Top 10 biggest FCPA settlements ever: Penalties for bribing

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Bribery runs deep in the corporate culture. Many a times companies bribe foreign government officials to win contracts and other favors. To prevent companies and individuals from paying bribes to foreign officials, the United States passed a law called the Foreign Corrupt Practices Act (FCPA) in 1977. The Securities and Exchange Commission (SEC) and the Department of Justice are responsible for enforcing the FCPA. Here we take a look at the top 10 biggest FCPA settlements since the law came into effect in 1977.

The FCPA units of the SEC and DOJ have been super active over the last few years. In 2019 alone they imposed a staggering $2.9 billion of penalties on dozens of companies and individuals. But reckless companies, both American and non-American, remain non-compliant. They still pay out bribes because That’s how it works or It’s part of the local system.

The FCPA prohibits companies issuing stocks in the US from bribing foreign officials. It applies to non-compliant actions occurring all over the world. The FCPA covers the actions of companies, their directors, executives, shareholders, employees, agents, partners, and consultants.

Ten biggest FCPA settlements ever

The ranking is based on data from the Securities and Exchange Commission (SEC) and the FCPA Tracker. Most of these companies are headquartered outside the United States.

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10- KBR and Halliburton (2009), $579 million

In February 2009, the SEC announced that it had reached a settlement with KBR and Halliburton. KBR’s subsidiary Kellogg Brown & Root LLC had bribed Nigerian government officials over a 10-year period to obtain construction contracts, violating the FCPA. The regulators had also charged KBR and its former parent company Halliburton with engaging in books and records violations.

9- Societe Generale (2018), $585 million

SocGen is one of France’s largest investment banking and financial services companies. In 2018, the Paris-based bank agreed to settle charges that it had paid nearly $100 million in bribes to Libya officials during Muammar al-Gaddafi regime. Its subsidiary SGA Societe Generale Acceptance N.V. pleaded guilty to an FCPA conspiracy charge in federal court in New York.

8- Alstom (2014), $772 million

Alstom is a France-based heavy engineering company engaged in making rail transportation equipment. According to FCPA Blog, it pleaded guilty to bribing officials in Saudi Arabia, Indonesia, Egypt, and the Bahamas. The Department of Justice had charged it with violating the FCPA and failing to implement adequate internal controls. It had to shell out $772 million to settle the charges.

7- VimpelCom (2016), $795 million

The Amsterdam-based telecom giant and its subsidiary in Uzbekistan, Unitel LLC, reached a $795 million settlement with the DOJ, SEC, and the Dutch regulators. VimpelCom and Unitel had paid more than $114 million in bribes to Uzbek government officials between 2006 and 2012. VimpelCom paid $397.5 million to the Dutch regulators, $230.1 million criminal penalty to the DOJ, and $167.5 million to the SEC.

6- Siemens (2008), $800 million

In December 2008, the German engineering conglomerate agreed to pay a staggering $800 million to settle the SEC charges that it had violated the FCPA by bribing government officials in multiple countries to win contracts. Siemens engaged in “a systematic practice of paying bribes” to obtain business in Venezuela, Israel, Mexico, Vietnam, China, Russia, Argentina, Iraq, and other countries.

5- Mobile TeleSystems (2019), $850 million

Popularly known as MTS, the Russian telecom giant paid at least $420 million in bribes to Gulnara Karimova for obtaining and retaining business. Gulnara Karimova used her influence over the Uzbek telecom regulatory authority to get MTS the approval to operate in the country for eight years. MTS generated $2.3 billion in revenue during that period. MTS agreed to pay the DOJ a criminal fine and forfeiture of $850 million.

4- Telia (2017), $965 million

It’s quite surprising that four of the ten biggest FCPA settlements were in the telecom industry. In September 2017, the Swedish telecom provider agreed to pay $965 million in a global settlement with the SEC, DOJ, and Swedish and Dutch law enforcement. Telia had violated the FPCA to win business in Uzbekistan. According to the SEC, Telia paid at least $330 million in bribes to a shell company in Uzbekistan, which was owned by an Uzbek government official.

3- Ericsson (2019), $1.06 billion

Just a few months ago, Sweden-based telecom giant Ericsson agreed to pay a little over a billion dollars to the DOJ and SEC to resolve charges that it engaged in a “large-scale bribery scheme.” Ericsson used sham consultants to funnel money to government officials in about a dozen countries. The business obtained through bribes generated hundreds of millions of dollars in profits for the company.

2- Petrobras (2018), $1.78 billion

In what was the biggest FCPA settlement at the time, the Brazilian oil and gas giant agreed to pay $933 million in disgorgement and prejudgment interest and an $853 million penalty in 2018. The SEC had charged it with misleading the US investors by filing false financial documents. Petrobras was running a “massive bribery and bid-rigging scheme” that it concealed from investors. It was the first ever billion-dollar FCPA settlement.

1- Airbus (2020), $2.09 billion

Earlier this year, the European aerospace giant reached a $2.09 billion FCPA settlement with the DOJ. It also paid $2.3 billion to the French prosecutor Parquet National Financier, and $1.09 billion to the UK Serious Fraud Office. Airbus was engaged in a massive bribery and corruption scheme all over the world to win business.