Foreign Corrupt Practices Act Prosecutions
Overview
The FCPA, enacted in 1977, prohibits U.S. persons and businesses (and certain foreign issuers of securities) from bribing foreign officials to obtain or retain business.
It has two main provisions:
Anti-Bribery Provision — prohibits bribery of foreign officials.
Accounting Provisions — requires accurate record-keeping and internal controls for publicly traded companies.
Enforcement is primarily by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).
Penalties include criminal fines, civil penalties, and prison sentences for individuals.
Key Case Law Examples
Case 1: United States v. Siemens AG (2008)
Facts: Siemens, a German multinational, engaged in systematic bribery of foreign officials worldwide to win contracts.
Charges: Violated FCPA’s anti-bribery and accounting provisions.
Outcome: Siemens pleaded guilty and agreed to pay over $800 million in combined penalties.
Significance: One of the largest FCPA settlements ever; set a precedent on corporate cooperation and the need for internal compliance programs.
Case 2: United States v. KBR, Inc. (2013)
Facts: KBR and its parent company Halliburton were charged with bribing Nigerian officials to secure contracts for construction projects.
Charges: Violated anti-bribery provisions of the FCPA.
Outcome: KBR paid a $402 million penalty; several executives were also charged.
Significance: Demonstrated aggressive prosecution of subcontractors and foreign subsidiaries involved in bribery schemes.
Case 3: United States v. Panalpina Welttransport GmbH (2013)
Facts: Panalpina, a Swiss logistics company, paid bribes to customs officials in several countries to expedite shipments.
Charges: FCPA anti-bribery violations.
Outcome: Panalpina agreed to pay $49.6 million in penalties.
Significance: Showed that logistics and shipping industries are not immune; also highlighted risks of bribery in customs processes.
Case 4: SEC v. Teva Pharmaceuticals (2016)
Facts: Teva paid bribes to foreign officials to influence drug approvals and market entry.
Charges: Violations of FCPA anti-bribery and books-and-records provisions.
Outcome: Teva agreed to pay $519 million in combined penalties (SEC and DOJ).
Significance: Among the largest settlements involving the pharmaceutical industry; underlined enforcement focus on healthcare.
Case 5: United States v. Odebrecht S.A. (2016)
Facts: Odebrecht, a Brazilian construction company, was involved in a vast bribery scheme across Latin America.
Charges: Violated FCPA through payments to foreign officials to secure contracts.
Outcome: Paid $2.6 billion in combined penalties—the largest FCPA penalty to date.
Significance: Set record for largest FCPA fine; underscored international cooperation in fighting corruption.
Case 6: United States v. Alstom S.A. (2014)
Facts: Alstom, a French power and transport company, paid bribes to foreign officials to win energy contracts.
Charges: FCPA violations.
Outcome: Paid over $772 million in fines; company implemented extensive compliance reforms.
Significance: Illustrated the importance of corporate compliance programs post-settlement.
Case 7: United States v. BAE Systems (2010)
Facts: BAE Systems paid millions in bribes to foreign officials to secure defense contracts.
Charges: Anti-bribery and accounting provisions of the FCPA.
Outcome: Paid $400 million in penalties; negotiated deferred prosecution agreement.
Significance: Showed how FCPA enforcement applies to defense contractors and the impact of DPAs.
Case 8: United States v. Avon Products (2014)
Facts: Avon bribed foreign officials to obtain licenses and permits in China and other countries.
Charges: FCPA violations under anti-bribery and books-and-records provisions.
Outcome: Paid $135 million in combined penalties.
Significance: Highlighted risk for consumer products companies operating internationally.
Important Legal Themes from Cases
Corporate Liability: Companies are held responsible for employees, agents, and subsidiaries acting corruptly.
Individual Accountability: Executives and employees are increasingly prosecuted alongside corporations.
Global Reach: The FCPA applies not only to U.S. companies but also to foreign firms issuing securities in the U.S.
Deferred Prosecution Agreements (DPAs): Common enforcement tool allowing companies to avoid indictment by agreeing to penalties and reforms.
Importance of Compliance: Courts consider the strength and effectiveness of corporate compliance programs when determining penalties.
Summary
The FCPA is aggressively enforced to deter bribery of foreign officials.
Settlements often involve hundreds of millions or billions of dollars.
Enforcement targets diverse industries: construction, pharmaceuticals, energy, defense, logistics, and consumer products.
Effective compliance and self-reporting can mitigate penalties.
These cases highlight the seriousness with which U.S. authorities prosecute foreign bribery to maintain fair international business practices.
RELATED Blog
0 comments