The Morning Risk Report: C-Suite on Hot Seat Over Bribery, Study Says
Senior executives are in the cross-hairs as the U.S. continues to crack down on individuals in corporate bribery cases, according to research published this week by a law firm.
More than half of the people charged with violating the nation’s foreign-bribery law in the past 13 years worked near the top of the corporate tree, Arent Fox LLP found. The Justice Department charged 20 individuals with violations of the Foreign Corrupt Practices Act in 2017, the second-highest total since the law was passed in 1977, according to the report.
Thirty-three people were charged in 2010, Arent Fox said, but that total includes 22 individuals, charged in a Federal Bureau of Investigation undercover operation, whose cases were later dismissed by a court.
“Our study shows the federal government is continuing to intensify its FCPA focus on individuals–not just through policy memoranda and press releases but through actual investigations and enforcement actions,” said M. Scott Peeler, co-head of Arent Fox’s government enforcement and white-collar group.
The research tracked all individuals charged with violating the FCPA by either the Justice Department or the Securities and Exchange Commission from the start of 2005 through the end of 2017. It found that 53% of the 180 people charged worked as chief executive officer, president, vice-president, managing director or director in their corporation.
From the start of 2005 through 2010, five CEOs faced civil or criminal charges, amounting to 6% of the 82 people charged. Thirteen were charged from 2011 through 2017, 13% of the 98 individuals the Justice Department or SEC went after, data included in the report show..
The figures exclude the 22 enforcement actions related to the 2010 FBI probe. A court permanently dismissed those actions in 2012.
“Enforcement agencies have encouraged a risk-based approach to compliance for years,” said Mr. Peeler. “Well, the risk to individuals is real, and companies should act accordingly.”
People charged in cases where the total bribes paid were less than $100,000 accounted for 6% of the number of individuals targeted, while matters with a total payment of more than $100 million comprised 5%. Cases involving total bribes of between $1 million and $10 million accounted for 45%.
Even the smallest bribery cases are likely to lead to criminal prosecutions, according to the report. Only one individual faced civil charges in a matter involving total bribes of less than $100,000; nine people were prosecuted criminally.
“It can be low-level bribes and you can still be prosecuted criminally,” said Mr. Peeler. “The trip point is actually lower than you might think.”
EXCLUSIVE ON RISK AND COMPLIANCE JOURNAL
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