- FCPA Professor - https://fcpaprofessor.com -

An Open Invitation To The DOJ And SEC To Refute These Numbers

As highlighted in this [1] prior post, at a recent American Bar Association event Kara Brockmeyer (Chief of the SEC’s FCPA Unit) and Patrick Stokes (Chief of the DOJ’s FCPA Unit) spoke on a panel titled “DOJ-SEC FCPA Update:  Trends and Significant Developments.”

Towards the end of the panel, after hearing Brockmeyer and Stokes carry forward enforcement agency rhetoric concerning individual prosecutions, I asked the following general question.

The DOJ and SEC frequently talk about individual FCPA enforcement actions and indeed recognize the importance of individual enforcement in maximizing deterrence.  However, the reality is that since 2008 approximately 80% of corporate FCPA enforcement actions lack any related enforcement action against company employees.  Indeed, the SEC has not brought an individual FCPA enforcement action in nearly 2.5 years.  Is one possible explanation for these statistics – that corporate FCPA enforcement actions do not necessarily represent provable FCPA violations?

Both Brockmeyer and Stokes strongly disagreed with my statistics and called them false, wrong, deeply flawed, etc.

Stokes also seemed to hint at FCPA enforcement that is not public (see this [2] prior post regarding apparent secret FCPA enforcement) as well as FCPA charges that are currently under seal and thus not yet publicly known.  The later point is obviously valid as the public can only keep FCPA enforcement statistics based on information currently in the public domain.

In other respects however, Stokes merely did what former DOJ Deputy Assistant Attorney General Denis McInerney did when I highlighted the same general statistics at a public conference in May 2013 (see here [3]); in other words Stokes talked about the small minority of cases in which a corporate employee has indeed been charged in connection with a corporate FCPA enforcement action.

In addition, Stokes also mentioned a number of instances in which the DOJ has charged individuals with FCPA charges. This of course is true, but as highlighted in prior posts here [4] and most recently here [5], it must be noted that the DOJ appears to follow a clear “clustering” approach in charging individuals.  For instance (with statistics calculated through the end of 2013,  53% of the individuals charged by the DOJ with FCPA criminal offenses since 2008 have been in just four cases and 75% of the individuals charged by the DOJ since 2008 have been in just nine cases.  In other words, just a few cases (such as 22 individuals in the failed Africa Sting case, 9 individuals in the Haiti Teleco case, 8 individuals in the Control Components case, 8 individuals in the Siemens case – and most recently 6 individuals in the April 2014 Indian mining license case) account for the substantial bulk of individual FCPA charges.

For approximately two years (see prior posts here [4] and here [6]) I have been keeping the below statistics.

I now “show my work” and the below data is based on public information found on the DOJ and SEC’s websites (see here [7] and here [8]).

I invite the DOJ and SEC to refute these numbers and commit to publishing any response the DOJ and SEC sends to me.  I can be e-mailed at fcpaprofessor@gmail.com

For starters, the easiest statistic is the fact that the SEC has not brought an individual FCPA enforcement action in approximately 2.5 years.  As clearly evidenced from the SEC’s FCPA website [8], the last individual FCPA action was in April 2012 against Garth Peterson.

The next statistic is that since 2008, the SEC has brought 68 corporate FCPA enforcement actions.  As highlighted by the below chart, 12 of these actions have resulted in a related enforcement action against a company employee.  Thus, 82% of corporate SEC FCPA enforcement actions since 2008 have not resulted in any related enforcement action against a company employee.

SEC

Year

 

Corporate Action

Related Action Against Any Employee 

2008

Fiat

No

2008

Siemens

Yes

2008

Con-Way

No

2008

Faro

Yes

2008

Willbros

Yes

2008

AB Volvo

No

2008

Flowserve

No

2008

Westinghouse Air Brake

No

2009

UTStarcom

No

2009

AGCO

No

2009

Nature’s Sunshine

Yes

2009

Helmerich & Payne

No

2009

Avery Dennison

No

2009

United Industrial Corp.

