Year in Review 2015 Archives - Page 2 of 4

A Focus On SEC Individual Actions

By Mike Koehler on January 11, 2016 in FCPA Statistics, Individual Enforcement Action, SEC Enforcement Action, Year in Review 2015

This previous post highlighted various facts and figures from 2015 SEC FCPA enforcement (both corporate and individual).

As highlighted in the prior post, of the 9 corporate SEC FCPA enforcement actions from 2015, 2 (22%) (PBSJ and FLIR Systems) have involved, at present, related SEC charges against company employees.

As further highlighted in the prior post, the SEC brought two individual enforcement actions in 2015 (Vicente Garcia – associated with SAP and Walid Hatoum – associated with PBSJ).

This post focuses on SEC FCPA individual actions historically.

Like the DOJ, the SEC frequently speaks in lofty rhetoric concerning its focus on holding individuals accountable under the FCPA.

In November 2014, the SEC’s Director of Enforcement stated:

“I always have said that actions against individuals have the largest deterrent impact. Individual accountability is a powerful deterrent because people pay attention and alter their conduct when they personally face potential punishment. And so in the FCPA arena as well as all other areas of our enforcement efforts, we are very focused on attempting to bring cases against individuals. […] [I]ndividual accountability is critical to FCPA enforcement — and imposing personal consequences on bad actors, including through bars and monetary sanctions, will continue to be a high priority for us.”

Most recently in November 2015, the SEC’s Director of Enforcement stated:

“Holding individuals accountable for their wrongdoing is critical to effective deterrence and, therefore, the Division considers individual liability in every case. […] The Commission is committed to holding individuals accountable and I expect you will continue to see more FCPA cases against individuals.”

Since 2000, the SEC has charged 63 individuals with FCPA civil offenses. The breakdown is as follows.

2000 – 0 individuals
2001 – 3 individuals
2002 – 3 individuals
2003 – 4 individuals
2004 – 0 individuals
2005 – 1 individual
2006 – 8 individuals
2007 – 7 individuals
2008 – 5 individuals
2009 – 5 individuals
2010 – 7 individuals
2011 – 12 individuals
2012 – 4 individuals
2013 – 0 individuals
2014 – 2 individuals
2015 – 2 individuals

As highlighted by the above statistics, most of the individuals charged – 37 (or 59%) were charged since 2008. Thus, on one level the SEC is correct when it states that individual prosecutions are a focus of its FCPA enforcement program at least as measured against the historical average given that between 1977 and 1999 the SEC charged 22 individuals with FCPA civil offenses.

Yet on another level, a more meaningful level given that there was much less overall enforcement of the FCPA between 1977 and 1999, the SEC’s statements represent hollow rhetoric as demonstrated by the below figures.

Of the 37 individuals charged with civil FCPA offenses by the SEC since 2008:

7 individuals were in the Siemens case;
4 individuals were in the Willbros Group case;
4 individuals were in the Alliance One case;
3 individuals were in the Maygar Telekom case; and
3 individuals were in the Noble Corp. case.

In other words, 57% of the individuals charged by the SEC with FCPA civil offenses since 2008 have been in just five cases.

Considering that there has been 81 corporate SEC FCPA enforcement actions since 2008, this is a rather remarkable statistic. Of the 81 corporate SEC FCPA enforcement actions, 67 (or 83%) have not (at least yet) resulted in any SEC charges against company employees.

This is an interesting figure given that between 1977 and 2004 61% of SEC corporate FCPA enforcement actions did indeed result in related charges against company employees. In other words, for most of the FCPA’s history the majority of corporate SEC FCPA enforcement resulted in related individual accountability, but in the SEC’s modern FCPA enforcement program, the vast majority of corporate SEC FCPA enforcement actions have not resulted in related individual accountability despite the SEC’s rhetoric.

It is also interesting to analyze the 14 instances since 2008 where an SEC corporate FCPA enforcement action resulted in related charges against company employees. With the exception of Siemens, KBR/Halliburton and Magyar Telekom, the corporate SEC FCPA enforcement actions resulting in related charges against company employees occurred in what can only be described as relatively minor (at least from a settlement amount perspective) corporate enforcement actions. These actions are: Faro Technologies, Willbros Group, Nature’s Sunshine Products, United Industrial Corp., Pride Int’l., Noble Corp., Alliance One, Innospec, Watts Water, PBSJ and FLIR Systems.

