In 2014, the U.S. Department of Justice (DOJ) settled several large and long-term cases involving violations of the Foreign Corrupt Practices Act (FCPA). As reported by Jones Day, a law firm, the number of cases dropped in 2015 – sharply. In fact, “the DOJ settled FCPA cases with only two companies and collected $24.2 million in 2015, figures that equal only a fraction of the ten corporate enforcement actions and over $1.25 billion collected in 2014,” Jones Day reported in “FCPA 2015 Year In Review.”
While at first glance this might appear to be a fraud trend in the right direction (finally), the likelihood is that if has more to do with a decrease in prosecutorial actions. Let’s be honest, bribery and corruption are still going strong, and statistical norms would dictate that it would not drop so dramatically from one year to the next.
The reality is that regulators and investigators are always subject to shifting priorities. Under the threat of terrorism in the early 2000s, many DOJ, FBI, Secret Service and other agents who had been working fraud cases were diverted to handle domestic threats. When huge cases like Enron and Worldcom struck a few years later, more resources were dedicated to fraud, but since then, most corporate fraud enforcement has been left to the Securities and Exchange Commission (SEC), for example.
As the Jones Day piece notes, the drop in actions in 2015 is attributed to “fewer self-disclosures” and an emphasis on more “high-impact bribery cases.” The balance may be tipping again, according to the article:
Against this slowdown in FCPA enforcement, the DOJ invested in the future of its enforcement regime by tripling the number of Federal Bureau of Investigation ("FBI") agents devoted to investigating foreign bribery cases, hiring a dedicated compliance expert, and announcing plans to double the number of prosecutors devoted to FCPA prosecutions.
Speaking of the SEC, the New York Times reports that their enforcement action in 2015 remained on par with the previous year. The NYT’s “Corporate Bribery Cases and Fines Fell in 2015, Report Shows” explains the following:
The Securities and Exchange Commission, which handles such cases civilly, resolved 10 enforcement actions against corporations last year, settling them for $75,000 to $25 million, and two cases against individuals, according to the report. That was nearly the same as 2014.
In 2015, both federal agencies collected $140 million in fines and disgorgements, which is less than a tenth of the amount received in 2014, a near record year at $1.57 billion, and less than a fifth of the $720 million collected in 2013, according to figures provided in the report.
U.S. investigators aren’t going it alone, of course. Countries across the world have stepped up efforts against fraud involving international business. Among the countries that notable increased ant-corruption efforts in 2015:
- South Korea
Only by working together and sharing information will countries, and their governments, be able to make the most impact on corruption that crosses their borders. Many investigators in these nations have made concerted efforts to collaborate with their foreign counterparts to increase enforcement and bring resolution to corruption cases. We can only hope this trend continues through 2016 and beyond.