FCPA enforcement plummets in 2013

SEC reports that Foreign Corrupt Practices Act enforcement actions fell by two-thirds

The Foreign Corrupt Practices Act (FCPA) was passed in 1977 in order to address issues of corruption and bribery in overseas dealings by US companies. In recent years, enforcement of the FCPA by the Securities and Exchange Commission (SEC) has spiked, as public and governmental awareness of corruption has led to more action on this front.

But in the SEC’s latest report, it revealed that FCPA enforcement actions have dropped in the past year, even while monetary sanctions continue to rise. A report for fiscal year 2013 (which ended on Sept. 30) noted that the number of enforcement actions fell by two-thirds. There were only five such actions in 2013, as compared to 15 actions in 2012 and 20 in 2011.

Despite the lower number of actions, the total of monetary sanctions reached a record high, with $3.4 billion worth of sanctions ordered by the SEC. 

All five of the enforcement actions in 2013 involved settlements. The smallest was a $4.5 million settlement with Koninklijike Philips Electronics. Other enforcement actions included a $398 million settlement with French oil and gas company Total S.A., which had previously faced a joint SEC and Department of Justice probe. 

There could indeed be a link between the total amount of money involved in the settlements and the decrease in enforcement actions. The whole point of the FCPA is to discourage and, ideally eliminate corruption. The monetary sanctions are meant as warnings to other companies to let them know what penalties they will face if they are caught engaging in bribery in foreign nations. Therefore, companies may be taking this to heart and cleaning up their acts.

 

For more FCPA news, check out the following:

Demystifying the U.S. Foreign Corrupt Practices Act (Part II)

Financial firms face FCPA fines for foreign fraternization

Weatherford International hit with FCPA fine

Solving the puzzle of the FCPA in China

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