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FCPA Inc. Desperately Needs Some Basic Standards

standards

In 2010 I coined the term “FCPA Inc.” as shorthand term used to describe a vibrant, niche industry consisting of numerous market participants and not just lawyers. Regardless of what you think of the term, FCPA Inc. has become part of the FCPA lexicon and it is undisputed that FCPA Inc. is a multi-billion dollar industry.

Most mature niche industries have basic standards (a common language if you will) concerning basic issues relevant to the industry. However, FCPA Inc. has none and it resembles the wild west in many instances.

Consider the following basic question: how many corporate enforcement actions were there last year and how much money did the U.S. government collect in those enforcement actions? As highlighted below, certain FCPA Inc. participants have answered this question four different ways.

The FCPA Blog began the year by asserting:

“[In 2017] 11 companies paid just over $1.92 billion to resolve FCPA cases.”

Next up, Shearman & Sterling noted that “among the highlights from 2017 were”

“Thirteen corporate enforcement actions—six of which were announced prior to January 20—with total sanctions of approximately $1.95 billion.”

From there, Paul Weiss asserted:

“In 2017, the DOJ and the SEC resolved a combined 14 enforcement actions against business entities resulting in $1.1 billion in fines, penalties, disgorgement and pre-judgment interest.”

And then, Covington stated:

“By the numbers, DOJ and the SEC collected a total of $1.13 billion in 2017 from 13 corporate defendants.”

Kudos to Covington (as well as Debevoise & Plimpton – see here) for getting the right answer. As highlighted in this previous post, in 2017 there were 13 core corporate FCPA enforcement actions in which the DOJ/SEC collected $1.13 billion in net FCPA settlements.

Calculating certain basic FCPA enforcement statistics should not be complicated.

As highlighted in the article “A Common Language to Remedy Distorted FCPA Enforcement Statistics,” it’s called using the same counting methods endorsed by the DOJ, the same counting methods used to tally enforcement statistics in other areas of law, and engaging in accurate and consistently applied math (in other words consistently “netting” FCPA settlement amounts based on credits/deduction for related foreign law enforcement actions).

The difference between $1.95 billion and $1.1 billion is obviously massive and problematic as these various figures serve as the denominator for many FCPA enforcement statistics of interest to the business and compliance communities. Even though the difference between 11, 13 and 14 corporate enforcement actions is less drastic the differences are still material for the same reason.

For numerous prior posts on the same topic see here, here, here, here, here and here.

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