Set forth below is a complete list of SEC corporate FCPA enforcement actions since 2008 and whether the corporate enforcement action resulted in any related individual charges. Beginning in October 2014, I publicly invited (see here) the SEC to refute these numbers to support its individual accountability rhetoric. The SEC has not responded and the invitation still stands.

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
2014	Layne Christensen	No
2014	Bio-Rad	No
2014	Bruker	No
2014	Avon	No
2015	PBSJ	Yes
2015	Goodyear	No
2015	FLIR Systems	Yes
2015	BHP Billiton	No
2015	Mead Johnson	No
2015	BNY Mellon	No
2015	Hitachi	No
2015	Hyperdynamics	No
2015	Bristol-Myers Squibb	No

The “Foreign Officials” Of 2015

By Mike Koehler on January 8, 2016 in FCPA Statistics, Foreign Official, Year in Review 2015

A “foreign official.”

Without one, there can be no FCPA anti-bribery violation (civil or criminal). Who were the alleged “foreign officials” of 2015?

This post highlights the alleged “foreign officials” from 2015 corporate DOJ and SEC FCPA enforcement actions.

There were 11 core corporate enforcement actions in 2015.

Of the 11 enforcement actions 6 (55%) explicitly involved, in whole or in part, employees of alleged state-owned or state-controlled entities (“SOEs). These entities ranged from health care providers, to sovereign wealth funds, to a real estate development firm, a sugar factory, a cement company, a diamond mine, and an oil and gas company.

By way of comparison, in 2014 60% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here). In 2013, 55% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here). In 2012, 42% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 348-353). In 2011, 81% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 29-41). In 2010, 60% of corporate FCPA enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 108-119). In 2009, 66% of corporate FCPA enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 410-44).

In 2014, in an issue of first impression for an appellate court, the 11th Circuit set forth a control and function test for whether an alleged SOE can be “instrumentality” under the FCPA such that its employees are “foreign officials” under the FCPA. As highlighted here and more extensively in my Supreme Court amicus brief supporting the cert petition, there were many flaws in the 11th Circuit’s reasoning. The Supreme Court declined to hear the case. As to whether Congress intended employees of SOEs to be “foreign officials” under the FCPA, see here for my “foreign official” declaration.

The remainder of this post describes (as per DOJ/SEC allegations) the “foreign officials” of 2015. As is apparent from the descriptions below, in certain instances the enforcement agencies describe the “foreign official” with reasonable specificity; in other instances with virtually no specificity.

[Note: certain of the enforcement actions below technically only involved FCPA books and records and internal control charges or findings. As most readers know, actual charges in many FCPA enforcement actions hinge on voluntary disclosure, cooperation, collateral consequences, and other non-legal issues. Thus, even if an FCPA enforcement action is resolved without FCPA anti-bribery charges, most such actions remain very much about the “foreign officials” involved – a fact evident when reading the actual enforcement action].

PBSJ

SEC

Employees of Qatari Diar Real Estate Investment Company (“Qatari Diar”). Qatari Diar was established by the Qatari government to coordinate the country’s real estate development.

Goodyear

SEC

Employees of Kenyan government-owned or affiliated entities including including the Kenya Ports Authority, the Armed Forces Canteen Organization, the Nzoia Sugar Company, the Kenyan Air Force, the Ministry of Roads, the Ministry of State for Defense, the East African Portland Cement Co., and Telkom Kenya Ltd.

Employees of government-owned or affiliated entities in Angola, including the Catoca Diamond Mine, UNICARGAS, Engevia Construction and Public Works, the Electric Company of Luanda, National Service of Alfadega, and Sonangol.

IAP Worldwide

DOJ

Individual(s) at the Kuwaiti Ministry of the Interior

BHP Billiton

SEC

Government officials and employees of state-owned enterprises to attend the Olympics at the company’s expense. The majority of these invitations were extended to government officials from countries in Africa and Asia that had well-known histories of corruption.

