In 2022, the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) imposed over $1.5 billion in sanctions in Foreign and Corrupt Practices Act (FCPA) cases, according to a new report by FCPA Clearinghouse. Overall the report shows an increase in FCPA activity compared to 2021, though figures remain below those posted in 2016-2020.
This figure is a dramatic increase from the $360 million in sanctions imposed in 2021. However, the 2022 figure falls short of the 10-year average and pales in comparison to the record $6.1 billion in sanctions imposed in 2016.
Likewise, the 25 FCPA-related Enforcement Actions filed in 2022 is an increase over the 20 filed in 2021 but remains below the 10-year average. 18 of the 25 actions were filed by the DOJ while the remaining 7 were filed by the SEC.
The FCPA prohibits the payment of anything of value to foreign government officials in order to obtain a business advantage. It also contains accounting provisions which 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 (DFA) added whistleblower provisions to the FCPA. Individuals can disclose information relevant to potential FCPA violations to either the SEC or the Commodity Futures Trading Commission.
Through the SEC and CFTC Whistleblower Programs, qualified whistleblowers, individuals who voluntarily provide the SEC or CFTC with original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government. Additionally, under the DFA’s related action provisions, when a whistleblower’s disclosure to the SEC also leads to a successful enforcement action by another agency, the whistleblower is entitled to an award of 10-30% of funds recovered in that action. For example, a whistleblower whose disclosure leads to FCPA charges by both the SEC and the DOJ could be eligible for awards based on the sanctions collected by both agencies.
The majority of the FCPA sanctions imposed in 2022 stem from a small number of enforcement actions. According to FCPA Clearinghouse, “sanctions imposed on Glencore plc ($701 million), ABB Ltd. ($400 million), and Honeywell International Inc. ($160 million), three of the ten companies charged with FCPA-related violations in 2022, comprised 82 percent of the total sanctions imposed that year.”
According to FCPA Clearinghouse’s report, there were 12 foreign countries associated with the FCPA actions filed in 2022. “For the second year running, Brazil claimed the top spot as the country most frequently implicated in FCPA-related bribery schemes resulting in enforcement actions, with four separate schemes,” the report states. “The remaining 11 countries implicated in 2022 all had one bribery scheme each. When examined by region, Latin America was most frequently implicated in FCPA-related bribery schemes, with almost half of the schemes.”
