This FCPA Blog asks “Why isn’t there more FCPA enforcement against Asian companies?”
Like many FCPA Blog posts, it contains inaccurate information and fails to address a salient issue.
The FCPA Blog asserts:
“For the record, there have been 13 FCPA corporate enforcement actions involving companies headquartered in Asia: One from China, one from Indonesia, seven from Japan, two from Singapore, and two from South Korea.”
However, there have been 19 FCPA corporate enforcement actions involving companies headquartered in Asia.
The enforcement actions fall into two general categories: (1) enforcement actions involving a parent company headquartered in Asia; and (2) enforcement actions involving a non-Asian parent company in which a subsidiary headquartered in Asia was a party to the resolution.
Enforcement Actions Involving a Parent Company Headquartered in Asia (9)
- KT Corp (South Korea)
- Samsung Heavy Industries (South Korea)
- Keppel Offshore & Marine (Singapore)
- Panasonic (Japan)
- Hitachi (Japan)
- Bridgestone (Japan)
- JGC Corp. (Japan)
- Marubeni Corp x 2 (Japan)
Enforcement Actions Involving a Non-Asian Parent Company in Which a Subsidiary Headquartered in Asia Was a Party to the Resolution (10)
- Avon Products (China) Co. Ltd. (China)
- DaimlerChrysler China Ltd. (China)
- DPC (Tianjin) Ltd. (China)
- Goldman (Malaysia) Sdn Bhd (Malaysia)
- Siemens Bangladesh Limited (Bangladesh)
- Alliance One Tobacco OSH, LLC (Kyrgyzstan)
- Kolorit Dizayn Ink Limited Liability Company (Uzbekistan)
- SSI International Far East Ltd (South Korea)
- Syncor Taiwan Inc. (Taiwan)
- KPMG Siddharta Siddharta & Harsono (Indonesia)
As to the FCPA Blog’s question of why isn’t there more FCPA enforcement against Asian companies, one obvious answer is that there needs to be jurisdiction.
Many FCPA enforcement actions against foreign companies are simply based on the company having shares listed on a U.S. exchange without any other meaningful U.S nexus. For instance, the KT Corp. and Hitachi enforcement actions fall into this category.
Relevant to this issue, there are not many Asian companies (relatively speaking) with shares listed on a U.S. exchange. The SEC’s Division of Corporate Finance used to do a good job of reporting this data, but its statistics have not been updated since 2015.
The SEC’s most recent report on the “Number of Foreign Companies Registered and Reporting with the U.S. Securities and Exchange Commission” shows the following. There is only one Asian country (Japan) in the Top 15 and outside of the Top 3 the numbers are rather small.
Also relevant to jurisdiction is that two enforcement actions (JGC and Marubeni) involved companies being involved in the TSKJ Joint Venture (along with U.S. companies among others) involved in the Bonney Island, Nigeria project from which there were numerous FCPA enforcement actions.
The FCPA Blog says that there has been one FCPA enforcement action against a company headquartered in China. The FCPA Blog is likely referring to 2013 enforcement action against Keyuan Petrochemicals (see here). However, this was a non-FCPA, FCPA enforcement action in which the SEC found that the company failed to “disclose to investors numerous related party transactions involving its CEO, controlling shareholders, and entities controlled by management or their family members.” Of note, the SEC doesn’t even include this enforcement action on its FCPA enforcement page. If the FCPA Blog wants to include this non-FCPA, FCPA enforcement action in its FCPA enforcement statistics, that is fine, but to be consistent it should then include in its statistics the more than 1,000 non-FCPA, FCPA enforcement actions brought by the SEC.