FLIR Systems

SEC

Individuals with the Saudi Arabia Ministry of Interior. Individuals from the Egyptian Ministry of Defense

Louis Berger

DOJ

Various foreign officials in Indonesia, Vietnam, India and Kuwait.

Hyperdynamics

SEC

Payments by company subsidiaries in the Republic of Guinea for purported public relations and lobbying expenses, even though the company lacked sufficient supporting documentation to determine whether the services were actually provided and to identify the ultimate recipient of the funds.

Hitachi

SEC

Various payments to Chancellor House Holdings (Pty) Ltd. (“Chancellor”), a local South African company that was a front for the African National Congress (“ANC”), South Africa’s ruling political party

BNY Mellon

SEC

The company provided “valuable student internships to family members of foreign government officials affiliated with a Middle Eastern sovereign wealth fund.”

Mead-Johnson

SEC

Certain health care professionals at state-owned hospitals in China

Bristol-Myers Squibb

SEC

Various health care providers at state-owned and state-controlled hospitals in China

Corporate FCPA Enforcement In 2015 Compared To Prior Years

By Mike Koehler on January 7, 2016 in FCPA Statistics, Year in Review 2015

Previous posts this week (see here and here) separately analyzed SEC and DOJ corporate Foreign Corrupt Practices Act enforcement in 2015.

Viewing FCPA enforcement statistics this way is useful and informative given that the DOJ and SEC are separate law enforcement agencies and different issues may arise in DOJ and SEC FCPA enforcement actions.

Accepting year-to-year FCPA statistics for what they are, the issue remains: how best to analyze and interpret these statistics over time?

Here is how I see it through reference to another example. In year 1, a city issues 100 speeding tickets and collects $20,000 in fines associated with those tickets. In year 2, a city issues 90 speeding tickets, but because certain drivers were going really fast, the city collects $25,000 in fines associated with those tickets. Was there less enforcement in year 2 compared to year 1? Depends on what you are measuring – the number of infractions or amount of fines.

The some logic applies to year-to-year FCPA statistical data and I believe that the best way to track yearly enforcement is through the number of “core” enforcement actions.

By this measure and as highlighted below, overall corporate FCPA enforcement in 2015 was up slightly compared to 2014 and 2013 corporate enforcement even though DOJ corporate FCPA enforcement in 2015 was at its lowest level since 2006 and even though overall FCPA settlement amounts were well below historical averages.

Corporate DOJ FCPA Enforcement Actions

Year	Core Actions
2015	2
2014	7
2013	7
2012	9
2011	11
2010	17

Corporate SEC FCPA Enforcement Actions

Year	Core Actions
2015	9
2014	7
2013	8
2012	8
2011	13
2010	19

Corporate DOJ FCPA Enforcement Action Settlement Amounts

Year	Settlement Amounts
2015	$24.2 million
2014	$1.25 billion
2013	$420 million
2012	$142 million
2011	$355 million
2010	$870 million

Corporate SEC FCPA Enforcement Action Settlement Amounts

Year	Settlement Amounts
2015	$115 million
2014	$327 million
2013	$300 million
2012	$118 million
2011	$148 million
2010	$530 million

Viewing FCPA enforcement in the aggregate (DOJ and SEC combined) is of course also useful and informative and in 2015 the DOJ and SEC combined collected approximately $139 million in 11 core corporate enforcement actions.

The below chart provides a summary of corporate FCPA enforcement data (DOJ and SEC combined) for the years 2007-2015, as well as notable circumstances that significantly skewed enforcement data statistics for particular years.

Corporate FCPA Enforcement Actions (2007-2015)

