Archive for the ‘FCPA Statistics’ Category

How Many Foreign Companies Are Issuers Under The FCPA?

Tuesday, October 20th, 2015

What woudl you doThe Foreign Corrupt Practices Act does not just apply to U.S. companies.

Rather, foreign companies that are listed on a U.S. stock exchange or otherwise required to file periodic reports with the SEC are “issuers” and thus subject to the FCPA’s books and records and internal controls provisions as well as the anti-bribery provisions under the dd-1 prong of the statute to the extent the “mails or any means or instrumentality of interstate commerce” are used in furtherance of a bribery scheme.

In addition, any foreign company or national can be subject to the FCPA’s anti-bribery provisions under the dd-3 prong of the statute which requires that “while in the territory of the United States” corrupt use of the mails or any means or instrumentality of interstate commerce or any other act in furtherance of a bribery scheme.

Against this backdrop, one might wonder how many foreign companies are issuers under the FCPA?

Each year, the SEC’s Division of Corporation Finance releases a chart titled “Number of Foreign Companies Registered and Reporting with the U.S. Securities and Exchange Commission.” Set forth below are the total number of foreign issuers for each of the past five years.

Total Number of Foreign Issuers

2014 – 912

2013 – 940

2012 – 946

2011 – 965

2010 – 970

As the above figures highlight, each year for the past five years there have fewer foreign issuers in the U.S.

I am not suggesting a direct casual relationship between this fact and the new era of FCPA enforcement (declared in 2010 and during which several foreign issuers have resolved FCPA enforcement actions). Indeed, a company determining where to list its securities will consider numerous factors not just whether a listing will expose the company to a certain law.

Nevertheless, it is interesting to note (as highlighted in this prior post) that certain foreign companies such as Siemens, Daimler and Magyar Telekom deslisted their U.S. securities after resolving FCPA enforcement actions.

Foreign Issuers Based on Country of Incorporation

The SEC’s data also lists foreign issuers based on the country of incorporation and for each of the past five years Canada, the Cayman Islands, and Israel have been 1, 2 and 3 in terms of the country of incorporation of foreign issuers.

The percentage of foreign issuers from Canada has ranged between 30-35% over the past five years.

The percentage of foreign issuers from the Cayman Islands has ranged between 13-14% over the past five years.

The percentage of foreign issuers from Israel has ranged between between 7-9% over the past five years.

What is interesting about these figures is that despite accounting for between 30-35% of foreign issuers in any given year, there has never been an FCPA enforcement action against an issuer from Canada. That may change in the near future as the following Canadian issuers have all disclosed FCPA scrutiny: Kinross Gold Corp, Nordion, and Brookfield Asset Management.

In terms of the Cayman Islands, the following issuers incorporated there all resolved FCPA enforcement actions in connection with the 2010 CustomsGate enforcement action concerning alleged conduct in Nigeria: Transocean, Noble Corp. and GlobalSantaFe.

In terms of Israel, there has never been an FCPA enforcement action against an issuer from Israel, but this too may change in the near future as Teva Pharmaceuticals has disclosed FCPA scrutiny.

The Timing Of FCPA Enforcement Actions

Wednesday, October 7th, 2015

3d small people - alarm clockLast week, as its fiscal year drew to a close, the SEC brought two Foreign Corrupt Practices Act enforcement actions.

This post noted the timing and I was motivated to “run the numbers” and analyze when FCPA enforcement actions are brought both by the SEC and DOJ.

In reviewing the charts below, do realize that information is pending for October, November and December 2015 (in SEC and DOJ charts 1), and thus for Q4 (in SEC and DOJ charts 2), and thus for the aggregate of Q3-Q4 (in SEC and DOJ charts 3). Do also keep in mind that the SEC’s fiscal year ends on September 30th.

Even so, with the existing data, it is clear that most SEC and DOJ FCPA enforcement actions are brought in the second half of the year and the current numbers depicted in the below charts for the second half of 2015 are only going to get bigger as October, November and December 2015 happen. (Indeed, since the first draft of this post was written the SEC brought an FCPA enforcement action on October 5th – see here).

The take-away points from the below charts?

