad),  3 enforcement actions (43%) were the result of previous foreign law enforcement investigations or related thereto (Alstom, Marubeni, and HP), 1 enforcement action was related to a previous FCPA enforcement action (Dallas Airmotive) and 1 enforcement action was the result of civil litigation (Alcoa).

By way of comparison, in 2013 57% of corporate FCPA enforcement actions were the result of corporate voluntary disclosures or the direct result of a related voluntary disclosure; in 2012, 78% of corporate FCPA enforcement actions were the result of corporate voluntary disclosures or casually related to previous corporate voluntary disclosures; in 2011, 73% of corporate FCPA enforcement actions were the result of corporate voluntary disclosures.

Monitors

Of the 7 corporate DOJ FCPA enforcement actions in 2014, 1 (14%) enforcement action (Avon) resulted in a corporate monitor. By way of comparison, of the 7 corporate DOJ FCPA enforcement actions in 2013, 4 enforcement actions (57%) involved a monitor; of the 9 corporate DOJ FCPA enforcement actions in 2012, 3 enforcement actions (33%) involved a monitor; of the 11 corporate DOJ FCPA enforcement actions in 2011, 1 enforcement action (9%) involved a corporate monitor; of the 17 corporate DOJ enforcement actions in 2010, 7 enforcement actions (41%) involved a corporate monitor.

This remainder of this post provides an overview of corporate DOJ FCPA enforcement in 2014.

Alstom and Related Entities (December 22nd).

See here and here for prior posts

Charges:  As to Alstom S.A., violation of the FCPA’s books and records and internal controls provisions.  As to Alstom Network Schweiz AG, conspiracy to violate the FCPA’s anti-bribery provisions.  As to Alstom Power Inc., conspiracy to violate the FCPA’s anti-bribery provisions.  As to Alstom Grid Inc., conspiracy to violate the FCPA’s anti-bribery provisions.

Resolution Vehicle:  As to Alstom and Alstom Network Schweiz, plea agreements.  As to Alstom Power and Alstom Grid, DPAs.

Guidelines Range:  As to Alstom $532.8 million to $1.065 billion

Penalty:  As to Alstom, $772 million (the other entities were not required to pay separate penalties).

Disclosure:  The enforcement action presumably originated from a prior 2011 Swiss enforcement action (see here and here).

Monitor:  No

Individuals Charged:  Yes (as to the Indonesia conduct – see here).

Avon Entities (December 17th)

See here and here for prior posts

Charges:  As to Avon China, conspiracy to violate the FCPA’s books and records provisions.  As to Avon Products, conspiracy to violate the FCPA’s books and records provisions and violation of the FCPA’s internal controls provisions.

Resolution Vehicle:  As to Avon China, a plea agreement; as to Avon Products a DPA.

Guidelines Range:  As to Avon China, $73.9 million to $147.9 million; as to Avon Products, $84.6 million to $169.1 million.

Penalty:  As to Avon China, $67.6 million; as to Avon Products $67.6 million but the Avon China penalty was deducted from this amount.

Disclosure:  Voluntary Disclosure.

Monitor:  Yes

Individuals Charged:  No

Dallas Airmotive (December 10th)

See here for the prior post

Charges:  Conspiracy to violate the FCPA’s anti-bribery provisions and violation of the FCPA’s anti-bribery provisions.

Resolution Vehicle:  DPA

Guidelines Range:  $17.5 million to $35 million

Penalty:  $14 million

Disclosure:  The enforcement action appears to be casually related to a prior enforcement action against BizJet International and certain of its executives

Monitor:  No

Individuals Charged:  No

Bio-Rad (November 3rd)

See here and here for prior posts

Charges:  Not applicable

Resolution Vehicle:  NPA

Guidelines Range:  Not set forth in the NPA

Penalty:  $14.4 million

Disclosure:  Voluntary Disclosure

Monitor:  No

Individuals Charged:  No

HP Related Entities (April 9th)

See here for the prior post

Charges:  As to HP Russia – (i) conspiracy to violate the FCPA’s anti-bribery provisions and books and records and internal controls provisions; (ii) one count of violating the FCPA’s anti-bribery provisions; (iii) one count of violating the FCPA’s internal controls provisions; and (iv) one count of violating the FCPA’s books and records provisions; As to HP Poland – violation of the FCPA’s books and records and internal controls provisions; As to HP Mexico – not applicable.

Resolution Vehicle:  As to HP Russia, a plea agreement; as to HP Poland a DPA; as to HP Mexico an NPA.

Guidelines Range:  As to HP Russia $87 million to $174 million; as to HP Poland $19.3 million to $38.6 million; as to HP Mexico not specified in the NPA.

Penalty:  As to HP Russia $58.8 million; as to HP Poland $15.5 million; as to HP Mexico $2.5 million.

Disclosure:  The enforcement action appears to have been the result of a previous German and Russian law enforcement investigation (see here for the prior post).

Monitor:  No

Individuals Charged:  No

Marubeni (March 19th)

See here for the prior post

Charges:  Conspiracy to violate the FCPA’s anti-bribery provisions and 7 substantive FCPA anti-bribery violations

Resolution Vehicle:  Criminal information resolved via a plea agreement

Guidelines Range:  $63.7 million to $127.4 million

Penalty:  $88 million

Disclosure:  Related to the April 2013 FCPA enforcement action against various current and former employees of Alstom

Monitor:  No

Individuals Charged:  No

Alcoa (January 9th)

See here for the prior post

Charges:  One count of violating the FCPA’s anti-bribery provisions.

Resolution Vehicle:  Criminal information against Alcoa World Alumina LLC resolved via a plea agreement.

Guidelines Range:  $446 million – $892 million.

Penalty:  $209 million (plus administrative forfeiture of $14 million)

Disclosure:  A 2008 civil lawsuit between Alba and Alcoa.

Monitor:  No

Individuals Charged:  No

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