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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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