At the halfway mark, it looked like 2013 was going to be a banner year for Foreign Corrupt Practices Act (FCPA) enforcement actions. At that point, the Department of Justice (DOJ) had already initiated more actions than it had in all of 2012. And there were still six months left to go. Since then, though, the agency has slowed its pace considerably.
As of this writing, the DOJ has announced eighteen enforcement actions for the year, an increase of seven from 2012. This is exactly in line with the agency’s ten-year enforcement average, but lower than its five-year average of twenty-five per year. The Securities and Exchange Commission (SEC) meanwhile initiated its fewest number of enforcement actions (seven) since 2006. This is a marked decline from both its five-year and ten-year averages, at eighteen and fourteen enforcement actions respectively.
But action frequency isn’t the only measure of enforcement rigor. Penalty amounts are another, and on that score 2013 has indeed been one for the books. The year saw the fourth biggest FCPA case ever by dollar value reach its conclusion, as Total S.A. paid $398 million in penalties and disgorgement for bribing an Iranian official to gain access to lucrative oil and gas fields. This was swiftly followed by the recent Weatherford International case, in which that company agreed to pay $152.6 million to settle FCPA offenses in the Middle East and Africa, among other charges. That was enough to make the Weatherford case the ninth biggest in history by dollar value, giving 2013 two of the top ten slots, second only to 2010 with five spots on the list in a year that also set records for the most DOJ and SEC enforcement actions.
In addition to large financial penalties, 2013 also saw a trend toward an increase in enforcement actions against individuals. Of the eighteen actions initiated by the DOJ in the year to date, twelve of them – two-thirds of the total – were focused on individual defendants who acted willfully, as opposed to entities alone. (Given its mission and role in FCPA enforcement, the SEC only pursued charges against corporations.) This individual-to-entity enforcement ratio is wildly skewed relative to years past, potentially signaling a partial shift in the agency’s deterrence focus from institutional to individual actors.
Finally, 2013 saw the SEC make use of its first non-prosecution agreement (NPA), a tool the DOJ uses regularly. The case involved the Ralph Lauren Corporation’s Argentina subsidiary bribing local customs officials, and ultimately ended with the iconic brand agreeing to pay $1.6 million in combined penalties to the DOJ and SEC. Here the agencies agreed to enter into dual NPAs, signaling the start of a promised harmonization of agency efforts for increased consistency and clarity. SEC officials characterized the NPA in this case as an example of the benefits that cooperative offenders can enjoy, as Ralph Lauren both disclosed the matter to the U.S. government and took extensive remedial measures of its own volition.
In summation, 2013 was a year of carrots and sticks, as aggressive enforcement against individual bad actors and big financial penalties against institutional offenders were at least partially balanced by a new benefit (SEC NPAs) made available to those willing to acknowledge mistakes and play ball.