Year	Core Actions	Settlement Amounts	Of Note
2007	15	$149 million	Six enforcement actions involved Iraq Oil for Food conduct and these enforcement actions comprised 40% of all enforcement actions and approximately 50% of the $149 million amount.
2008	10	$885 million	The $800 million Siemens enforcement action comprised approximately 90% of the $885 million amount.
2009	11	$645 million	The $579 million KBR / Halliburton Bonny Island, Nigeria enforcement action comprised approximately 90% of the $645 million amount.
2010	21	$1.4 billion	Six enforcement actions, all resolved on the same day, centered on various oil and gas companies use Panalpina in Nigeria. Panalpina also resolved an enforcement action on the same day.Two enforcement actions (Technip and Eni / Snamprogetti) involved Bonny Island conduct. In other words, there were 14 unique corporate enforcement actions in 2010. Of further note, the two Bonny Island enforcement actions, Technip($338 million) and Eni/Snamprogetti ($365 million) comprised approximately 50% of the $1.4 billion amount.
2011	16	$503 million	The $219 million JGC Corp. Bonny Island, Nigeria enforcement action comprised approximately 44% of the $503 million amount
2012	12	$260 million	None that significantly skewed the statistics
2013	9	$720 million	The $398 million Total enforcement action comprised approximately 55% of the $720 million amount
2014	10	$1.6 billion	Two enforcement actions (Alstom – $772 million and Alcoa – $384 million) comprised approximately 72% of the $1.6 billion amount.
2015	11	$139 million	None that significantly skewed the statistics
TOTALS	115	$6.37 billion

DOJ Enforcement Of The FCPA – Year In Review

By Mike Koehler on January 6, 2016 in DOJ, FCPA Statistics, Year in Review 2015

This previous post highlighted facts and figures from SEC enforcement of the FCPA in 2015.

This post highlights facts and figures from corporate DOJ FCPA enforcement in 2015. (See here for a similar post from 2014, here for a similar post from 2013, here for a similar post from 2012, here for a similar post from 2011, and here from 2010).

When reviewing the statistics below, keep in mind that there were only 2 corporate FCPA enforcement actions in 2015. Thus, certain of the below statistics are largely meaningless, yet nevertheless highlighted for comparative purposes.

Settlement Amounts and Specifics

In 2015, the DOJ brought 2 corporate FCPA enforcement actions (the lowest number of corporate DOJ FCPA enforcement actions since 2006).

By comparison, in 2014, the DOJ brought 7 corporate FCPA enforcement actions; in 2013 the DOJ brought 7 corporate enforcement action; in 2012 the DOJ brought 9 corporate FCPA enforcement actions; in 2011 the DOJ brought 11 corporate enforcement actions; and in 2010 the DOJ brought 17 corporate enforcement actions. (Note: these figures use the “core” approach to FCPA statistics – see here for the prior post – an approach also endorsed by the DOJ – see here).

In the 2 corporate FCPA enforcement actions from 2014, the DOJ collected approximately $24.2 million in criminal fines.

By comparison, in the 7 corporate FCPA enforcement actions from 2014, the DOJ collected approximately $1.25 billion in criminal fines (an all-time record in terms of yearly FCPA settlement amounts); in the 7 corporate FCPA enforcement actions from 2013, the DOJ collected approximately $420 million in criminal fines; in 2012, the DOJ collected approximately $142 million in criminal fines; in 2011, the DOJ collected approximately $355 million in criminal fines ($504 million including the $149 million forfeiture in the Jeffrey Tesler individual enforcement action); and in 2010, the DOJ collected approximately $870 million in criminal fines.

Corporate DOJ FCPA enforcement in 2015 ranged from $17.1 million (Louis Berger) to $7.1 million (IAP Worldwide). Both enforcement actions were DOJ only and involved privately-held companies.

In the 1 corporate FCPA enforcement actions where an analysis was possible, the DOJ agreed to a criminal fine at the minimum range suggested by the sentencing guidelines.

[Note – the IAP Worldwide enforcement action was resolved via an NPA and the DOJ does not set forth a guidelines range in NPAs]

Corporate vs. Individual Prosecutions

Of the 2 corporate DOJ enforcement actions in 2015, 2 (100%) resulted in related DOJ prosecutions of company employees. Notwithstanding this 2015 statistic, as highlighted in this prior post, approximately 75% of DOJ corporate enforcement actions since 2008 have not (at least yet) resulted in any DOJ charges against company employees.

The DOJ announced 8 individual FCPA enforcement actions in 2015 (Harder, Rama, Hirsch/McClung, Garcia, Condrey and Rincon / Shiera) in 6 core actions.

Stay tuned for future posts specifically about DOJ and SEC individual FCPA enforcement actions in 2015.

