Further To The SEC’s Inconsistent Approach To Enforcing The FCPA’s Books And Records And Internal Controls Provisions
As highlighted in previous posts on this subject (here, here, here and here), a basic rule of law principle is consistency.
In other words, the same legal violation ought to be sanctioned in the same way. When the same legal violation is sanctioned in materially different ways, trust and confidence in law enforcement is diminished.
However, there sure does seem to be a lack of consistency between how the SEC resolves Foreign Corrupt Practices Act books and records and internal controls violations.
60% Of SEC FCPA Enforcement Actions In Recent Years Do Not Involve Charges Or Findings That An Issuer Violated The Anti-Bribery Provisions
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.
A Focus On SEC Individual Actions
This previous post highlighted various facts and figures from 2018 SEC FCPA enforcement actions against issuers.
As highlighted in the prior post, of the 14 corporate SEC FCPA enforcement actions in 2018, 1 (7%) has involved, at present, related SEC FCPA charges or findings against company employees.
In 2018, the SEC charged or found that three individuals violated the FCPA: Joo Hyun Bahn (associated with Colliers International Group); Patricio Contesse Gonazlez (associated with SQM which resolved an FCPA enforcement action in 2017); and Paul Margis (associated with Panasonic Avionics). (Note: the SEC’s enforcement action against Takeshi Uonaga (Panasonic Avionics former CFO) is not included in FCPA enforcement statistics for the simple reason that this was a revenue recognition matter and thus a non-FCPA FCPA enforcement action).
Friday Roundup
Interesting, from the DOJ’s perspective, pay them more, sanctioned, scrutiny update, exit, and for the reading stack. It’s all here in the Friday roundup.
Interesting
As highlighted here, in December 2016 Odebrecht S.A. (a Brazilian holding company) and Braskem S.A. (a Brazil-based petrochemical company in which Odebrecht owns a majority of voting shares) resolved a large FCPA and related enforcement action largely concerning conduct in Brazil including the companies relationships with Petrobras as well as allegations of improper payments in Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, and Venezuela.
SEC FCPA Enforcement – 2018 Year In Review
Foreign Corrupt Practices Act enforcement, it’s not just about the DOJ.
Granted, as a civil enforcement agency the SEC’s sticks are less sharp than the DOJ’s, but the SEC also claims a significant piece of the FCPA enforcement pie (query whether it should – but that is a subject for another day – for instance as discussed in “The Story of the Foreign Corrupt Practices Act” the SEC wanted no part in enforcing the FCPA’s anti-bribery provisions).
This previous post highlighted various corporate enforcement statistics from 2018, this post focused more specifically on DOJ enforcement in 2018, and this post goes in-depth into various facts and figures relevant to SEC FCPA enforcement in 2018.