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DOJ Enforcement Of The FCPA – 2016 Year In Review

This post highlights facts and figures from corporate Foreign Corrupt Practices Act enforcement actions in 2016 by the DOJ. (See here [1] for a similar post from 2015, here [2] for a similar post from 2014, here [3] for a similar post from 2013, here [4] for a similar post from 2012, here [5] for a similar post from 2011, and here [6] from 2010).

Settlement Amounts and Specifics

In 2016, the DOJ brought 13 corporate FCPA enforcement actions (the second-largest number of all-time behind 2010 in which the DOJ brought 17 corporate FCPA enforcement actions).

By comparison in 2015 the DOJ brought 2 corporate FCPA enforcement actions; in 2014 the DOJ brought 7 corporate FCPA enforcement actions; 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 [7] for the prior post – an approach also endorsed by the DOJ – see here [8]).

In the 13 corporate FCPA enforcement actions from 2016, the DOJ collected approximately $1.17 billion in criminal fines (the largest of all-time). (Note: the $1.17 billion figure represents net FCPA settlement amounts after accounting for certain credits or deductions in a few enforcement actions involving foreign companies).

By comparison, in the 2 corporate FCPA enforcement actions from 2015, the DOJ collected approximately $24.2 million in criminal fines; in the 7 corporate FCPA enforcement actions from 2014, the DOJ collected approximately $1.25 billion in criminal fines;  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.

Corporate DOJ FCPA enforcement in 2016 ranged from $283 million (Teva) to $335,000 (NCH).

[9]

In 10 of the 13 enforcement actions, the resolution documents set forth a sentencing guidelines range. (The HMT and NCH declination & disgorgement letters and the PTC NPA does not mention a guidelines range).

Of the 10 enforcement actions in which an analysis is possible, the DOJ agreed to a criminal fine below the minimum amount suggested by the guidelines in 9 of the enforcement actions. The only criminal fine amount in the guidelines range was in the LAN Airlines enforcement action.

In the 9 enforcement actions below the guidelines range, the median percentage below the minimum amount suggested by the guidelines was approximately 22.5 % with a range of 50% (General Cable) to 15% (Braskem).

Corporate v. Individual Prosecutions

In the 13 corporate DOJ enforcement actions in 2016, 0 (0%) resulted in related DOJ prosecutions of company employees. So much for that Yates Memo individual accountability rhetoric [10].

In 2016, the DOJ brought or announced individual FCPA charges against 8 individuals in 4 core actions (Moises Abraham Millan Escobar; Samuel Mebiame; Ng Lap Seng and Jeff Yin; Daniel Perez, Kamta Ramnarine, Victor Valdez, and Douglas Ray).

Stay tuned for future posts specifically about DOJ and SEC individual FCPA enforcement actions in 2016.

Resolution Vehicles

The 13 corporate FCPA enforcement actions by the DOJ in 2016 utilized a variety of resolution vehicles:

In total, 12 of the 13 corporate enforcement actions (92%) involved, in whole or in part, an NPA, DPA or declination with disgorgement. By way of comparison, in 2015 100% of DOJ corporate enforcement actions were resolved via an NPA or DPA; in 2014, 5 of the 7 (71%) DOJ corporate enforcement actions included an NPA or DPA; 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.

Voluntary Disclosures

Of the 13 DOJ corporate enforcement actions in 2016, 5 enforcement actions (38%) were the result of a corporate voluntary disclosure. By way of comparison, in 2015, 50% of corporate FCPA enforcement actions were the result of a corporate voluntary disclosure; in 2014, 29% of corporate FCPA enforcement actions were the result of corporate voluntary disclosures; 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.

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Monitors

Of the 13 corporate DOJ FCPA enforcement actions in 2016, 7 (54%) resulted in a corporate monitor.

By way of comparison, of the 2 corporate DOJ FCPA enforcement actions in 2015, 1 (50%) enforcement action resulted in a corporate monitor; of the 7 corporate DOJ FCPA enforcement actions in 2014, 1 (14%) resulted in a corporate monitor; of the 7 corporate DOJ FCPA enforcement actions in 2013, 4 enforcement actions (57%) resulted in a monitor; of the 9 corporate DOJ FCPA enforcement actions in 2012, 3 enforcement actions (33%) resulted in a monitor; of the 11 corporate DOJ FCPA enforcement actions in 2011, 1 enforcement action (9%) resulted in a corporate monitor; of the 17 corporate DOJ enforcement actions in 2010, 7 enforcement actions (41%) resulted in a corporate monitor.