NPAs / DPAs

In 2015, 2 of the 2 (100%) DOJ corporate enforcement actions were resolved via an NPA (IAP Worldwide) or a DPA (Louis Berger).

By way of comparison, in 2014, 5 of the 7 (71%) DOJ corporate enforcement actions included an NPA or DPA; in 2013, 100% of corporate DOJ enforcement actions involved either an NPA or DPA; in 2012 100% of corporate DOJ enforcement actions involved either an NPA or a DPA; in 2011 82% of corporate DOJ enforcement actions involved either an NPA or DPA; and in 2010 94% of corporate DOJ enforcement actions involved either an NPA or DPA.

Since 2010, approximately 85% of corporate DOJ enforcement actions have involved either an NPA or DPA.

Voluntary Disclosures

Of the 2 DOJ corporate enforcement actions in 2015, 1 enforcement action (50%) was the result of a corporate voluntary disclosure.

[Note – the Louis Berger DPA states as follows: “after the government had made [the company] … aware of a False Claim Act investigation, [the company] conducted an internal investigation, discovered potential FCPA violations, and voluntarily self-reported to the [DOJ] the misconduct.” The origin of the IAP Worldwide action is unclear as the NPA makes no mention of voluntary disclosure or other potential origins of the action.]

By way of comparison, of the 7 corporate DOJ FCPA enforcement actions in 2014, 2 enforcement actions (29%) were the result of corporate voluntary disclosures; in 2013 57% of corporate FCPA enforcement actions were the result of corporate voluntary disclosures or the direct result of a related voluntary disclosure; in 2012, 78% of corporate FCPA enforcement actions were the result of corporate voluntary disclosures or casually related to previous corporate voluntary disclosures; in 2011, 73% of corporate FCPA enforcement actions were the result of corporate voluntary disclosures.

Monitors

Of the 2 corporate DOJ FCPA enforcement actions in 2015, 1 (50%) enforcement action (Louis Berger) resulted in a corporate monitor.

By way of comparison, of the 7 corporate DOJ FCPA enforcement actions in 2014, 1 (14%) resulted in a corporate monitor; of the 7 corporate DOJ FCPA enforcement actions in 2013, 4 enforcement actions (57%) involved a monitor; of the 9 corporate DOJ FCPA enforcement actions in 2012, 3 enforcement actions (33%) involved a monitor; of the 11 corporate DOJ FCPA enforcement actions in 2011, 1 enforcement action (9%) involved a corporate monitor; of the 17 corporate DOJ enforcement actions in 2010, 7 enforcement actions (41%) involved a corporate monitor.

This remainder of this post provides an overview of corporate DOJ FCPA enforcement in 2015.

*****

Louis Berger Int’l. (July 17th)

See here for the prior post

Charges: Conspiracy to violate the FCPA’s anti-bribery provisions

Resolution Vehicle: DPA

Guidelines Range: $17.1 million – $34.2 million

Penalty: $17.1 million.

Disclosure: The DPA states: “after the government had made [the company] … aware of a False Claim Act investigation, [the company] conducted an internal investigation, discovered potential FCPA violations, and voluntarily self-reported to the [DOJ] the misconduct”

Monitor: Yes

Individuals Charged: Yes

IAP Worldwide Services Inc. (June 16th)

See here for the prior post

Charges: Not applicable.

Resolution Vehicle: NPA

Guidelines Range: None set forth in the NPA.

Penalty: $7.1 million.

Disclosure: Unclear, the NPA makes no mention of voluntary disclosure or other potential origins of the action.

Monitor: No

Individuals Charged: Yes

SEC Enforcement Of The FCPA – Year In Review

By Mike Koehler on January 5, 2016 in FCPA Statistics, SEC, Year in Review 2015

This is the first of several posts regarding FCPA 2015 enforcement statistics and issues to be published on FCPA Professor this month.

Yearly FCPA enforcement statistics are interesting, particularly when compared to prior years, but any yearly statistic contains an arbitrary cutoff date and is thus of marginal value.

Moreover, statistics are calculated against the universe of enforcement activity in any given year and in 2015 there were 9 corporate SEC enforcement actions and just 2 corporate DOJ enforcement actions. With such low denominators, yearly enforcement statistics are of further marginal value.