Yes

2009

Novo Nordisk

No

2009

ITT Corp.

No

2009

KBR/Halliburton

Yes

2010

Alcatel-Lucent

No

2010

RAE Systems

No

2010

Panalpina

No

2010

Pride Int’l

Yes

2010

Tidewater

No

2010

Transocean

No

2010

GlobalSantaFe

No

2010

Noble Corp.

Yes

2010

Royal Dutch Shell

No

2010

ABB

No

2010

Alliance One

Yes

2010

Universal

No

2010

GE/Ionics

No

2010

Eni/Snamprogetti

No

2010

Veraz Networks

No

2010

Technip

No

2010

Daimler

No

2010

Innospec

Yes

2010

Natco

No

2011

Magyar Telekom

Yes

2011

Aon

No

2011

Watts Water

Yes

2011

Diageo

No

2011

Armor Holdings

No

2011

Tenaris

No

2011

Rockwell

No

2011

Johnson & Johnson

No

2011

Comverse

No

2011

Ball Corp.

No

2011

IBM

No

2011

Tyson

No

2011

Maxwell Tech.

No

2012

Eli Lilly

No

2012

Allianz

No

2012

Tyco

No

2012

Oracle

No

2012

Pfizer

No

2012

Orthofix

No

2012

Biomet

No

2012

Smith & Nephew

No

2013

Philips

No

2013

Parker Drilling

No

2013

Ralph Lauren

No

2013

Total

No

2013

Diebold

No

2013

Stryker

No

2013

Weatherford Int’l

No

2013

ADM

No

2014

Alcoa

No

2014

HP

No

2014

Smith & Wesson

No

The next statistic is that since 2008, the DOJ has brought 63 corporate FCPA enforcement actions.  As highlighted by the below chart, 16 of these actions have resulted in a related enforcement action against a company employee.  Thus, 75% of corporate FCPA enforcement actions since 2008 have not resulted in any related enforcement action against a company employee.

DOJ

Year

Corporate Action

Related Action Against Any Employee 

2008 Faro No
2008 AGA Medical No
2008 Nexus Technology Yes
2008 Fiat No
2008 Flowserve No
2008 AB Volvo No
2008 Siemens Yes
2008 Willsbros Yes
2008 Westinghouse Air Brake No
2009 Control Components Yes
2009 Helmerich & Payne No
2009 KBR / Halliburton Yes
2009 Latin Node Yes
2009 UTStarcom No
2009 AGCO No
2009 Novo Nordisk No
2010 Innospec No
2010 Daimler No
2010 Technip No
2010 Snamprogetti No
2010 Alliance One Yes
2010 Universal No
2010 Mercator Yes
2010 ABB Yes
2010 Lindsey Yes
2010 Panalpina No
2010 Pride International No
2010 Tidewater No
2010 Transocean No
2010 Noble No
2010 Royal Dutch Shell No
2010 RAE Systems No
2010 Alcatel-Lucent Yes
2011 Maxwell Yes
2011 Tyson No
2011 JGC No
2011 Comverse No
2011 Johnson & Johnson No
2011 Tenaris No
2011 Cinergy Telcommunications Yes
2011 Armor Holdings Yes
2011 Bridgestone Yes
2011 Aon No
2011 Magyar / Deutsche Telekom No
2012 Marubeni No
2012 Smith & Nephew No
2012 BizJet / Lufthansa Yes
2012 Biomet No
2012 Data Systems & Solutions No
2012 Orthofix No
2012 NORDAM Group No
2012 Pfizer No
2012 Tyco No
2013 Parker Drilling No
2013 Ralph Lauren No
2013 Total No
2013 Diebold No
2013 Weatherford No
2013 Bilfinger No
2013 ADM No
2014 Alcoa No
2014 Marubeni No
2014 HP No