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Robust enforcement of anti-bribery laws by the Justice Department and Securities and Exchange Commission continues in 2018, according to a Bloomberg Law review of SEC and DOJ enforcement actions.
The review shows that under President Donald Trump, enforcement of the Foreign Corrupt Practices Act (FCPA), which bars companies and individuals from paying bribes to foreign officials to gain business, remains steady despite the president’s disparagement of the law in 2012. There was a jump in enforcement in 2016, and this year’s actions aren’t likely to hit that level, but they are on pace to match the average number of annual cases throughout most of the Obama administration.
The law is enforced by both the SEC and the DOJ, and sometimes the agencies file complaints at different times over the same conduct. For example, the DOJ this month wrapped up its massive anti-bribery investigation of Société Générale S.A. and Legg Mason Inc., while the SEC is still reviewing the possible accounting violations that stemmed from the bribes.
Trump said in 2012 that the FCPA is “a horrible law” that “puts us at a huge disadvantage.” Jay Clayton, Trump’s appointee to lead the SEC, made a similar critique of the FCPA in 2011. Clayton’s appointment fueled concerns that anti-bribery enforcement would wane during Trump’s tenure.
But that does not appear to be the case.
The DOJ has brought nine enforcement actions this year, and the SEC has brought four, putting 2018 “well on pace to be an above-average year,” Mike Koehler, an FCPA professor at Southern Illinois University Law school, told Bloomberg Law.
Data from the SEC, DOJ, and Bloomberg Law’s FCPA tracker shows that enforcement continues across multiple industries and results in millions of dollars in fines for government agencies. Activity levels and fine amounts in 2017 and for year-to-date 2018 are close to mirroring the last two years of the Obama administration, the data shows.
FCPA enforcement hovered in the low double digits in 2014 and 2015, with DOJ bringing 15 and 14 actions, respectively, and the SEC bringing eight and 11 actions in those years. Enforcement jumped in 2016, the last year of the Obama administration. There were 27 DOJ and 29 SEC enforcement actions, netting more than $2 billion in sanctions that year.
But 2016 was an outlier in the Obama administration. The DOJ brought an average of 21 cases per year from 2008 to 2015, and the SEC brought 13 cases per year.
For 2017, the first year of the Trump administration, the DOJ’s FCPA actions mirrored 2016 levels with 27 cases. SEC actions dropped to eight from 21 in 2016, but that was the same level as in 2014.
The FCPA case involving Paris-based financial services provider Société Générale marked one of the largest settlements ever in an FCPA case. SocGen agreed to pay more than $560 million to resolve DOJ claims of interest-rate manipulation and bribery of Libyan officials. The fines could rise with expected SEC claims.
The DOJ and SEC have netted more than $923 million in FCPA fines so far this year, putting 2018 on pace to exceed last year’s total settlement amount of $934 million.
FCPA enforcement cases in 2018 touch a multitude of industry sectors, similar to prior years. This year’s cases involve bribery schemes in finance, communications, nuclear transport, information technology, and mineral mining industries.
The DOJ and the SEC also often bring FCPA complaints against individuals who engaged in bribery schemes. Already this year, four FCPA cases include individuals. In 2017, 18 cases named individuals. Individuals were named in 14 cases in 2016.
The DOJ has resolved one case so far this year under its cooperation policy for companies that self-disclose bribery schemes and work with the government during an investigation. Business information provider Dun & Bradstreet Co. avoided DOJ charges for bribery violations because its officials cooperated with the government. The case still counts as a DOJ enforcement action, however.
The DOJ resolved two cases under the self-disclosure policy in 2017 and seven in 2016. The policy was created as a pilot program in 2016 and became permanent in November.
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