With such limitations in mind, let the 2015 FCPA enforcement statistics begin.

*****

Foreign Corrupt Practices Act enforcement, it is 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).

Today’s post is a year in review of SEC FCPA Enforcement. (See here for a similar post for 2014; here for a similar post for 2013; here for a similar post for 2012; here for a similar post for 2011; and here for a similar post for 2010).

Stay tuned for a similar post on DOJ FCPA enforcement in 2015.

As highlighted below, four statistics stand out from corporate SEC FCPA enforcement in 2015:

(i) unlike in prior years where several SEC corporate enforcement actions also had a DOJ component, each SEC corporate enforcement action in 2015 was a “stand-alone” action;

(ii) compared to prior years, civil penalties comprised a much larger percentage of SEC settlement amounts;

(iii) consistent with prior years, SEC enforcement was largely corporate only as only 2 of the 9 corporate enforcement actions also resulted in related enforcement actions against company employees; and

(iv) compared to prior years, a lower percentage of corporate enforcement actions were the result of voluntary disclosures, but rather originated from pro-active FCPA investigations.

Settlement Amounts and Specifics

In 2015, the SEC collected approximately $114.8 million in 9 corporate FCPA enforcement actions.

By comparison, in 2014 the SEC collected approximately $327 million in 7 corporate FCPA enforcement actions; in 2013 the SEC collected approximately $300 million in 8 corporate enforcement actions; in 2012 the SEC collected approximately $118 million in 8 corporate FCPA enforcement actions; in 2011 the SEC collected approximately $148 million in 13 corporate FCPA enforcement actions; and in 2010, the SEC collected approximately $530 million in 19 corporate FCPA enforcement actions.

The range of SEC FCPA enforcement actions in 2015 was, on the high end, $25 million (BHP Billiton), and on the low end, $75,000 (Hyperdynamics). The median settlement amount was approximately $14.7 million.

All SEC corporate FCPA enforcement actions in 2015 were SEC only – a noticeable difference from prior years in which many SEC corporate FCPA enforcement actions also involved a DOJ component.

Of the 9 corporate enforcement actions from 2015, 7 enforcement actions (78%) were administrative actions, 1 enforcement action (PBSJ) was a deferred prosecution agreement and 1 enforcement action (Hitachi) was a settled civil complaint filed in federal court.

In other words, there was no judicial scrutiny of 89% of SEC FCPA enforcement actions from 2015. By comparison, in 2014 there was no judicial scrutiny of 86% of SEC FCPA enforcement actions and in 2013 there was no judicial scrutiny of 50% of SEC FCPA enforcement actions.

In 2015, the SEC collected approximately $45.2 million in disgorgement and prejudgment interest in enforcement actions that did not charge anti-bribery violations. This is noteworthy because many question, and rightfully so, whether disgorgement is an appropriate remedy in cases that do not charge FCPA anti-bribery violations. See here for a prior post on so-called “no-charged bribery disgorgement” cases.

By way of comparison, in 2014 the SEC collected approximately $104 million in disgorgement and prejudgment interest in no-charged bribery disgorgement cases; in 2013, the SEC collected approximately $208 million in disgorgement and prejudgment interest in no-charged bribery disgorgement cases; in 2012, the SEC collected approximately $57.4 million in disgorgement and prejudgment interest in no-charged bribery disgorgement cases; and in 2011 the SEC collected approximately $51 million in disgorgement and prejudgment interest in n0-charged bribery disgorgement cases.

The $114.8 million the SEC collected in 2015 FCPA enforcement actions breaks down as follows:

$56.2 million in a civil penalties (Bristol-Myers, Hyperdynamics, Hitachi, BNY Mellon, Mead Johnson, BHP Billiton, FLIR Systems, and PBSJ); and

$58.6 million in disgorgement and prejudgment interest.

This division (only 51% of SEC FCPA settlement amounts in 2015 consisted of disgorgement and prejudgment interest) is noteworthy because in 2014 99% of SEC FCPA settlement amounts in 2014 consisted of disgorgement and prejudgment interest; in 2013 98% of SEC FCPA settlement amounts consisted of disgorgement and prejudgment interest; in 2012 86% of SEC FCPA settlement amounts consisted of disgorgement and prejudgment interest; in 2011, disgorgement and prejudgment interest comprised 94% of SEC FCPA enforcement settlement amounts; and in 2010, disgorgement and prejudgment interest comprised 96% of SEC FCPA enforcement settlement amounts.