(i) most FCPA enforcement actions take place in the second half of the year; and (2) as 2015 draws to a close, stay tuned to FCPA Professor as this website offers the most comprehensive, real-time analysis of FCPA enforcement actions.


[A few notes regarding the below statistics.  Consistent with other FCPA enforcement actions found on FCPA Professor, the below statistics largely follow the “core” approach.  In other words, when the SEC brought an enforcement action against PBSJ Corp. and Walid Hatoum (a former employee) on the same day in January 2015 based on the same core conduct (see here), this is counted as one enforcement action in the below charts. The same concept applies to the July 2015 DOJ enforcement action against Louis Berger International and former employees Richard Hirsch and James McClung (see here) – this is counted as one enforcement action in the below charts. However, if the SEC or DOJ brought an enforcement action against a company and employees based on the same core conduct that is separated by time (as occasionally happens – see here and here for instance) such an enforcement action (one “core” enforcement action for most other statistical purposes) is counted twice because the below charts seek to measure the timing of FCPA enforcement].

























































Friday Roundup

Friday, September 25th, 2015

Roundup2More on the Yates Memo, scrutiny alerts, survey says, and FCPA reform.  It’s all here in the Friday roundup.

More on the Yates Memo

Once again a private company has marketed a public official to drive attendance to its paid event.

Earlier this week, Assistant Attorney General Leslie Caldwell delivered this speech reiterating various aspects of the “Yates Memo.” Caldwell stated:

“[O]ur focus on individuals stems from the reality that corporations act through human beings, and that justice usually requires identifying those responsible for criminal conduct and holding them personally accountable.  Prosecuting the corporate entity, and imposing a fine and other impersonal conditions, simply is not enough – in most instances – to fully punish and, more importantly, deter corporate misconduct.”

Regarding the cooperation credit aspects of the “Yates Memo,” Caldwell stated:

“We recognize, however, that a company cannot provide what it does not have.  And we understand that some investigations – despite their thoroughness – will not bear fruit.  Where a company truly is unable to identify the culpable individuals following an appropriately tailored and thorough investigation, but provides the government with the relevant facts and otherwise assists us in obtaining evidence, the company will be eligible for cooperation credit.  We will make efforts to credit, not penalize, diligent investigations.  On the flip side, we will carefully scrutinize and test a company’s claims that it could not identify or uncover evidence regarding the culpable individuals, particularly if we are able to do so ourselves.

As I have said before, it is not our intent to outsource our investigation of corporate wrongdoing to companies and their outside advisors.  As in the past, we will not sit idle, waiting for a company to conduct or complete its investigation.  Regardless of a company’s cooperation, federal agents and prosecutors will conduct thorough investigations.  If, through this process, we are able to identify the culpable individuals when the company itself did not do so, as well as evidence that would support the charging and prosecution of those individuals, we will assess whether that evidence truly was unavailable to the company.

We, of course, recognize that we sometimes can obtain evidence that a company cannot.  We often can obtain from third parties evidence that is not available to the company.  Also, we know that a company may not be able to interview former employees who refuse to cooperate in a company investigation.  Those same employees may provide information to us, whether voluntarily or through compulsory process.  Likewise, there are times when, for strategic reasons, we may ask that the company stand down from pursing a particular line of inquiry.  If so, the company will not be penalized for failing to identify facts subsequently discovered by government investigators.”

Caldwell also answered questions after the speech.  It appears that this Q&A was recorded and the same private company put the Q&A behind its paywall.

It’s just plain wrong that a private company is selling the words of public officials. It ought to stop.

Scrutiny Alerts


As highlighted here, in 2010 as part of the CustomsGate enforcement actions, Transocean resolved a $20.7 million FCPA enforcement action (involving a DOJ and SEC component) concerning alleged conduct in Nigeria.

Bloomberg reports:

“Transocean Ltd., the world’s largest offshore rig contractor, is being linked for the first time to the corruption probe of Petroleo Brasileiro SA, the state-owned energy giant at the center of Brazil’s biggest corporate scandal. A former executive at Brazil’s state-run oil company has testified to receiving what he says were payments made by someone claiming to be a Transocean agent in exchange for a rig-operation contract from Petrobras.”


