Yesterday’s post highlighted the 30 corporate enforcement actions based, in whole or in part, on the enforcement theory that employees (such as physicians, nurses, mid-wives, lab personnel, etc.) of certain foreign health care systems are “foreign officials” under the FCPA.
It was noted in the prior post that this enforcement theory has never been subjected to judicial scrutiny and that a useful datapoint in examining the legitimacy and validity of this enforcement theory is analyzing the number of criminal charges filed against individuals based on this theory. That answer was zero, zilch, nada.
The same can be said about another dubious Foreign Corrupt Practices Act enforcement theory that has also become prominent in the modern era and that is providing an internship (even an unpaid internship) or other job opportunity to the family member of an alleged “foreign official” violates the FCPA.
Prior to to highlighting the first enforcement action based exclusively on this theory (the 2015 BNY Mellon enforcement action), it is important to note that up until this point several FCPA enforcement actions (dating back to at least 2007) included allegations of improper hiring of spouses or children of alleged “foreign officials” (see here for a prior post), but the allegations were not a main focus of the enforcement action.
When this enforcement theory became the subject of intense FCPA scrutiny for the financial industry (beginning in approximately 2013 – see here) there was a significant amount of critical commentary. For instance, in this Wall Street Journal editorial former SEC Commissioner Arthur Levitt called the FCPA scrutiny of the financial industry “scurrilous and hypocritical.” He wrote:
“If you walk the halls of any institution in the U.S.—Congress, federal courthouses, large corporations, the White House, American embassies and even the offices of the SEC—you are likely to run into friends and family members of powerful and wealthy people.”
There were hints that the financial industry was pushing back (see here), but alas the companies ended up rolling over.
Set forth below are five FCPA enforcement actions based on the dubious enforcement theory that providing an internship (even an unpaid internship) or other job opportunity to the family member of an alleged “foreign official” violates the FCPA.
If you are scoring at home, the last two days this website has profiled just two enforcement theories that have yielded 35 corporate enforcement actions and over $2 billion in settlement amounts.
Yet, neither of these enforcement theories have ever been subjected to judicial scrutiny and not one individual has ever been charged based on these dubious theories.
BNY Mellon Corp. (2015 SEC Enforcement Action – $14.8 million)
See here and here for prior posts.
Qualcomm (2016 SEC Enforcement Action – $7.5 million)
See here and here for prior posts.
JPMorgan (2016 DOJ and SEC Enforcement Action – $202.6 million)
See here, here, and here for prior posts.
Credit Suisse (2018 DOJ and SEC Enforcement Action – $77 million)
See here and here for prior posts.
Deutsche Bank (2019 SEC Enforcement Action – $16.2 Million)
See here and here for prior posts.
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