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Companies That Have Resolved FCPA Enforcement Actions Or Are Currently Under FCPA Scrutiny Are Helping To Change The World

In the minds of some, companies that have resolved Foreign Corrupt Practices Act enforcement actions or are currently under FCPA scrutiny are bad or unethical companies.

It is a tempting position to take. After all, the FCPA is about bribery and corruption.

However, it is a wrong position to take in many (but certainly not all) instances.

Certain members of the FCPA and anti-corruption space need to realize that many (but certainly not all) FCPA enforcement actions and/or instances of FCPA scrutiny are based on the conduct of just a few individuals in a business organization that employs thousands or tens of thousands of individuals and a business organization otherwise making good faith efforts to comply with the FCPA.

Previous posts here [1], here [2] and here [3] highlighted how companies that have resolved FCPA enforcement actions or were currently under FCPA scrutiny have always been well-represented on Ethisphere’s “World’s Most Ethical Companies” list. This post [4] highlights how such companies have been well-represented on Fortune’s “Most Admired Companies” list.

This post highlights how such companies are well-represented on Fortune’s recent companies that are “Changing the World [5]” list.

In the words [6] of some FCPA commentators, GlaxoSmithKline (GSK) is the “world’s current poster child[] for bribery and corruption.” Yet GSK secured the top spot on Fortune’s “Changing the World” list. As stated by Forbes [7]:

“[GSK has an] unmatched record for balancing scientific progress, social impact and the profit motive.

GSK has made a calculated bet on intellectual property leniency in poor nations, releasing drugs from patent protection and thus lowering their prices. That may depress revenue, but GSK says it doesn’t lose money in any market where it operates. And over time the approach builds goodwill and a strong market presence around the globe.”

General Electric has resolved an FCPA enforcement action not once, but twice, and recently acquired Alstom (a company that resolved a major FCPA enforcement action in 2014).  Yet, as stated by Forbes [8], GE is “responsible for about one-third of the world’s electricity capacity, making its commitment to clean energy a critical step for the future.”

United Technologies is currently under FCPA scrutiny and stated in its most recent quarterly filing:

“As previously disclosed, in December 2013 and January 2014, UTC made voluntary disclosures to the United States Department of Justice (DOJ), the Securities and Exchange Commission (SEC) Division of Enforcement and the United Kingdom’s Serious Fraud Office to report the status of its internal investigation regarding a non-employee sales representative retained by United Technologies International Operations, Inc. (UTIO) and IAE for the sale of Pratt & Whitney and IAE engines and aftermarket services, respectively, in China.  On April 7, 2014, the SEC notified UTC that it was conducting a formal investigation and issued a subpoena to UTC.  UTC continues to cooperate fully with the investigations and has responded to requests for documents and information.  The DOJ and SEC also continue to request information, and the SEC issued a second subpoena on March 9, 2015 seeking documents related to internal allegations of alleged violations of anti-bribery laws from UTC’s aerospace and commercial businesses, including but not limited to Otis businesses in China.”

Yet, as stated by Forbes [9]:

United Technologies, through its Pratt & Whitney division, this year introduced a new commercial jet engine that provides relief [from climate change] on multiple fronts. Compared to the company’s own traditional engine, it cuts fuel burn and carbon dioxide emissions by 16%, slashes the release of particulates in half, and dramatically muffles engine roar. For each plane, that means 3,600 fewer metric tons of carbon dioxide generated annually, $1 million in annual savings on fuel, and 500,000 fewer airport neighbors who will hear each takeoff.”

Wal-Mart has been under FCPA scrutiny for approximately five years and is arguably the most high-profile instance of FCPA scrutiny in history providing fodder for journalists and other commentators with agendas. Yet, as stated by Forbes: [10]

“[Earlier this year], the world’s largest retailer gave more than 1.1 million hourly “associates” a raise as part of its $2.7 billion campaign, unveiled in 2015, to invest in its workforce. That same month, it launched “Pathways,” a program that will enroll 500,000 employees in its first year in a curriculum designed to teach job skills that could help them climb the income ladder.”

The Siemens FCPA enforcement action remains the largest overall settlement amount of all-time ($800 million). The conduct at issue (unlike most FCPA enforcement actions) was engaged in by high-level executives (since terminated), but the company reformed itself and in the words of the DOJ ” “set a high standard for multi-national companies to follow.” Regarding the Siemens of today, Forbes states [11]:

“Energy use lies at the heart of Siemens’ business: the industrial giant’s broadly defined “environmental portfolio”—ranging from “smart grid” systems to Amtrak locomotives to wind and gas turbines—generates 43% of its $87 billion in annual revenues. So CEO Joe Kaeser has spotlighted energy efficiency as Siemens’ stock-in-trade, with an aggressive pledge, made just last year, to cut its own carbon emissions in half by 2020—and become “carbon-neutral” a decade later.”

Johnson & Johnson resolved an FCPA enforcement action in which the SEC stated: “J&J chose profit margins over compliance with the law” and “bribes to public doctors can have a detrimental effect on the public health care systems that potentially pay more for products procured through greed and corruption.” Yet, Forbes stated the following [12] regarding Sirturo, a drug discovered by the company in 2004 and given lightening fast approval by the FDA in December 2012.”

“[It is] the first-ever medicine approved for MDR-TB—and the first TB drug in four decades—J&J is now working with governments, physicians, and NGOs to spread the precious drug to those who need it. It’s not a blockbuster, but Sirturo is saving lives: the drug, which was added to the World Health Organization’s Essential Medicines List in 2015, has been registered in over 40 countries and used to treat more than 10,000 patients.”

Rounding out the list of companies that have resolved FCPA enforcement actions or are currently under FCPA scrutiny on companies “Changing the World” list is IBM – another FCPA repeat offender. As stated by Forbes [13], “in recent years, Big Blue has ramped up its education efforts, not only working with an increasing number of high schools and universities to set up technical curriculum but also developing more and more software tools for educators.”

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The methodology for the “Changing the World” list is described as follows.

methodology