Between 2011 and 2018, the SEC brought 90 corporate Foreign Corrupt Practices Act enforcement actions.
However, only 36 of those actions (40%) involved charges or findings that a company violated the FCPA’s anti-bribery provisions. In other words, the majority of SEC corporate FCPA enforcement actions in recent years “merely” involve books and records and/or internal controls charges or findings.
Strangely, as further highlighted below, several SEC enforcement actions that did not involve civil charges or findings of anti-bribery violations, did involve the DOJ (an agency that enforces the FCPA criminally) bringing criminal anti-bribery charges.
First, the yearly statistics.
- Of the 14 corporate enforcement actions in 2018, 3 involved charges or findings that the company violated the anti-bribery provisions (United Technologies, Panasonic, Credit Suisse)
- Of the 7 corporate enforcement actions in 2017, 2 involved charges or findings that the company violated the anti-bribery provisions (Telia and Biomet)
- Of the 24 corporate enforcement actions in 2016, 11 involved charges or findings that the company violated the anti-bribery provisions (General Cable, Teva, Braskem, JPMorgan, Embraer, Och-Ziff, ABInBev, Qualcomm, VimpelCom, PTC and SciClone)
- Of the 9 corporate enforcement actions in 2015, 3 involved charges or findings that the company violated the anti-bribery provisions (BNY Mellon, Flir Systems, PBSJ)
- Of the 7 corporate enforcement actions in 2014, 4 involved charges or findings that the company violated the anti-bribery provisions (Bio-Rad, Layne Christensen, Smith & Wesson, Alcoa)
- Of the 8 corporate enforcement actions in 2013, 4 involved charges or findings that the company violated the anti-bribery provisions (Weatherford, Diebold, Total, Parker Drilling)
- Of the 8 corporate enforcement actions in 2012, 4 involved charges or findings that the company violated the anti-bribery provisions (Lilly, Tyco, Biomet, Smith & Nephew)
- Of the 13 corporate enforcement actions in 2011, 5 involved charges or findings that the company violated the anti-bribery provisions (Magyar Telekom, Armor Holdings, Johnson & Johnson, Tyson, Maxwell Technologies).
Why don’t more SEC corporate FCPA enforcement actions involve charges or findings that the resolving company violated the anti-bribery provisions?
One explanation is legal, the other is perhaps a reflection of the dynamics of the settlement process.
As a matter of law, foreign issuers are subject to the books and records and internal controls provisions (without an express U.S. nexus requirement – other than of course listing and filing requirements with the SEC), whereas foreign issuers are only subject to the FCPA’s anti-bribery provisions to the extent there is “use of the mails or any means or instrumentality of interstate commerce” in connection with the bribery. (Note: a salient fact which is often overlooked is that the alternative jurisdiction test found in 78dd-1(g) only applies to an “issuer organized under the laws of the United States …”).
Another explanation for the fact that a majority of SEC corporate enforcement actions in recent years lack anti-bribery charges or findings is that often the specifics of settlement are not necessarily a reflection of just the law and the facts, but other issues such as voluntary disclosure and cooperation.
Regardless of the reasons, it is truly strange that in several SEC enforcement actions that did not involve civil charges or findings of anti-bribery violations, did involve the DOJ (an agency that enforces the FCPA criminally) bringing criminal anti-bribery charges.
These enforcement actions are: Polycom, Legg Mason, Analogic, HP, ADM, Ralph Lauren, Pfizer, and Aon. (Note certain of these enforcement actions were DOJ NPAs or declinations with disgorgement yet did reference the anti-bribery provisions as opposed to just the books and records and/or internal controls provisions).
How is it that a corporate entity can criminally violate the FCPA’s anti-bribery provisions, but not civilly? Well, that’s the question.
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