This CBCNews report goes in-depth regarding new allegations in a civil suit concerning SNC-Lavalin. According to the article:

“Top executives for years endorsed bribes and lavish gifts — including a yacht and even prostitutes — to win contracts from Libya’s Gadhafi regime.”

To cement ties, [the complaint] alleges specific SNC executives signed off on or approved numerous favours to help Gadhafi, including:

  • providing SNC staff and hiring university professor as tutors;
  • helping to obtain a Canadian visa;
  • considering appointing Saadi Gadhafi an SNC vice-president;
  • officially sponsoring his Italian Serie A professional soccer team.

One of the largest expenses included the purchase of a Palmer Johnson yacht worth $38 million for Saadi Gadhafi ”organized and validated by CFO Laramée and approved by the then CEO Lamarre.” Saadi Gadhafi visited Canada in 2008, and SNC Lavalin picked up the bill — more than $2 million.”

Survey Says

KPMG recently conducted a worldwide online survey of corporate risk leaders to find out the strengths and weaknesses of their companies’ programs to combat bribery and corruption.  According to the survey responses:

“There is a sharp increase in the proportion of respondents who say they are highly challenged by the issue of Anti-Bribery Compliance (ABC) compared with a survey KPMG conducted four years earlier.

As companies continue to globalize, management of third parties poses the greatest challenge in executing ABC programs.

Despite the difficulty of monitoring their business dealings with third parties, more than one third of the respondents do not formally identify high-risk third parties. More than half of those respondents with right to-audit clauses over third parties have not exercised the right.

ABC considerations are accorded too low a priority by companies preparing to acquire, or merge with, other corporations across borders.

Respondents complain they lack the resources to manage ABC risk.

A top-down risk assessment would help companies set priorities, but executives admit that an ABC risk assessment is one of their companies’ top challenges.

Data analytics is an increasingly important and cost-effective tool to assess ABC controls. Yet only a quarter of respondents use data analysis to identify violations and, of those that do so, less than half continuously monitor data to spot potential violations.”

FCPA Reform

The U.S. Chamber of Commerce recently released this document outlining its policy priorities. Included in the lengthy document was the following:  ”work to reform the Foreign Corrupt Practices Act by supporting changes to enforcement practices.”


A good weekend to all.


2 Enforcement Theories, 17 DOJ Corporate Enforcement Actions, 0 Individual Prosecutions

Thursday, September 24th, 2015

zeroThe subject matter of this post is certainly nothing new.

For over five years, I have been highlighting the low percentage of DOJ corporate Foreign Corrupt Practices Act enforcement actions that result in related individual prosecutions.

In 2010, I was asked to testify at the Senate FCPA hearing – specifically about the above issue – and offered the following explanation in my testimony.

“[A] reason no individuals have been charged in [many FCPA] enforcement actions may have more to do with the quality of the corporate enforcement action than any other factor. As previously described, given the prevalence of NPAs and DPAs in the FCPA context and the ease in which DOJ offers these alternative resolution vehicles to companies subject to an FCPA inquiry, companies agree to enter into such resolution vehicles regardless of the DOJ’s legal theories or the existence of valid and legitimate defenses.”

Yesterday’s post awarded an FCPA Professor apple award to Matthew Fishbein (Debevoise & Plimpton - who previously served in the U.S. Attorney’s Office for the Southern District of New York as Chief Assistant U.S. Attorney and Chief of the Criminal Division, among other DOJ positions) for his recent excellent article which touches upon the same subject. In pertinent part, Fishbein observed:

“[T]he lack of individual prosecutions [in most DOJ corporate enforcement actions] is the inevitable consequence of making a potential criminal case out of every news story where something bad occurs. While the needs and interests of companies often lead them to enter into settlements even where there is little evidence that a crime actually was committed, individuals are more likely to test the government’s case – especially if that case rests on questionable footing.”

In light of yesterday’s post, and more broadly the general discussion of individual accountability in the aftermath of the recent “Yates Memo,” it is useful to analyze some specific examples in the hopes of making the abstract more concrete.

The remainder of this post highlights 2 DOJ FCPA enforcement theories that have resulted in 17 DOJ corporate FCPA enforcement actions yielding approximately $350 million in settlements but have resulted in 0 individual prosecutions.

