Be Afraid, Be Very Afraid. The U.S. Is Raising the Stakes in FCPA Enforcement

Top 10 FCPA Settlements

The Securities and Exchange Commission and the Justice Department Oct. 24 sanctioned Brazilian aerospace conglomerate Embraer SA with a $205 million penalty over a U.S. subsidiary’s bribing of government officials in the Dominican Republic and other countries.

Less than a month earlier, the SEC and the DOJ fined New York-based hedge fund manager Och-Ziff Capital Management Group LLC $412 million over a bribery scheme involving officials in the Democratic Republic of Congo and Libya.

Embraer and Och-Ziff’s penalties are among the highest levied under the Foreign Corrupt Practices Act. According to Bloomberg Law statistics, Och-Ziff’s sanction was the second-highest imposed on a company under the foreign bribery act since 2013.

Another company that made the list—Russian mobile-phone operator VimpelCom Ltd.—reached a $400 million settlement with U.S. authorities in February to resolve allegations that it bribed officials in Uzbekistan.

The highest fine on that list—Alstom SA’s $772 million for a worldwide bribery scheme—was imposed in November. The all-time highest fine under the statute, of course, is that levied against Siemens AG—$800 million—in 2008.

Meanwhile, Wal-Mart Stores Inc. reportedly is trying to negotiate down a $600 million-plus fine to resolve probes by the U.S. law enforcement agencies into whether the megastore bribed officials in Mexico, India and China.

FCPA shortfalls mean real money, especially if you factor in the cost of internal investigations and remediation measures taken by some companies. Wal-Mart, for example, said it has spent $791 million on legal fees and an internal investigation into the alleged payments and to revamp its global compliance procedures.

While FCPA sanctions are ratcheting up, the DOJ also is experimenting with a one-year pilot program under which it won’t award cooperation credit unless companies turn in culpable executives.

All this means that the SEC and the DOJ mean real business when they’re enforcing the FCPA. Companies and executives that don’t pay attention may find themselves out of business.