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A Focus On DOJ Individual FCPA Enforcement Actions

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This recent post focused on SEC individual FCPA actions in 2022 and historically.

Today’s post highlights various facts and figures regarding the DOJ’s prosecution of individuals for Foreign Corrupt Practices Act offenses in 2022 and historically.

The key word above is FCPA offenses.

Some in the FCPA space include enforcement actions containing non-FCPA charges (often money laundering charges against alleged “foreign officials” or with increasing frequency money laundering charges against alleged bribe payors – see here) related to an FCPA enforcement action as an individual FCPA enforcement action. While it is fine to track such enforcement actions, calling them FCPA enforcement actions is factually false. (In fact, as highlighted in this prior post, approximately 55% of enforcement actions in recent years on the DOJ’s FCPA website are not actual FCPA enforcement actions).

Compared to corporate FCPA enforcement actions, tracking individual FCPA enforcement actions can be difficult because the DOJ does not publicly announce every individual enforcement action and/or certain matters are filed under seal and announced at a later date (sometimes a different year).

As highlighted numerous times on FCPA Professor, the DOJ frequently talks about the importance of individual criminal prosecutions.

In 2022, Attorney General Merrick Garland stated:

“I have made it clear that the Department’s first priority in corporate criminal cases is to prosecute the individuals who commit and profit from corporate malfeasance. It is our first priority because corporations only act through individuals. It is our first priority because penalties imposed on individual wrongdoers are felt by those wrongdoers, rather than by shareholders or inanimate organizations. It is our first priority because – as everyone who has counseled individual corporate officers know – the prospect of personal liability has an uncanny ability to focus the mind. That prospect is the best deterrent to corporate crime. And deterrence – after all – is what we are after. But most important, the prosecution of individuals is our first priority because it is essential to Americans’ trust in the rule of law.”

In 2021, DOJ officials stated:

“Accountability starts with the individuals responsible for criminal conduct. Attorney General Garland has made clear it is unambiguously this department’s first priority in corporate criminal matters to prosecute the individuals who commit and profit from corporate malfeasance.”

In 2020, DOJ officials stated:

“Ensuring individual accountability for corporate wrongdoing has been a hallmark of our white-collar work in recent years …”.

“Why do we focus on individual accountability in addition to pursuing corporations?  Because we understand that corporations necessarily act through their officers and employees, and that to have a truly meaningful deterrent effect, our work must focus on not only entities, but also individuals where appropriate.”

In 2019, DOJ officials stated:

“While pursuit of criminal and civil remedies against corporations is important, we should always focus on the individuals responsible for misconduct. Cases against corporate entities allow us to recover fraudulent proceeds, reimburse victims, and deter future wrongdoing. But the deterrent impact on the individual people responsible for wrongdoing is sometimes attenuated in corporate prosecutions. The most effective deterrent to corporate criminal misconduct is identifying the people who commit crimes and sending them to prison.”

In 2018, DOJ officials stated: “focusing on individual wrongdoers is an important aspect of the Department’s FCPA program” and as follows:

“The Criminal Division’s commitment to corporate enforcement has been on full display with our emphasis on individual accountability.  A company only acts through its employees and agents.  It therefore makes sense to focus our investigative efforts on the culpable individuals – both to secure appropriate punishment for the bad actors, and to have the greatest impact on preventing and deterring corruption.”

In 2017, DOJ officials stated: “The DOJ is committed to holding  individuals accountable for criminal activity.” “Effective deterrence of corporate corruption requires prosecution of culpable individuals.  We should not just announce large corporate fines and celebrate penalizing shareholders.”

Previously, DOJ officials have stated that: “certainly…there has been an increased emphasis on, let’s get some individuals” and that it is “very important for [the DOJ] to hold accountable individuals who engage in criminal misconduct in white-collar (cases), as we do in every other kind of crime.”

Likewise, the DOJ’s FCPA Unit Chief stated that the DOJ is “very focused” on prosecuting individuals as well as companies and that “going after one or the other is not sufficient for deterrence purposes.”

Against this backdrop, what do the facts actually show?

Since 2000, the DOJ has charged 240 individuals with FCPA criminal offenses.  The breakdown is as follows.

  • 2000 – 0 individuals
  • 2001 – 8 individuals
  • 2002 – 4 individuals
  • 2003 – 4 individuals
  • 2004 – 2 individuals
  • 2005 – 3 individuals
  • 2006 – 6 individuals
  • 2007 – 7 individuals
  • 2008 – 14 individuals
  • 2009 – 18 individuals
  • 2010 – 33 individuals (including 22 in the Africa Sting case)
  • 2011 – 10 individuals
  • 2012 – 2 individuals
  • 2013 – 12 individuals
  • 2014 – 10 individuals
  • 2015 – 8 individuals
  • 2016 – 8 individuals
  • 2017 – 18 individuals
  • 2018 – 13 individuals
  • 2019 – 26 individuals
  • 2020 – 15 individuals
  • 2021 – 10 individuals
  • 2022 – 9 individuals

The following 9 individuals (in connection with 4 core actions) were charged with FCPA offenses that were filed and/or publicly announced in 2022.

