Enforcement trends by the numbers
- 10 companies settled for $1.565 billion in fines.
- 11 individuals indicted for FCPA offenses last year.
- Guilty Pleas
- 1 BizJet, 2 Alstom, 2 Direct Access Partners
- 11 publicly known corporate declinations.
Organization Enforcement Actions
- $384 million fine, including $175 million in profit disgorgement. This represents the largest fine of all time and the top disgorgement amount.
- One was found guilty in the UK (the bribe receiver).
- $108 million total fine for multi-country bribery schemes due to a complete breakdown in internal controls.
- They cooperated so well and fully with the DOJ, that their fine represented less than half of what the minimum fine was for their bribery actions.
- $135 million in total fines, with $67 million to DOJ, $52.85 in profit disgorgement from the SEC, and $14.5 million in pre-judgment.
- Represents the highest pre-settlement costs to date, and will total as high as much as $500 million.
- The attorneys’ fees were so high that the DOJ pulled the attorneys and forced them to explain their fees.
- Ongoing more than 6 years from the initial whistleblower report.
- $8 million in bribes resulting in Avon paying as much as $750 million in total expense.
- $772 million fine, which is the highest FCPA criminal fine ever. There was no SEC prosecution.
- The entire company refused to cooperate with the investigation until 3 US citizens were indicted personally for their roles in the bribery.
- Four executives were indicted and plead guilty.
Individual Enforcement Actions
- Joseph Sigelman, the former co-CEO, was charged with substantive FCPA violations. He is awaiting trial.
- Sigelman tried to hide behind attorney-client privilege. It didn’t work for several reasons, mostly because there wasn’t any legal advice given during their conversations.
- Direct Access Partners
- A former managing director charged in federal count in New York for bribery involving Venezuela’s state bank.
- Venezuela cooperated, helped investigate, and extradited individuals to the US for this case.
- First court to hold that state-owned enterprises can be instrumentalies under the FCPA
- The Court developed a 2-prong test:
- Control Test
- The foreign government’s formal designation of the entity;
- Whether the government has an interest in the entity;
- The government’s ability to hire and fire the entity’s principals;
- The extent to which the entity’s profits, if any, go directly into the government;
- The extent to which the government funds the entity if it fails to break even; and
- The length of time these indicia have existed.
- Function Test
- Does the entity have a monopoly over the function it exists to carry out;
- Does the foreign government subsidize the costs associated with the entity providing the services;
- Does the entity provide services to the public at large in the foreign Country; and
- Does the foreign government generally perceive the entity to be performing a governmental function?
- Control Test
GlaxoSmithKline & China
- Reilly and 3 others found guilty (in a one-day secret trial) and were fined $491 million. Had sentences suspended, but are not allowed to leave China.
- 46 other employees caught up in the prosecution.
- GSK is currently investigating corruption in Poland, Syria and other countries.
- The UK & US have started a formal investigations.
SEC & Internal Controls
- Smith & Wesson
- Declination from the DOJ – no evidence that they committed corruption.
- They did not have any internal controls when conducting oversees business.
- $2.1 million fine from the SEC.
- Layne Christensen
- Declination from the DOJ.
- SEC issued a Cease and Desist Order – $5.1 million for mischaracterization of payments.
- Their internal controls failed by not having a second set of eyes.
Tips from Tom Fox:
Follow the money. Bribery money has to come from somewhere, look where the money is requested and where (if you can find it) it appears on the books.
When a whistleblower complaint is made, take it seriously.
Perception is reality.
To see Tom’s entire presentation click here http://bit.ly/1B5nhEB