If one tries to analyze why some SEC FCPA enforcement actions in 2015 included a civil penalty, disgorgement and prejudgment interest (PBSJ, FLIR Systems, BNY Mellon, Mead Johnson and Bristol-Myers), whereas other enforcement actions included only disgorgement and prejudgment interest (Goodyear), whereas other enforcement actions included only a civil penalty (BHP Billiton, Hyperdynamics, and Hitachi) good luck and please enlighten us all with your insight.

Corporate vs. Individual Actions

Of the 9 corporate SEC FCPA enforcement actions from 2015, 2 (22%) (PBSJ and FLIR Systems) have involved, at present, related SEC charges against company employees.

By way of comparison, in 2014 of the 7 corporate SEC FCPA enforcement actions from 2014, 0 (0%) have involved, at present, related SEC charges against company employees; in 2013 of the 8 SEC corporate FCPA enforcement actions 0 (0%) have involved, at present, related SEC charges against company employees; in 2012, 0 of the 8 corporate (0%) FCPA actions involved related SEC charges against company employees; in 2011, 2 of the 13 (15%) corporate SEC FCPA enforcement actions involved related SEC charges against company employees; in 2010, 3 of the 19 (15%) corporate SEC FCPA enforcement actions involved related SEC charges against company employees.

Voluntary Disclosures

Of the 9 corporate SEC FCPA enforcement actions from 2015, 3 enforcement actions (33%) (PBSJ, Goodyear, and FLIR Systems) were the result of corporate voluntary disclosures. 5 enforcement actions (BHP Billiton, Hyperdynamics, BNY Mellon, Mead Johnson and Bristol-Myers) would appear to be the result of pro-active SEC investigations (i.e. issuance of subpoenas, industry sweeps). The origin of 1 enforcement action (Hitachi) is not specified in the resolution documents.

In terms of voluntary disclosure, by way of comparison of the 7 corporate SEC FCPA enforcement actions from 2014, 4 enforcement actions (57%) were the result of corporate voluntary disclosures; of the 8 corporate SEC FCPA enforcement actions in 2013, 3 enforcement actions (38%) were the result of corporate voluntary disclosures; in 2012 of the 8 corporate SEC FCPA enforcement actions 4 (50%) were the result of corporate voluntary disclosures; and in 2011 of the 13 corporate SEC FCPA enforcement actions 11 (85%) were the result of corporate voluntary disclosures.

This remainder of this post provides an overview of SEC FCPA enforcement in 2015.

Bristol-Myers Squibb (October 5th)

See here and here for prior posts

Charges: None. Administrative cease and desist order finding violations of the FCPA’s books and records and internal controls provisions

Settlement: $14.7 million ($11.4 million in disgorgement, prejudgment interest of $500,000, and a civil penalty of $2.75 million)

Disclosure: According to the company’s disclosures, its FCPA scrutiny began in 2006 when the SEC informed the company that it had begun a formal inquiry into the activities of certain of the company’s subsidiaries and its employees and agents. In March 2012, the company received a subpoena from the SEC issued in connection with its investigation under the FCPA, primarily relating to sales and marketing practices in various countries.

Individuals Charged: No

Related DOJ Enforcement Action: No.

Hyperdynamics (Sept. 29th)

See here for the prior post

Charges: None. Administrative cease and desist order finding violations of the FCPA’s books and records and internal controls provisions

Settlement: $75,000 civil penalty.

Disclosure: According to the company’s disclosure – ”the SEC had issued a subpoena to Hyperdynamics concerning possible violations of the FCPA”

Individuals Charged: No

Related DOJ Enforcement Action: No.

Hitachi (Sept. 28th)

See here and here for prior posts

Charges: Settled civil complaint charging FCPA books and records and internal controls violations.

Settlement: $19 million civil penalty.

Disclosure: Not specified in the resolution documents.

Individuals Charged: No

Related DOJ Enforcement Action: No.

BNY Mellon (August 18th)

See here and here for prior posts.