The first enforcement theory that has resulted in 7 DOJ FCPA enforcement actions (Panalpina, Noble, Shell, Pride International, Tidewater Marine, Transocean, and Parker Drilling) was based on the core theory that payments allegedly made to notoriously corrupt Nigerian Customs Services (“NCS”) employees in connection with securing or renewing temporary importation permits (“TIPS”) so that oil rigs could remain in Nigerian waters, as well as other allegations that payments were made to NCS officials to expedite the delivery of goods and equipment into Nigeria, consisted FCPA violations.

The enforcement theory was aggressive because the FCPA’s anti-bribery provisions specifically exempt so-called facilitation payments.  Perhaps in a sign of how obvious the facilitating payments exception was to the conduct at issue, the DOJ twice stated in resolution documents that “the payments [at issue] … would not constitute facilitation payments for routine governmental actions within the meaning of the FCPA.”

All of the so-called CustomsGate enforcement actions involved either an NPA or a DPA in which the DOJ extracted approximately $175 million in corporate settlements. However, none of the CustomsGate enforcement actions involved any related criminal prosecution of individuals associated with the companies resolving the enforcement actions.

With is perhaps most notable about the CustomsGate enforcement actions is that the SEC (which also brought 8 FCPA enforcement actions against business organizations based on the same core theory and extracted approximately $85 million in corporate settlements) brought only one related prosecution of individuals associated with the companies resolving the enforcement action.  However, Mark Jackson and James Ruehlen (both associated with Noble Corp.) put the SEC to its burden of proof as to whether the payments violated the FCPA. In an ironic twist, two years after the enforcement agencies collected approximately $260 million in the corporate CustomsGate enforcement actions, a federal trial court judge ruled that the SEC has the burden of proof to negate the facilitating payments exception. Despite the SEC merely have a civil burden of proof of preponderance of the evidence (as opposed to the DOJ’s higher burden of proof in criminal actions of beyond a reasonable doubt), the SEC was unable to carry its burden and on the eve of trial the SEC offered to settle the Jackson & Ruehlen matter on terms very favorable to the defendants.

The second enforcement theory that has yielded 10 DOJ FCPA enforcement actions (Syncor Taiwan, DPC (Tianjin Co), Micrus, AGA Medical, Johnson & Johnson, Pfizer, Orthofix International, Biomet, Smith & Nephew, and Bio-Rad ) was based on the core theory that various employees of alleged foreign health care systems such as physicians, nurses, mid-wives and lab personnel are “foreign officials” under the FCPA. This enforcement theory was first used by the DOJ in 2002 (before NPAs and DPAs became the dominate way for the DOJ to resolve FCPA enforcement actions against business organizations) and since 2005 has yielded 8 DOJ enforcement actions.

The enforcement theory was aggressive because the FCPA’s legislative history is clear that the main reason motivating Congress to enact the FCPA was the foreign policy implications of discovered corporate payments to foreign government officials such as the Prime Minister of Japan, the President of Korea, the President of Gabon, and Italian political parties. In other words, in passing the FCPA Congress was concerned with corporate payments to bona fide foreign government officials.

All of the “healthcare workers as foreign officials” enforcement actions since 2005 were resolved through an NPA or DPA in which the DOJ extracted approximately $90 million in corporate settlements. However, none of the enforcement actions against business organizations involved any related criminal prosecution of individuals associated with the companies resolving the enforcement actions.

In short, 2 DOJ FCPA enforcement theories that have yielded 17 corporate DOJ enforcement actions in which the DOJ extracted approximately $350 million in corporate settlements have not resulted in any related criminal prosecution of individuals.

Zero. Zilch. Nada.

Friday Roundup

Friday, August 28th, 2015

Roundup2The latest edition of the double standard, survey says, when the dust settles, and for the reading stack.  It’s all here in the Friday roundup.

Double Standard

An individual currently holds political office in one unit of government, yet is also a candidate for a higher unit of government.

Among the contributors to organizations supporting the individual’s campaign for higher office are companies that have secured millions in contracts from the lower unit of government run by the individual.  After all, the individual may not prevail in the higher office race and thus return to the lower unit.

A prudent FCPA practitioner would spot the “red flags” as the contributions could be viewed as a way to curry favor with the individual upon return to the lower unit of government.

