The article “FCPA Ripples” highlights the many financial ripple effects of Foreign Corrupt Practices scrutiny and enforcement beyond an actual enforcement action by the DOJ/SEC.
Among the financial ripple effects are the “three buckets” of FCPA financial exposure: (1) pre-enforcement action professional fees and expenses; (2) settlement amount; and (3) post-enforcement action professional fees and expenses.
Numerous examples (based on company disclosures) demonstrated that pre-enforcement action professional fees and expenses are typically the largest financial hit to companies as those expenses are often three times (and sometimes higher) the settlement amount.
Even after an FCPA enforcement action, most companies still incur professional fees and expenses as most corporate enforcement actions require – as a condition of settlement – reporting requirements to the government as well as other compliance obligations generally for a 1-3 year period. Such post-enforcement action professional fees and expenses are typically the “smallest” of “three buckets,” yet can still result in a company spending millions of additional dollars.
Case is point is Stericycle.
As highlighted in this prior post, in mid-2022, the Illinois based medical waste disposal company resolved a net $59 million parallel DOJ and SEC enforcement action concerning conduct in Brazil, Mexico, and Argentina.
As a condition of settlement, the DOJ required Stericycle to engage an independent compliance monitor for a two year period (a relatively rare recent example of a U.S. company being required to engage a monitor in connection with an FCPA enforcement action).
Not all companies that are required to engage a monitor disclose monitor expenses (or more broadly post-enforcement action professional fees and expenses), but Stericycle has disclosed such figures.
This recent earnings release states:
“Litigation, Settlements, and Regulatory Compliance: In 2024 and 2023, SG&A [Selling, General, and Administrative expenses] includes $9.3 million (which includes FCPA monitor related fees of $0.7 million) and $14.2 million (which includes FCPA monitor related fees of $3.4 million), respectively, of primarily consulting and professional fees and estimated contingent liability provisions related to certain litigation, settlement and regulatory compliance matters.”
As highlighted in this post, Stericycle disclosed its FCPA scrutiny in mid-2017.
Thus, seven years later Stericyle is still paying millions of dollars per year in connection with FCPA issues.
