2021: A Down Year for FCPA Enforcement

FCPA Enforcemet

In 2021, the number of Foreign Corrupt Practices Act (FCPA) enforcement actions fell to the lowest level in a decade. According to a report from Stanford University’s FCPA Clearinghouse, the U.S. Securities and Exchange Commission (SEC) and Department of Justice (DOJ) only filed 18 FCPA enforcement actions in 2021. This number is well below the ten-year annual average of 36 actions.

In 2020, the DOJ and SEC filed 39 FCPA enforcement actions. The high mark over the past ten years came in 2016 when the agencies filed 58 actions. 2021 also saw a steep decrease in the amount of sanctions imposed by U.S. regulators in FCPA enforcement actions. The DOJ and SEC imposed just under $360 million in sanctions in 2021, a 94 percent decrease from 2020 and the third lowest in a decade. $299 million of these sanctions were levied against Credit Suisse Group AG.

The 18 FCPA actions filed in 2021 were connected with nine separate bribery schemes. Two of the schemes were located in Brazil while the seven other schemes were each located in a separate foreign country.

Newly initiated FCPA investigations were also down in 2021. Only three companies disclosed in their SEC filings a new FCPA-related investigation commenced by U.S. authorities. In 2016, thirty companies disclosed new investigations.

The FCPA, passed by Congress in 1977, is a U.S. anti-corruption law that prohibits the payment of anything of value to foreign government officials in order to obtain a business advantage. It also contains accounting provisions that require publicly traded corporations to make and keep books and records that accurately reflect the transactions of the corporation. In 2010, the Dodd-Frank Act, which established the SEC Whistleblower Program, added whistleblower provisions to the FCPA.

“This remarkable falloff in activity may be the initial result of the steady decline in publicly-disclosed investigations witnessed over the last four years,” the Stanford report’s authors speculated. “If so, the level of activity could remain slow over the next few years. That said, policy changes initiated in the first year of the Biden administration may cause the number of FCPA-related investigations and enforcement actions to increase over the coming years. In the more immediate future, at least two companies, Stericycle, Inc. and Honeywell International Inc., disclosed accruals in 2021 in anticipation of the settlement of their FCPA investigations.”

In an announcement of 2021 enforcement results, the SEC highlights a number of different “key priority areas” in which it filed noteworthy enforcement actions over the course of the year. One of these areas is enforcing the FCPA. The announcement outlines the four actions filed by the SEC in the 2021 fiscal year and also notes that “the SEC’s whistleblower program was critical to these efforts and had a record-breaking year.”

The Stanford report highlights the Biden administration’s National Security Study Memorandum from June as a major FCPA development in 2021. Following the release of the memorandum, in which the Biden-Administration signaled that anti-corruption would be a central aspect of its foreign policy, whistleblower advocates began calling for full use of the FCPA’s whistleblower provisions as a key force in fighting corruption.

For example, in an article published in September, whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto states that “[t]he problems that President Biden’s Anti-Corruption Memorandum is targeting with a renewed effort to combat international corruption are remarkably similar to the problems identified by the [SEC] and the [DOJ] in supporting continued prosecutions under the [FCPA], including the use of whistleblowers as a key tool for detecting foreign bribery.”

“Given those similarities, the use of the FCPA should be the backbone of an effective anti-corruption program,” Kohn continues. “Likewise, the use of the Dodd-Frank Act’s transnational whistleblower program needs to be expanded, especially in light of the evidence of the invaluable role played by whistleblowers in detecting bribery.”


Stanford’s FCPA Clearinghouse’s 2021 Year in Review

Nine Ways the Biden Administration Can Use Whistleblowing to Fight Corruption

More FCPA news on WNN

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