2012 FCPA Penalties Dramatically Lower

A host of information was recently released by the federal government regarding last year's Foreign Corrupt Practices Act (FCPA) enforcement effort. One thing that's clear from the numbers is that the Justice Department and the SEC have dramatically decreased the fines levied against violators of the Act. What that means for companies remains to be seen.

Some are asking whether the lower fines seen in 2012 are representative of a larger shift among federal officials who will now dole out smaller punishments for FCPA violations. Others believe the dip last year was merely an oddity and not the beginning of a change in the way such cases are handled.

Last year the Justice Department and the SEC collected a combined $260 million in criminal civil penalties related to FCPA violations. That number is down dramatically from the $652 million collected in 2011 and the staggering $1.8 billion collected in 2010.

Another change this year is that both agencies have remained quiet about their FCPA enforcement efforts. In years past, both the Justice Department and the SEC would release statements congratulating themselves on the large amount of fines collected. This year, mum's the word.

Some in the financial industry say the trend reveals that penalties for FCPA violations have plateaued. However, other groups are saying the 2012 numbers are merely a blip and will rise again in the future. The truth is likely somewhere in between.

As one expert points out, typical FCPA settlements usually range between $10 and $20 million. The number for 2010 and, to a lesser extent, 2011, were skewed by mega settlements. For example, in 2010, BAE Systems paid a massive $400 million FCPA settlement, one of the largest ever. Last year there were no such mega settlements, making the number appear smaller than it actually is.

Some in the legal industry are warning that there may be other mega settlements on the horizon. A major settlement out of the French oil company Total may end up being over $300 million and a recent push into the pharmaceutical industry by Justice Department investigators could also yield big fines. It appears as if the days of massive FCPA hauls by the federal government may not be over just yet.

Lower Fines the New Norm for the FCPA? by Christopher Matthews, published at WSJ.com on January 17, 2013.

FCPA Violations by Dr. Elaine Buckberg, published at Mondaq.com on January 16, 2013.

See Our Related Blog Posts:
Primer on the Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act: High Cost of Corrupt Practices