Charges: None. Administrative cease and desist order finding violations of the FCPA’s anti-bribery and internal control provisions.

Settlement: $14.8 million ($8.3 million in disgorgement, $1.5 million in prejudgment interest, and a $5 million penalty).

Disclosure: Unclear from the resolution documents (perhaps the industry sweep of the financial services industry)

Individuals Charged: No.

Related DOJ Enforcement Action: No.

Mead Johnson (July 28th)

See here and here for prior posts.

Charges: None. Administrative cease and desist order finding violations of the FCPA’s books and records and internal controls provisions.

Settlement: Approximately $12 million ($7.77 million in disgorgement, $1.26 million in prejudgment interest, and a $3 million penalty).

Disclosure: The resolution documents state: “In 2011, Mead Johnson received an allegation of possible violations of the FCPA in connection with the Distributor Allowance in China. In response, Mead Johnson conducted an internal investigation, but failed to find evidence that Distributor Allowance funds were being used to make improper payments to HCPs. Thereafter, Mead Johnson China discontinued Distributor Allowance funding to reduce the likelihood of improper payments to HCPs, and discontinued all practices related to compensating HCPs by 2013. Mead Johnson did not initially self-report the 2011 allegation of potential FCPA violations and did not thereafter promptly disclose the existence of this allegation in response to the Commission’s inquiry into this matter.

Individuals Charged: No.

Related DOJ Enforcement Action: No.

BHP Billiton (May 20)

See here, here and here for prior posts.

Charges: None. Administrative cease and desist order finding violations of the FCPA’s books and records and internal control provisions.

Settlement: $25 million civil penalty.

Disclosure: The company disclosed that it received information requests from the SEC in August 2009.

Individuals Charged: No

Related DOJ Enforcement Action: No.

FLIR Systems (April 8th)

See here and here for prior posts.

Charges: None. Administrative cease and desist order finding violations of the FCPA’s anti-bribery, books and records and internal control provisions.

Settlement: Approximately $9.5 million (disgorgement of $7,534,000, prejudgment interest of $970,584 and a penalty of $1 million).

Disclosure: Voluntary disclosure.

Individuals Charged: Yes in November 2014 (see here for the prior post).

Related DOJ Enforcement Action: No.

Goodyear (Feb. 24th)

See here, here and here for prior posts.

Charges: None. Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions.

Settlement: $16,228,065 (disgorgement of $14,122,525 and prejudgment interest of $2,105,540).

Disclosure: Voluntary disclosure.

Individuals Charged: No

Related DOJ Enforcement Action: No

PBSJ (Jan. 22nd)

See here for a prior post.

Charges: Violations of the FCPA’s anti-bribery, books and records, and internal controls provisions.

Settlement: The charges were resolved via a deferred prosecution agreement in which the company agreed to pay approximately $3.4 million (disgorgement and interest of $3,032,875 and a penalty of $375,000).

Disclosure: Voluntary Disclosure

Individuals Charged: Yes (see below).

Related DOJ Enforcement Action: No.

SEC Enforcement (Individual)

The SEC brought two FCPA enforcement actions against individuals in 2015. The enforcement actions are summarized below.

Vicente Garcia (August 12th)

See here for the prior post

Charges: None. Administrative cease and desist order finding violations of the FCPA’s anti-bribery provisions and internal controls provisions.

Settlement: Garcia consented to the entry of the cease-and-desist order and agreed to pay disgorgement of $85,965, which is the total amount of kickbacks he received, plus prejudgment interest of $6,430 for a total of $92,395.

Employer Charged: Garcia was the former head of Latin America sales for SAP, but at present the company has not been charged

Related DOJ Enforcement Action: Yes

Walid Hatoum (January 22nd)

See here for the prior post

Charges: None. Administrative cease and desist order finding violations of the FCPA’s anti-bribery, internal controls, and books and records provisions.

Settlement: Hatoum consented to the entry of the cease-and-desist order and agreed to pay a $50,000 civil penalty.

Employer Charged: Yes, Hatoum was a former President of PBSJ lnt’l and PBSJ also resolved an FCPA enforcement action on the same day.

Related DOJ Enforcement Action: No.

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