Foreign Corrupt Practices Act enforcement actions brought by the Department of Justice and Securities and Exchange Commission in 2014 held fairly steady in comparison to the previous year’s enforcement numbers, while the average price tag in penalty amounts continued to skyrocket.
According to a recap of FCPA enforcement activity by Gibson, Dunn & Crutcher, 2014 saw a combined 26 enforcement actions, with 17 brought by the Justice Department, and nine brought by the SEC. In comparison, 2013 saw 27 enforcement actions, with 19 brought by the Justice Department, and eight brought by the SEC.
Even though the number of enforcement actions remained steady, the average total value of monetary resolutions in an FCPA enforcement action increased significantly. In 2014, the average total value of monetary resolutions in FCPA enforcement actions reached $156.6 million, in comparison to an average of $80 million in 2013 and $34 million in 2012, according to Gibson Dunn’s analysis.
2014 saw two blockbuster FCPA enforcement actions. In December, French power and transportation giant Alstom entered into a guilty plea and agreed to a $772 million criminal penalty—the largest ever obtained by the Justice Department in an FCPA case. According to the Justice Department, various Alstom executives paid bribes to government officials around the world to win power, grid, and transportation projects, and then falsified books and records to cover it up.
Countries on Alstom’s hit list include in Indonesia, Egypt, Saudi Arabia, the Bahamas, and Taiwan. In total, Alstom paid more than $75 million from at least 2000 to 2011 to secure $4 billion in projects, with a profit to the company of approximately $300 million. Alstom’s total settlement resolution with the Justice Department is second only to the $800 million settlement Siemens reached with the Justice Department and SEC in 2008.
In the second blockbuster case, also reached in December, cosmetics giant Avon agreed to pay a total of $135 million to the SEC, the Department of Justice, and the U.S. Attorney’s Office for the Southern District of New York to resolve charges that it failed to put controls in place to detect and prevent payments and gifts to Chinese government officials from employees and consultants at a subsidiary.
As Compliance Week has reported over the last year, the following companies resolved FCPA enforcement actions in 2014:
Alstom;
Avon;
Bruker;
Dallas Airmotive;
Bio-Rad;
Layne Christensen; and
Smith & Wesson.
Another new development in 2014: the SEC’s move toward the use of in-house administrative proceedings, as opposed to civil complaints filed in federal district court. In 2012, the SEC filed 11 civil complaints as opposed to one administrative proceeding. Those numbers are in stark contrast to 2014, when administrative proceedings outnumbered civil complaints eight-to-one.
Gibson Dunn’s report details several other developments in 2014 FCPA enforcement that highlights the myriad of risks facing companies doing business internationally. Specifically, the last year witnessed a series of judicial decisions that further define the FCPA's scope, and increasingly vigorous anti-corruption enforcement and legislative activities around the globe. Expect that momentum to continue in 2015.
Gibson report last year
http://www.complianceweek.com/blogs/enforcement-action/fcpa-enforcement-on-the-rise-once-again#.VLQnkcmE43g
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