Foreign Corrupt Practices Act charges rise
Despite the change in administration, 20 individuals were charged with violating the U.S. Foreign Corrupt Practices Act in 2017, the second most individual prosecutions in a year since 1977, says a study.
A total of 180 individuals, working for 81 different companies over the past 13 years, have been charged with FCPA violations, according to the study of government-initiated FCPA enforcement actions against individual defendants for the period Jan. 2, 2005, to Dec. 31, 2017, by Washington, D.C.-based Arent Fox L.L.P. More than half of all individuals charged since 2005 were the CEO, president, vice president or managing director/director of their organization.
The study found, however, that an individual was more likely to be charged during the past seven years than in the previous six. For instance, while five CEOs were charged 2007-2010 period, 13 were charged during the 2011-2017 period.
A 2016 memo by then-Deputy Attorney General Sally Quillian Yates stressed individual responsibility in corporate wrongdoing.
There has also been a shift as to whether the bribes were paid. Comparing the 2005-2010 and 2011-2017 periods reveals that only Mexico and China made both lists, according to the study C-Suite at Risk, a Study of Individual Liability Under the FCPA. Nigeria, the country with the most individuals charged over the past 13 years, does not appear among the top five for the more recent period.
“This data tells us that corporations doing business in Mexico and China would be well-served to put their compliance house in order, and that the overall diversity of the locations indicates an opportunistic rather than geographic approach” on the part of the U.S. Department of Justice and the Securities and Exchange Commission, said the report.
A total of 45% of individuals charged were involved in bribes schemes of between $1 million and $10 million, while 33% were charged in connection with bribe schemes of under $1 million. The study found however, a bias toward criminal charges toward in “lower-level” bribes, with individuals in cases involving bribes between $100,000-$499,000 more than twice as likely to be charged criminally than civilly, said the report.
In addition, the report said 13% of individuals were charged criminally “even when they only had a general suspicion that bribes could be occurring and were never specifically aware of or had any role in the bribery,” said the report. “Doing nothing — even when you only have a general suspicion of bribery — is risky,” it said.
“Their changes of being charged criminally more than doubled (to 29%) if they were told of at least one bribe but took no part in the misconduct themselves, and those charges increased by more than six times (to 70%), when they knew of the briber and took at least one step the government thought facilitated the bribes in some way,” the report said.
A total of 52% of individuals charged worked in five industries: oil/extraction, telecommunicators, energy, health care/medical devices and financial services industries, the report said.
In May, Deputy U.S. Attorney General Rod Rosenstein gave a speech in which he said federal agencies should coordinate and limit the imposition of multiple penalties for the same conduct, which experts said is unlikely to have a significant impact on directors and officers liability insurance rates.
6/25/2018 2:07:00 PM