This remainder of this post provides an overview of corporate DOJ FCPA enforcement in 2016.

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General Cable Corp. (Dec. 29th)

See here [12] and here for prior posts.

Charges: None

Resolution Vehicle: Non-prosecution agreement

Guidelines Range: Not set forth in the NPA although the NPA does state: “The monetary penalty is based upon profits of $51,174,237 as a result of the corrupt scheme, and reflects a discount of 50% off of the bottom of the U.S. Sentencing Guidelines fine range.”

Penalty: $20,469,694

Origin: Voluntary disclosure

Monitor: No

Individual Company Employees Charged: No

Teva Pharmaceutical (Dec. 22nd)

See here [13] and here [14] for prior posts

Charges: Teva LLC (conspiracy to violate the FCPA’s anti-bribery provisions); Teva (conspiracy to violate the FCPA’s anti-bribery provisions and FCPA internal controls violations).

Resolution Vehicle: Teva LLC (plea agreement); Teva (DPA)

Guidelines Range: Approximately $354 million to $708 million

Penalty: $283,177,348

Origin: The resolution documents state: “Teva did not timely voluntarily self-disclose the FCPA violations,” yet also state that Teva disclosed “conduct in Russia and Ukraine of which the [DOJ] was previously unaware.”

Monitor: Yes

Individual Company Employees Charged: No

Odebrecht / Braskem (Dec. 21st)

See here [15], here [16] and here [17] for prior posts

Charges: Odebrecht (conspiracy to violate the FCPA’s anti-bribery provisions); Braskem (conspiracy to violate the FCPA’s anti-bribery provisions)

Resolution Vehicle: Odebrecht (plea agreement); Braskem (plea agreement)

Guidelines Range: Odebrecht ($6.0048 billion to $12.0096 billion); Braskem ($744 million to $1.488 billion)

Penalty: Odebrecht (plea agreement states that “the appropriate total criminal penalty is $4.503 billion.” Next the plea agreement states that the company in unable to pay a criminal fine in excess of $2.6 billion. Pursuant to the plea agreement, company agreed to pay 10% (or $260 million) to the U.S. with the remaining amount to Brazil and Swiss law enforcement); Braskem (plea agreement states that the “appropriate criminal penalty is $632 million” which reflects a 15% discount off the bottom of the applicable Guidelines fine range.  The plea agreement then states that the company will pay $94.8 million to the U.S. Treasury with the remaining amount ($442 million or 70% being paid to Brazil and $94.8 million or 15% being paid to Switzerland). [Note: in April 2017 [18]the DOJ stated that Odebrecht will pay a $93 million penalty – not $260 million].

Origin: Foreign law enforcement investigation

Monitor: Yes

Individual Company Employees Charged: No

JPMorgan (Nov. 17th)

See here [19] and here [20] for prior posts

Charges: None

Resolution Vehicle: Non-prosecution agreement involving JPMorgan Securities (Asia Pacific) Limited (“JPMorgan-APAC), a wholly subsidiary of JP Morgan headquartered in Hong Kong

Guidelines Range: Not set forth in the NPA

Penalty: $72 million (NPA states that this amount is an aggregate discount of 25% off of the bottom of the U.S. Sentencing Guidelines fine range)

Origin: SEC information request

Monitor: No

Individual Company Employees Charged: No

Embraer (Oct. 24th)

See here [21] and here [22] for prior posts

Charges: conspiracy to violate the FCPA’s anti-bribery provisions and books and records provisions and violations of the FCPA’s internal controls provisions

Resolution Vehicle: Deferred prosecution agreement

Guidelines Range: $134 million to $268 million

Penalty: $107 million

Origin: SEC subpoena

Monitor: Yes

Individual Company Employees Charged: No

HMT LLC (Sept. 29)

See here [23] for the prior post.

Charges:  None

Resolution Vehicle:  DOJ “declination” letter pursuant to which the company paid disgorgement.

