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DOJ Enforcement Of The FCPA – Year In Review

This [1] 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 [2] for a similar post from 2013, here [3] for a similar post from 2012, here [4] for a similar post from 2011, and here [5] 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 [6] for the prior post – an approach also endorsed by the DOJ – see here [7]).

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 [8] and here [9] 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 [10] and here [11]).

Monitor:  No

Individuals Charged:  Yes (as to the Indonesia conduct – see here [12]).

Avon Entities (December 17th)

See here [13] 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 [14] 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 [15] and here [16] 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 [17] 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 [18] for the prior post).

Monitor:  No

Individuals Charged:  No

Marubeni (March 19th)

See here [19] 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 [12] against various current and former employees of Alstom

Monitor:  No

Individuals Charged:  No

Alcoa (January 9th)

See here [20] 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