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A Focus On DOJ FCPA Individual Prosecutions

This post updates various facts and figures first published in September 2011 (see here, here) concerning the DOJ’s prosecution of individuals for FCPA offenses.

Since 2005, the DOJ has charged 93 individuals with FCPA criminal offenses.  The breakdown is as follows.

  • 2005 – 3 individuals
  • 2006 – 6 individuals
  • 2007 – 7 individuals
  • 2008 – 14 individuals
  • 2009 – 18 individuals
  • 2010 – 33 individuals (including 22 in the Africa Sting case)
  • 2011 – 10 individuals
  • 2012 – 2 individuals

An analysis of the numbers reveals some interesting points.

Most of the individuals – 77 (or 83%) were charged since 2008.  Thus, on one level the DOJ is correct when it states that individual prosecutions are a “cornerstone” of its FCPA enforcement strategy and that it has been “vigorous about holding individuals accountable” – at least as measured against the historical average given that between 1978 and 2004, the DOJ charged 53 individuals with FCPA criminal offenses.

Yet on another level, a more meaningful level given that there was much less overall enforcement of the FCPA between 1978 and 2004, the DOJ’s statements about its focus on individuals represents hollow rhetoric as demonstrated by the below figures.

Of the 77 individuals criminally charged with FCPA offenses by the DOJ since 2008:

  • 22 individuals were in the Africa Sting case;
  • 9 individuals (minus the “foreign officials” charged) were in the Haiti Teleco case;
  • 8 individuals were in the Control Components case;
  • 8 individuals were in the Siemens case;
  • 4 individuals were in the Lindsey Manufacturing case;
  • 4 individuals were  in the LatinNode / Hondutel case; and
  • 4 individuals were in the Nexus Technologies case.

In other words, 61% of the individuals charged by the DOJ with FCPA criminal offenses since 2008 have been in just four cases and 77% of the individuals charged by the DOJ since 2008 have been in just seven cases.

Considering that there has been 53 corporate DOJ FCPA enforcement actions since 2008, this is a rather remarkable statistic.  Of the 53 corporate DOJ FCPA enforcement actions, 39 (or 74%) have not  (at least yet) resulted in any DOJ charges against company employees.

In recent years, the DOJ has consistently stated that prosecution of individuals is a “cornerstone” of its FCPA enforcement strategy.  For instance, in a November 2012 speech (see here for the prior post), Assistant Attorney General Lanny Breuer stated as follows.  “If you look at the FCPA over the past 4 years, you’ll see we really have been vigorous about holding individuals accountable.”

Yet, the above numbers paint a different picture, a very different picture – at least in certain enforcement actions.  What type of enforcement actions?

A very interesting and significant picture emerges when analyzing DOJ individual prosecution data based on whether the corporate entity employing or otherwise involved with the individual charged was a public or private entity.

Of the 77 individuals charged by the DOJ with FCPA criminal offenses since 2008, 54 of the individuals (70%) were employees or otherwise affiliated with private business entities.  This is a striking statistic given that 42 of the 53 corporate DOJ FCPA enforcement actions since 2008 (79%) were against publicly traded corporations.

In the 11 private entity DOJ FCPA enforcement actions since 2008, individuals were charged in connection with 6 of those cases (55%).  In contrast, in the 42 public entity DOJ FCPA enforcement actions since 2008, individuals were charged in connection with 8 of those cases (19%).  In short, and based on the data, a private entity DOJ FCPA enforcement is approximately three times more likely to have a related DOJ FCPA criminal prosecution of an individual than a public entity DOJ FCPA enforcement action.

[Notes – the above data was assembled using the “core” approach – see this prior post for an explanation.  The term “public entity”  is not limited to “issuers” under the FCPA, but rather a public entity regardless of which market it shares trade on.  Thus, for instance, JGC Corp. of Japan and Bridgestone are both public entities even though its shares are not traded on a U.S. exchange.]

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