Top Ten FCPA Recoveries of 2020
2020 was a blockbuster year in the U.S. government’s battle against companies and individuals enmeshed in foreign bribery schemes. The list of 2020’s largest settlements involving charges under the Foreign Corrupt Practices Act (FCPA) includes many substantial recoveries. In 2020 the government recovered billions of dollars in settlement of claims under the FCPA, building on substantial recoveries just last year.
The FCPA prohibits the payment of bribes to foreign officials for the purposes of furthering business interests. Violations of the FCPA are investigated by the SEC and DOJ. Because of the SEC’s role, whistleblowers who report violations of the FCPA to the SEC Whistleblower Program may be eligible to receive a whistleblower reward of up to 30% of the government’s recovery. A whistleblower does not need to be a citizen of the U.S. to be eligible for a whistleblower reward.
This year, the Department of Justice and the Securities and Exchange Commission concluded investigations that spanned the globe and included some unusual flavors of misconduct. Here are our top ten FCPA recoveries for 2020.
- Airbus. In the number two spot is French aerospace giant Airbus SE, which paid $4 billion to settle global bribery and trade charges with French, UK, and U.S. authorities to end an eight-year investigation that a British whistleblower triggered. Of that amount, DOJ’s criminal penalty for FCPA-related offenses totaled $2.09 billion. DOJ charged Airbus with criminal violations of the FCPA, stemming from the company’s scheme to bribe Chinese and other foreign officials to sell aircraft.
- Goldman Sachs. The famed bankers at Goldman Sachs top the charts this year, after the DOJ and SEC imposed a total of $3.3 billion in financial penalties against Goldman Sachs Group Inc. and a Malaysian subsidiary to resolve charges related to Malaysian sovereign wealth fund 1Malaysia Development Berhad (1MBD). Prosecutors alleged Goldman paid over $1 billion in bribes to Malaysian and Abu Dhabi officials to obtain lucrative business, including Goldman’s role in underwriting approximately $6.5 billion in three bond deals for 1MDB, for which the bank earned hundreds of millions in fees. In 2019, Goldman Sachs banker Tim Leissner agreed to disgorge more than $43 million to settle claims regarding his role in the scheme.
- Novartis. Badboy pharmaceutical giant Novartis AG and two of its subsidiaries paid the DOJ and SEC $346.7 million. The agreements resolve charges that Novartis made improper payments between 2012 and 2016 to public and private healthcare providers in Greece, Vietnam, and South Korea so they would use Novartis-branded pharmaceutical products. In South Korea, for example, a Novartis unit lavished more than $16 million on medical journals, some of which improperly passed the funds to providers as honoraria payments.
- J&F Investimentos S.A. J&F, a Brazilian private investment company, pled guilty to criminal FCPA bribery violations, agreeing to pay $256 million and cooperate with ongoing investigations. In a related action, J&F subsidiary JBS, the largest meat producer in the world, and two of J&F’s owners agreed to pay over $27 million to resolve SEC charges. The misconduct involved payment of millions of dollars to government officials to secure financing from two state-owned banks in Brazil, as well as payments to an executive at a Brazilian state-owned pension fund to obtain government approval of a proposed acquisition U.S.-based chicken producer Pilgrim’s Pride Corporation.
- Vitol. Vitol, Inc., one of the largest energy trading firms in the world, entered into a three-year deferred prosecution agreement with DOJ in exchange for a criminal penalty of $135 million. And in the first coordinated FCPA enforcement action between DOJ and the Commodities Futures Trading Commission (CFTC), the CFTC fined Vitol an additional $28.7 million. Vitol’s misconduct involved million of dollars in bribe payments Vitol made to numerous public officials in Brazil, Ecuador and Mexico. In Brazil, for example, DOJ charged that Vitol paid more than $8 million in bribes to at least four officials at Petrobras, Brazil’s state-owned oil company, in exchange for confidential Petrobras pricing and competitor information.
- Herbalife. Herbalife Nutrition Ltd. paid $123 million to the DOJ and SEC to resolve FCPA offenses in China. Between 2007 and 2016, Herbalife falsified its books and records and provided corrupt payments and benefits to Chinese government officials to obtain selling licenses to sell its products. Between 2007 and 2016, Herbalife reimbursed its employees “more than $25 million for entertaining and gift-giving to Chinese Government officials,” according to the DOJ.
- Eni S.p.A. Oil industry players are frequently snared in FCPA enforcement, and 2020 saw a $24.5 million settlement with Italian oilfield services company Eni S.p.A., which was alleged to have used a subsidiary to make payments of $215 million under sham agreements with an intermediary to assist in securing contracts with Algeria’s state-owned oil company. This settlement also illustrates the international reach of the FCPA, as the SEC asserted jurisdiction over the Italian company based on ADRs listed on the NY Stock Exchange.
- Alexion. Boston-based pharmaceutical company Alexion Pharmaceuticals Inc. agreed to pay more than $21 million to resolve charges that it bribed government officials and doctors at state-connected hospitals in Turkey and Russia to promote use of its blood-disease drug, Soliris. In Turkey, Alexion paid a consultant with ties to health officials over $1.3 million for consulting fees and purported expense reimbursements. In Russia, Alexion paid doctors at government hospitals over $1 million to increase Soliris prescriptions, recording the payments as honoraria, educational expenses, business meeting expenses, and scientific research.
- World Acceptance Corporation. World Acceptance Corporation (WAC), a South Carolina-based consumer loan company, agreed to pay the SEC $21.7 million in penalties and disgorgement to resolve FCPA offenses in Mexico. WAC’s Mexican subsidiary paid $4.1 million in bribes to Mexican government officials to gain or keep business related to its Préstamos Viva business line, which offered small loans to government employees. WAC reportedly deposited money into bank accounts linked to corrupt officials and hired an intermediary to distribute large bags of cash to them.
- Beam Suntory. Chicago-based spirits maker Beam Suntory Inc. agreed to pay $19.6 million to the DOJ to resolve charges that it Indian subsidiary paid bribes to Indian government officials from 2006 to 2012, often through third-party promotors and distributors, to secure business at government-controlled depots and stores. In July 2018, Beam paid the SEC $8.2 million to settle related civil charges
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