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Reasons Why Companies Are Still Landing In The Top Ten List


This recent FCPA Blog post poses the question: “why are new companies still landing on the top ten list” and then links to its inaccurate / misleading top ten list (see here for a list that uses accurate and consistently applied math).

This post discusses six reasons why companies are still landing on the top ten list (or more generally resolving FCPA enforcement actions for nine-figure settlement amounts).

For starters, FCPA enforcement actions are backwards looking and (because statute of limitations as a practical matter are close to meaningless in corporate enforcement actions) concern conduct from a long time ago. For instance, the recent record-setting MTS enforcement action (see here and here for prior posts) concerns conduct that began in 2004 – 15 years prior to the actual enforcement action.

Second, as highlighted in this prior post explaining why so many large FCPA settlement amounts involve foreign companies, FCPA settlement amounts are not just a function of the underlying conduct at issue, but also other factors such as voluntary disclosure and cooperation which determine a company’s so-called culpability score which then impacts settlement amounts. For instance, in the MTS enforcement action the company did not receive voluntarily disclose credit or full cooperation credit. Again, because FCPA enforcement actions are backwards looking, the corporate decisions impacting these issues were no doubt made 5-7 years and some cases 10+ years prior to the enforcement action and it seems to be the general consensus that non-U.S. companies either reject U.S. style law enforcement practices and/or are at least 5 – 10 years behind acceptance of U.S style law enforcement practices.

Third, as highlighted in prior posts here and here, FCPA settlement amounts (and other settlement amounts in DOJ enforcement actions) seem to be growing … just because. Consider the examples highlighted in one of the prior posts. In 2007, Baker Hughes resolved a then-record setting FCPA enforcement action concerning egregious conduct in multiple countries for $44 million. In the FCPA’s modern era, it is a common for a company like Diebold to resolve – per the government’s own allegations – less egregious enforcement actions, yet pay amounts such as $48 million. In other words, relatively garden variety FCPA enforcement actions are being resolved in the FCPA’s modern era for amounts greater than previous record-setting enforcement actions.

Fourth, many of the FCPA enforcement actions in the Top Ten (and more broadly the Top Twenty) are essentially the same enforcement actions concerning the same underlying conduct, yet were resolved over a span of several years. FCPA enforcement actions fitting this description include the Uzbekistan telecom actions (MTS, Telia and Vimpelcom which were resolved over the span of three years) and the Bonny Island, Nigeria enforcement actions (KBR/Halliburton, Snamprogetti/ENI, Technip and JGC which were resolved over the span of approximately 2.5 years). In other words, these “new” enforcement actions dribble out over time, yet are essentially the same enforcement action involving the same core conduct.

Fifth, new enforcement theories are being used to bring FCPA enforcement actions. Granted, the two largest internship and hiring practice enforcement actions (JPMorgan – $203 million and Credit Suisse – $77 million) are not in the top ten, but are certainly in the upper echelon of enforcement actions in terms of settlement amounts.

Sixth, some people may not like this truism, but FCPA liability, just like other forms of legal liability, can be managed and thus minimized, but can not be eliminated. (Indeed as highlighted in this prior post, there are numerous companies that are repeat FCPA offenders). Notwithstanding a generally agreed upon change in corporate compliance commitment, resources, and practices, bad things may still occur within a business organization by just a few isolated actors. Moreover, because FCPA risk is a function of business organizations having points of contact with foreign officials in the global marketplace the chance of this risk are magnified to a greater extent today compared to 10, 20, 30 and 40 years ago. Couple this dynamic with certain of the additional dynamics highlighted above and the end result is that the FCPA’s top ten list of corporate settlement amounts is likely to look much different five to ten years in the future compared to now.

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