Overview
2014 was a mixed year for enforcement of the US Foreign Corrupt Practices Act (FCPA). Although the 26 individual and corporate enforcement actions brought in 2014 by the US Department of Justice (DoJ) and the Securities and Exchange Commission (SEC) fell well below the authorities’ five-year enforcement average of 41 cases per year, total corporate penalties, disgorgement, and pre-judgment interest totaled $1.56 billion, the second highest in history. The penalties were bolstered by a $772 million settlement by the French company Alstom, the largest criminal fine ever imposed under the FCPA, and the resolution of several long-running cases.
Numbers aside, FCPA enforcement actions in 2014 demonstrated a continued commitment to vigorous enforcement, and evidenced a number of important legal and policy developments as well as a continuation of previous enforcement themes. Several long-standing investigations, including of Alstom and of beauty products company Avon, were concluded in December 2014, ending the year with a bang. The DoJ and SEC continued to tout the benefits of voluntary disclosure and cooperation, and companies slow to do so (Alstom and Marubeni, the Japanese trading company) failed to receive a discount off the US Sentencing Guidelines range, a benefit afforded to most other companies. The US Court of Appeals for the Eleventh Circuit issued an opinion on the FCPA’s definition of “instrumentality,” which largely affirmed the enforcement authorities’ interpretation of the term and which the Supreme Court declined to review. The DoJ and SEC were hampered by some apparent missteps, however, including the SEC’s resolution of charges against two Noble Corporation executives, Jackson and Ruehlen, on the eve of trial without any monetary sanction, leading many to conclude that the SEC’s case had fatal flaws. Even though the DoJ and SEC at times struggle when put to their burden at trial, most corporate and individual defendants continue to settle charges without trial, a trend that continued in 2014.
The collateral effects of robust FCPA enforcement also continued to affect companies and individuals significantly in 2014. Numerous new shareholder derivative actions and other suits were filed, compounding the risk picture for companies when conducting internal investigations or cooperating with US enforcement authorities. The SEC’s Dodd-Frank whistleblower program, in its fourth year of existence, continued to receive record numbers of whistleblower tips and produced a record whistleblower bounty of $30 million.
The trend of global anti-corruption law enforcement continued to gain momentum in 2014. China announced its first ever corruption settlement with a multinational company, GlaxoSmithKline, for almost half a billion dollars. UK enforcement authorities won a conviction in the first-ever trial under the UK Bribery Act, though faced difficulties in other bribery prosecutions. Canada imposed its first term of imprisonment for a violation of Canada’s revised and strengthened transnational bribery law. Germany concluded several anti-bribery investigations with monetary settlements in the tens of millions of dollars. The EU revised its standards for debarment from public contracting based on bribery and related offenses. Enforcement activity by the World Bank and other multilateral lending institutions remained strong. And an OECD report covering trends in bribery enforcement actions since 1999 counts 390 ongoing bribery cases in twenty-four member countries. While the enforcement picture worldwide is far from uniform, all of this suggests that investigative and enforcement efforts will remain strong in 2015.
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