A Rare Peek Into FCPA Settlement Amount Negotiations
A typical Foreign Corrupt Practices Act enforcement action resolution vehicle is negotiated between the company and the DOJ/SEC.
Conduct at issue and how it is framed, charges, settlement amount, post-enforcement action obligations can all be the subject of negotiation.
Rarely though is the back and forth of negotiations – including as to settlement amount – in the public domain.
This recent post discussed how Clear Channel generally prevailed in an FCPA-related insurance coverage dispute.
The judicial decision by a Delaware Superior Court judge also highlights the back and forth negotiations between Clear Channel and the SEC ultimately resulting in the September 2023 $26.1 million enforcement action (disgorgement of $16,355,567, prejudgment interest of $3,760,920, and a civil monetary penalty in the amount of $6,000,000).
Clear Channel Generally Prevails In FCPA-Related Insurance Coverage Dispute
In 2023, Clear Channel Outdoor Holdings (a public subsidiary of iHeartMedia and one of the world’s largest outdoor advertising corporations) resolved a $26.1 million FCPA enforcement action.
The SEC stated: “This matter concerns violations of the anti-bribery, recordkeeping, and internal accounting controls provisions of the FCPA by Clear Channel in connection with the actions of its agent, a former indirect, majority-owned Chinese subsidiary, Clear Media Limited. From at least 2012 through 2017, Clear Media bribed Chinese government officials, both directly and through third parties, to obtain concession contracts required to sell advertising services to public and private sector clients for display on public bus shelters, street furniture, and billboards. In addition, Clear Media used sham intermediaries and false invoices to generate cash for off-book consultants engaged to win advertising business from government and private customers. From at least 2012 through 2019, Clear Channel failed to ensure that sufficient internal accounting controls were in place at Clear Media. Clear Channel received approximately $16.4 million in benefits as a result of Clear Media’s improper payments, which were inaccurately recorded as legitimate business expenses in Clear Channel’s consolidated books and records.”
Issues To Consider From The McKinsey Enforcement Action
This prior post highlighted the Foreign Corrupt Practices Act enforcement action against McKinsey and Company Africa (Pty) Ltd (“MCKINSEY AFRICA”), a wholly owned and wholly controlled subsidiary of McKinsey & Company (an international consulting firm) concerning bribery schemes in South Africa.
This prior post highlighted how the matter was yet another FCPA enforcement action related to South Africa’s Broad-Based Black Economic Empowerment Program.
This post highlights additional issues to consider.
Timeline
Issues To Consider From The Deere & Co. Enforcement Action
This previous post highlighted the $9.9 million Foreign Corrupt Practices Act enforcement actions against Deere & Co. concerning subsidiary conduct in Thailand.
This post highlights additional issues to consider.
No Prior Disclosure
It is rarely a surprise when a publicly-traded company (an issuer under FCPA speak) resolves an FCPA enforcement action because most issuers disclose FCPA scrutiny in an SEC filing.
Top 20 SEC Disgorgement Amounts In FCPA Enforcement Actions
The Foreign Corrupt Practices Act contains specific penalty provisions for both violations of the anti-bribery and books and records and internal control provisions. However, in the FCPA’s modern era there has been a dramatic shift by the SEC away from the FCPA’s statutory penalties in most corporate enforcement action towards disgorgement.
The 2004 FCPA enforcement action against ABB is believed to be the first FCPA enforcement in which the SEC sought a disgorgement remedy.
Since then, the SEC has secured approximately $5.4 billion in disgorgement (and associated pre-judgment interest) in approximately 160 corporate enforcement actions. Set forth below is the current top 20 list of SEC disgorgement (and associated pre-judgment interest) amounts.