However, the individual (more accurately individuals) are not “foreign officials” they are current governors Chris Christie, John Kasich, Bobby Jindal, and Scott Walker who are also running for President.

For the latest edition of the double standard, see this Wall Street Journal article.


Silly you for even mentioning the “b” word.  This is all about “First Amendment rights” according to a source in the article.

Why do business interactions with “foreign officials” seem to be subject to different standards than business interactions with U.S. officials? Why do we reflexively label a “foreign official” who receives “things of value” from private business interests as corrupt, yet generally turn a blind eye when it happens here at home or call it something different such as participation in the political process? Is the FCPA enforced too aggressively or is enforcement of the U.S. domestic bribery statute too lax? Ought not there be some consistently between enforcement of the FCPA and the domestic bribery statute?

For approximately 50 other post highlighting these double standards, see this subject matter tag.

Survey Says

According to this recent ASEAN (Association of Southeast Asian Nations) Business Outlook Survey:

“The risk of pressure to bribe officials for essential licenses and permits varies greatly depending on the country from which executives responded. Less than half of the respondents in Brunei, Malaysia, Myanmar, and Singapore foresee that this risk will hinder their long-term operations, while large percentages of respondents in Cambodia (89%), Laos (85%), and Vietnam (74%) foresee that it will.”

“In contrast, facilitation payments for routine government services are a more common part of international business. (Routine government services may include processing governmental papers, such as visas and work orders, or such services as police protection, power supply, phone service, etc.) In nearly all countries, the risk of pressure to bribe officials to speed up routine government services is slightly higher than the comparable risk for essential licenses and permits.”

In passing the FCPA, Congress recognized the inherent difficulties companies encounter in foreign markets and thus elected not to capture payments in connection with licenses, permits and the like in the anti-bribery provisions.  (To learn more, see “The Story of the FCPA“).  Congress also chose to exempt facilitation payments from the anti-bribery provisions.

When The Dust Settles

FCPA enforcement actions only focus on alleged bribe payers.  However, when an FCPA enforcement action concludes, there is still an alleged “foreign official” who allegedly received the bribe payments.  When the dust settles, what happens to the “foreign official”?

For years, guest contributor Mike Dearington followed the DOJ’s 2011 enforcement action against Juthamas Siriwan, the former government officer of the Tourism Authority of Thailand, and Jittisopa Siriwan, the daughter of the alleged “foreign official” who was also alleged to be an “employee of Thailand Privilege Card Co. Ltd.” an entity controlled by TAT and an alleged “instrumentality of the Thai government.”  The Siriwan’s allegedly received improper payments from Gerald and Patricia Green who were convicted of FCPA and related offenses in 2009 and served time in federal prison. (See prior posts at this subject matter tag).

In short, the federal court judge overseeing the DOJ’s money laundering case against Siriwan stayed the case pending expected legal proceedings in Thailand against Siriwan.

Earlier this week, the Bangkok Post reported:

“The Criminal Court has indicted former Tourism Authority of Thailand (TAT) governor Juthamas Siriwan and her daughter in a film festival bribery case, the Office of the Attorney-General spokesman said Wednesday.  Prosecutors indicted Mrs Juthamas, 68, and her daugther Jittisopha, 41, in the Criminal Court on Tuesday on charges of taking bribes, corruption and bid-rigging, plus breaching Section 6 of the law dealing with state employees’ offences and Section 12 of the law governing submitting tenders to state agencies, which carries a maximum jail term of 20 years.”

This development is expected to functionally end the U.S. prosecution.

In other news relevant to the above enforcement action, the Hollywood Reporter reports that Gerald Green recently died.  He was 83.

Reading Stack

The most recent edition of the always informative FCPA Update by Debevoise & Plimpton has a nice write-up of the recent BNY Mellon enforcement action (see here and here for prior posts).  In pertinent part, the Update states:

In the SEC’s View, a Thing of Value Can Be Purely Psychological

[T]he government’s investigations in this area face a key threshold legal issue under the FCPA: can providing a job or internship to an official’s relative constitute a thing of value to the official him/herself? Can offering the purely psychological benefit of helping a child or relative land a job give rise to an actionable attempt at bribery? The official does not stand to see any personal financial gain from the internship, except in the arguable circumstance of reducing the official’s financial obligations to a dependent. But the SEC seems to have purposely disclaimed – or at least strained – that theory here, given that one of the internships at issue was unpaid. The SEC addressed this thorny issue in a single sentence in the Order, asserting that “[t]he internships were valuable work experience, and the requesting officials derived significant personal value in being able to confer this benefit on their family members.”