Guidelines Range:  Not applicable / not set forth in the “declination” letter

Penalty:  None, but disgorgement of $2.7 million

Origin: Voluntary Disclosure

Monitor:  No

Individual Company Employees Charged:  No

NCH Corp. (Sept. 29)

See here [23] for the prior post.

Charges:  None

Resolution Vehicle:  DOJ “declination” letter pursuant to which the company paid disgorgement.

Guidelines Range:  Not applicable / not set forth in the “declination” letter

Penalty:  None, but disgorgement of $335,000

Origin: Voluntary Disclosure

Monitor:  No

Individual Company Employees Charged:  No

Och-Ziff (Sept. 29)

See here [24] for the prior post.

Charges:  OZ Africa Management GP LLC – conspiracy to violate the FCPA’s anti-bribery provisions; Och-Ziff Capital Management – conspiracy to violate the FCPA’s anti-bribery provisions, and violations of the FCPA’s books and records and internal controls provisions

Resolution Vehicle:  OZ Africa – plea agreement; Och-Ziff – DPA.

Guidelines Range:  $266 million to $532 million

Penalty:  $213 million

Origin: The company previously disclosed: “Beginning in 2011, and from time to time thereafter, we have received subpoenas from the SEC and requests for information from the U.S. Department of Justice (the “DOJ”) in connection with an investigation involving the FCPA and related laws.”

Monitor:  Yes

Individual Company Employees Charged:  No

LAN / LATAM Airlines (July 25th)

See here [25] and here [26] for prior posts.

Charges:  FCPA books and records and internal controls violations.

Resolution Vehicle:  DPA

Guidelines Range:  $10.2 million – $20.4 million

Penalty:  $12.75 million

Origin: Argentine media reports

Monitor:  Yes

Individual Company Employees Charged:  No

BK Medical (Analogic) (June 21st)

See here [27] and here [28] for prior posts

Charges:  None

Resolution Vehicle:  NPA against BK Medical (Analogic’s Danish subsidiary)

Guidelines Range:  Not set forth in the NPA although the NPA does state: “the Company received an aggregate discount of 30% off the bottom of the U.S. Sentencing Guidelines fine range.”

Penalty:  $3.4 million

Origin: Voluntary Disclosure

Monitor:  No

Individuals Charged:  No

Olympus Latin America (March 1st)

See here [29] and here [30] for prior posts

Charges:  Conspiracy to violate the FCPA’s anti-bribery provisions and violating the FCPA’s anti-bribery provisions

Resolution Vehicle:  DPA

Guidelines Range:  $28.5 million – $57 million

Penalty:  $22.8 million

Origin: Unclear from the resolution documents

Monitor:  Yes

Individuals Charged:  No

Vimpelcom (February 18th)

See here [31], here [32], and here [33] for prior posts

Charges:  Unitel LLC – conspiracy to violate the FCPA’s anti-bribery provisions; VimpelCom Ltd – conspiracy to violate the FCPA’s anti-bribery and books and records provisions and a separate count of violating the FCPA’s internal controls provisions.

Resolution Vehicle:  Unitel – plea agreement; VimpelCom – DPA

Guidelines Range:  Unitel – $732 million to $1.46 billion; VimpelCom – $836 million to $1.67 billion

Penalty:  $460.3 million (reduced to $230.1 million after accounting for various credits and deductions)

Origin:  Unclear from the resolution documents

Monitor:  Yes

Individuals Charged:  No

PTC Entities (February 16th)

See here [34] and here [35] for prior posts

Charges:  None

Resolution Vehicle:  NPA against the following PTC entities: Parametric Technology (Shanghai) Software Co. Ltd. and Parametric Technology (Hong Kong) Limited

Guidelines Range:  Not set forth in the NPA

Penalty:  $14.5 million

Origin: The NPA states: “Although the Companies, through their parent corporation PTC Inc., reported to the Office in 2011 certain misconduct identified through a then-ongoing internal investigation, they did not voluntarily disclose relevant facts known to PTC Inc. at the time of the initial disclosure until the Office uncovered salient facts regarding the Companies’ responsibility for the improper travel and entertainment expenditures at issue independently and brought them to the Companies’ attention, after which the Companies disclosed information that they had learned as part of an earlier internal investigation”

Monitor:  No

Individuals Charged:  No