  • As highlighted here, the DOJ announced criminal charges against Charles Hunter Hobson (a former executive of Corsa Coal) in connection with an alleged Egypt bribery scheme. The allegations concern the same core conduct as the 2021 enforcement action against another former Corsa Coal executive.
  • As highlighted here, the DOJ announced criminal charges against Esteban Eduardo Merlo Hidalgo, Christian Patricio Pintado Garcia, and Luis Lenin Maldonado Matute in connection with an alleged bribery scheme in Ecuador.
  • As highlighted here, the DOJ announced that brothers Enrique Pere Ycaza and Antonio Pere Ycaza pleaded guilty to FCPA and related charges in connection with the Ecuador conduct previously at issue in the Sargeant Marine and Vitol enforcement actions.
  • As highlighted here, the DOJ announced criminal charges against Cary Yan and Gina Zhou in connection with an alleged bribery scheme in the Marshall Islands.
  • As highlighted here, the DOJ announced the unsealing of criminal charges against Asante Berko alleging the same core conduct as the SEC’s previously resolved enforcement action.

An analysis of DOJ individual FCPA prosecutions over time reveals some interesting points.

Most of the individuals – 219 (or 91%) were charged since 2006.  Thus, on one level the DOJ is correct when it states that there has been an “increased emphasis” on individual prosecutions – at least as measured against the historical average given that between 1978 and 1999, the DOJ charged 38 individuals with FCPA criminal offenses.

Yet on another level, a more meaningful level given that there was much less overall enforcement of the FCPA between 1978 and 1999, the DOJ’s statements about its focus on individuals represents hollow rhetoric as demonstrated by the below figures.

Of the 219 individuals criminally charged with FCPA offenses by the DOJ since 2006:

  • 22 individuals were in the failed (and manufactured) Africa Sting case;
  • 16 individuals were in connection with PDVSA matters;
  • 9 individuals were in the Haiti Teleco case;
  • 8 individuals were in connection with the Control Components case;
  • 8 individuals were in connection with the Siemens case;
  • 7 individuals were in connection with the Sargeant Marine case;
  • 6 individuals were in connection with the Alstom case;
  • 5 individuals were associated with DF Group in the Indian mining licenses case;
  • 5 individuals were associated with Direct Access Partners;
  • 5 individuals were associated with Rolls Royce;
  • 4 individuals were in connection with the Lindsey Manufacturing case;
  • 4 individuals were  in connection with the LatinNode / Hondutel case;
  • 4 individuals were in connection with the Nexus Technologies case;
  • 4 individuals were in connection with the BizJet case; and
  • 4 individuals were associated with Hunt Pan Am Airlines.

In other words, approximately 42% of the individuals charged by the DOJ with FCPA criminal offenses since 2006 have been in just ten core actions and approximately 51% of the individuals charged by the DOJ since 2006 have been in just fifteen core actions. This has been previously highlighted numerous times on these pages as the clustering phenomenon of DOJ individual FCPA actions.

Considering that there has been 136 corporate DOJ FCPA enforcement actions since 2006, this is a rather remarkable statistic.  Of the 136 corporate DOJ FCPA enforcement actions, 104 (or 76%) have not at least yet resulted in any DOJ FCPA charges against company employees.

Compare this figure to FCPA enforcement prior to 2004.

As highlighted in this prior post, from 1977 to 2004 approximately 90% of DOJ criminal corporate FCPA enforcement actions resulted in related FCPA charges against company employees.

Why the change?

Read the article “Measuring the Impact of NPAs and DPAs on FCPA Enforcement” in which a hypothesis is tested and to see comprehensive charts detailing every DOJ corporate FCPA enforcement and whether the action also resulted in related charges against company employees.

In short, and as demonstrated by the statistics, DOJ FCPA individual enforcement actions are significantly skewed by a small handful of enforcement actions and the reality is that 76% of DOJ corporate enforcement actions since 2006 have not resulted in any DOJ FCPA charges against company employees.

Indeed, since the DOJ supposedly renewed its emphasis on individual accountability with the Yates Memo release in September 2015, there have been 55 DOJ corporate enforcement actions. At present, 42 of those actions (76%) have lacked any related FCPA charges against company employees. The only DOJ corporate FCPA enforcement actions since the Yates Memo to have resulted in related FCPA charges against company employees were Embraer, Keppel Offshore, SBM Offshore, Rolls-Royce, Transport Logistics Int’l, Cognizant Technologies, TechnipFMC, Herbalife, Sargeant Marine, Ericsson, Goldman, Vitol, and Glencore.

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