This article titled “A Common Language to Remedy Distorted FCPA Enforcement Statistics” exposes in detailed fashion various distorted FCPA enforcement statistics. As highlighted in the article, the absence of a FCPA common language has numerous negative effects including infecting nearly all FCPA enforcement statistics.
The most reliable and accurate way to keep FCPA enforcement statistics is by using the “core” approach which focuses on unique instances of FCPA scrutiny. Using this approach, there were 14 corporate FCPA enforcement actions in 2019 that resulted in approximately $2.65 billion in net FCPA settlement amounts – the largest in FCPA history. (See here).
The core approach does not distort FCPA enforcement statistics by double counting parallel DOJ and SEC actions involving the same core conduct announced on the same day nor does the core approach distort FCPA enforcement statistics by separately counting the sometimes unique ways the DOJ slices and dices corporate conduct between parent companies and subsidiaries. As highlighted in the above article, the core approach to tracking FCPA enforcement has been endorsed by the DOJ and is a commonly accepted method used to track enforcement in other areas of law.
With each passing year there seems to be a general consensus around the core approach. For instance, in several year end reviews several FCPA Inc. participants also counted 14 core corporate enforcement actions and/or $2.65 in net FCPA settlement amounts.
“Fourteen companies faced charges from the DOJ, the SEC, or both in 2019.”
“The aggregate dollar value of monetary sanctions imposed by the DOJ and the SEC for FCPA-related offenses in 2019 was approximately $2.9 billion—$2.65 billion of which was payable to the US Treasury.”
From Gibson Dunn’s 2019 Year-End FCPA Update:
“2019 was, by many measures, the most significant year ever in Foreign Corrupt Practices Act (“FCPA”) enforcement. More than $2.6 billion in corporate fines sets a new high-water mark, driven by the two largest corporate resolutions in the statute’s history.”
Whereas some sources claim that Petrobras is among the largest FCPA settlement amount of all-time (as highlighted in this prior post it is not as the net FCPA settlement amount was approximately $170 million – not even in the Top Ten), it is interesting that Gibson Dunn (the firm that represented Petrobras) had this to say regarding its top ten list.
“Our figures do not include the 2018 FCPA case against Petróleo Brasileiro S.A. – Petrobras (“Petrobras”), even though some sources have reported the resolution as high as $1.78 billion, because the first-of-its kind resolution negotiated by Gibson Dunn offset the vast majority of payments against a shareholders’ class action lawsuit and foreign regulatory proceeding, leaving only $170.6 million fairly attributable to the DOJ / SEC FCPA resolution.”
“It was a record year for corporate FCPA settlements. In 2019, the U.S. Department of Justice (“DOJ”) and the U.S. Securities and Exchange Commission (“SEC”) resolved 14 corporate FCPA cases and collected—after accounting for various credits or deductions for related foreign enforcement actions—a record $2.65 billion in fines, penalties, disgorgement, and interest.”
From Greenberg Traurig:
Yet as highlighted below, once again various FCPA Inc. participants published 2019 FCPA enforcement statistics that were all over the map.
“We recognize that other commentators may arrive at slightly different numbers depending on their methodology. In determining the number of actions for the year, we have counted enforcement actions brought by the SEC and DOJ separately (e.g., parallel settlements by the SEC and DOJ with the same entity count as two actions). Actions brought by a single agency against related corporate entities (e.g., a parent and subsidiary) for the same core conduct, however, count as only one action. Declinations and case closures are not considered “actions” for purposes of this metric.”
“In 2019, the U.S. Department of Justice (“DOJ” or the “Department”) recovered approximately $1.6 billion through eight resolved corporate FCPA cases – seven through criminal resolutions, and one through declination with disgorgement. The U.S. Securities and Exchange Commission (the “SEC”) collected over $1 billion more in FCPA actions against 13 corporate entities. Together, the approximately $2.6 billion in 2019 FCPA recoveries is the highest on record for corporate FCPA enforcement.”
From the FCPA Blog:
“Last year 14 companies paid a record $2.9 billion to resolve FCPA cases.”
From Shearman & Sterling’s FCPA Digest:
“In 2019, the DOJ and SEC resolved twenty-five corporate enforcement actions.”
“Total corporate penalties this year nearly equaled the previous year—totaling $2.904 billion in 2019.”
“With increasingly complex settlements, often involving a mix of inter-agency credits and global settlements, there seems to be a lot of debate and inconsistency in how to calculate the “largest enforcement action of all time.” We take a “money out the door approach”—netting the payments for credits between the DOJ and SEC but counting payments made to foreign authorities.”
That is fine if one wants to track payments made to foreign authorities, but then track this as a “global settlement amount” and not an FCPA settlement amount for the obvious reason that foreign authorities don’t enforce the FCPA.
There are some things in the FCPA space that no doubt are challenging or complex.
However, the basic questions of what is an FCPA enforcement action and how much money the U.S. government actually collects in FCPA enforcement actions should not be.