The SEC has previously suggested that an intangible benefit can be a “thing of value” under the FCPA, having faulted Schering-Plough for providing a requested donation to a legitimate charity with which a foreign official and his spouse were closely involved, in an alleged attempt to influence the official. The BNYM Order, however, seems to represent a significant expansion of that thinking. Notably, in Schering-Plough the SEC charged only a “books and records” violation, not a violation of the FCPA’s anti-bribery provisions. Moreover, even assuming intangible prestige or listing an internship on a resumé can be a thing of value, Schering-Plough at least involved a transfer of funds at the official’s request, which arguably allowed the official himself to reap the prestige of the donation. Here, the prestigious and valuable work experiences – one of which was entirely unpaid – went not to the official but to the official’s family member, and thus only indirectly benefited the official.

Evidentiary Issues: Quid Pro Quo or Internal Speculation?

The BNYM case and others like it also raise difficult evidentiary issues for FCPA enforcement authorities. How can one draw the line between a genuine quid pro quo – an actual exchange of a personal benefit to an official for a business assignment – from mere internal speculation and anxiety about potentially damaging an important relationship? Here, the BNYM Order is notable for what it does not say: the Order does not place the internship hiring requests in the context of any specific business opportunity, or any review or re-evaluation of whether the Sovereign Wealth Fund should maintain its existing business relationship with BNYM. Rather, the cited internal communications reflect a generalized desire to gather additional business in the future or to a perception that existing business could be diminished relative to competitors.

Here, the lack of any tie to a concrete business opportunity could simply be a function of the asset management business, in which funds for investment are (in general terms) fungible. Time will tell whether, in other contexts, courts or enforcement authorities will focus more on an attempt to win a specific business opportunity rather than simply an effort to create or maintain good relations that may (or may not) bear fruit over time. For now, the SEC appears to have followed the controversial “quid pro quo lite” theory that has garnered some success in DOJ criminal domestic bribery prosecutions; in that sense, the reach of the Order may not be that surprising – although its theoretical underpinnings in the FCPA arena remain largely untested.

The SEC’s justification for the imposition of a disgorgement remedy is also difficult to locate within its factual recitation. The disgorgement amount of $8.3 million cannot be explained by the relatively minor new investment with BNYM (of less than $1 million). It stands to reason, then, that the disgorgement amount is based, at least in part, on BNYM’s retention of its existing business with the Sovereign Wealth Fund. The causation analysis on that point is not transparent, as the facts stated do not suggest any meaningful way to assess the degree to which the intern hires arguably contributed to maintaining the existing relationship. The result may be the product of any number of unstated factors that went into the settlement, highlighting once again, why settlements should not make law.


Overall, the BNYM Order highlights two areas of frequent criticism of FCPA enforcement. First, the activity under scrutiny bears a strong similarity to what are perceived as common practices in the private sector in which firms seek to accommodate client representative requests in order to maintain good relations with key decision makers. In this way, enforcement authorities risk criticism that they are using the FCPA to excise business practices affecting relationships with foreign officials abroad that are routinely tolerated in the private sector in the United States – and that are not unprecedented or even rare in the context of companies’ relationships with officials employed by the United States federal, state, and local governments.

Second, the SEC’s choice of a consented-to cease-and-desist order to announce a new and expansive interpretation of the FCPA leaves its interpretations of the law entirely untested by judicial scrutiny and adversarial process. Given that BNYM did not admit the allegations in the Order, BNYM had very little incentive to challenge the SEC’s view of the facts and law, yet as with Schering-Plough’s resolution (referenced above), the SEC’s debatable interpretive position may go years (or decades) without judicial scrutiny.

As noted at the outset, the BNYM Order is just the first resolution of a case of this kind. Others may follow, including in DOJ matters, which will likely shed additional light on the landscape in this area.”


A good weekend to all.