The SEC’s Enforcement Division has maintained a specialized FCPA unit since 2010. Enforcement of Foreign Corrupt Practices Act violations has expanded over the years, with whistleblowers coming forward from the four corners of the world. Under the FCPA, companies that are listed on the stock market in the U.S. are prohibited from bribing foreign government officials to secure contracts and other business.
The last year saw a substantial number of sizable FCPA recoveries arising from cases prosecuted by both the SEC and the DOJ. Some of the largest recoveries came from prominent American corporations, including Walmart and Microsoft. American and foreign whistleblowers shed light on misconduct taking place worldwide, from Turkey to Uzbekistan, and from Brazil to Iraq.
- Ericsson - $1 Billion Settlement
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The Nordic telecommunications giant Ericsson agreed to pay a combined $1 billion to the Securities Exchange Commission and the Department of Justice to settle claims that the multinational company ran a large-scale bribery scheme, using slush funds to bribe government officials in Djibouti, China, Vietnam, Indonesia, and Kuwait.
In Djibouti, for example, Ericsson allegedly doled out $2.1 million in bribes over five years. The bribes were disguised as consulting fees, and they resulted in the company winning a $22.5 million government contract.
- Mobile TeleSystems PJSC - $850 Million
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This Russian telecom giant agreed to pay a total of $850 million to settle claims that it violated the FCPA by bribing officials to win contracts in Uzbekistan. The bribe was allegedly paid to a local government official who was a relative of the Uzbek president. At least $420 million were allegedly paid through sham companies owned by the corrupt official.
- TechnipFMC - $296 Million
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TechnipFMC, an international gas and oil provider, paid a $296 million settlement to resolve allegations of bribery stemming from Brazil and Iraq. Both U.S. and Brazilian authorities prosecuted the case. According to prosecutors, the oil and gas company systematically bribed government officials to obtain business advantages in Brazil and Iraq between 2003 and 2013.
- Walmart - $282 Million
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According to the SEC, Walmart violated the FCPA’s internal accounting requirements for over a decade. As the retailer expanded around the world, the SEC and the DOJ claimed it failed to comply with anti-corruption regulations. Walmart paid the SEC $144 million and the DOJ $138 million, for a combined settlement of over $282 million.
Prosecutors found that Walmart bribed Brazilian officials through an intermediary to secure construction permits. According to the allegations, the company implemented insufficient anti-corruption controls in Brazil, China, India, and Mexico.
Walmart’s Brazilian subsidiary pleaded guilty to FCPA violations. As part of its settlement with the DOJ, Walmart entered into a comprehensive compliance monitoring agreement.
- Fresenius Medical Care - $231 Million
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Fresenius, a German-headquartered provider of medical products and services, paid $231 million to settle allegations that it violated the FCPA while conducting business in Angola, Saudi Arabia, Morocco, Spain, Turkey, and various West African countries. The charges arose from investigations by both the DOJ and the SEC. The violations allegedly spanned a decade.
To secure business in Saudi Arabia and Angola, Fresenius Medical Care (according to its own admissions) bribed local government officials between 2007 and 2016. In the rest of the countries listed above, the company admitted that it failed to maintain sufficient anti-corruption controls. In the words of the Assistant Attorney General, “Fresenius doled out millions of dollars in bribes across the globe to gain a competitive advantage in the medical services industry, profiting to the tune of over $140 million.”
- Tim Leissner at Goldman Sachs - $43.7 Million
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Once a high-ranking Goldman Sachs executive, Tim Leissner paid $43.7 million to the SEC and was permanently barred from the industry for engaging in a bribery scheme involving multiple FCPA violations. Leissner allegedly bribed officials in Malaysia and Abu Dhabi to secure lucrative business for his employer.
Leissner was Goldman’s Chairman in Southeast Asia. According to the SEC’s allegations, he played a key role in the looting of a Malaysian sovereign wealth fund known as 1MDB.
The defendant, who had pleaded guilty in a criminal case over related conduct in 2018, had previously been charged with conspiracy to launder money and FCPA violations. Leissner, who is still awaiting sentencing, could go to prison for 25 years.
According to the SEC, Leissner “personally received more than $43 million in illicit payments for his role in facilitating the bribe scheme.” The DOJ said that Goldman Sachs raised nearly $6.5 billion for the Malaysian wealth fund, and, as part of the bribery scheme, officials looted as much as $4.5 billion from it.
- Cognizant - $25 Million
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Cognizant, a New Jersey-based tech company, paid $25 million to settle allegations that it violated the FCPA’s anti-bribery and internal accounting control provisions.
Cognizant Technology Solutions and two of its executives faced both DOJ and SEC charges. According to the DOJ, the company illegally bribed a government official in India, and according to the SEC, it failed to maintain mandated accounting standards and records. To resolve these allegations, Cognizant paid disgorgement and prejudgment interest in the amount of $19 million, and $6 million in penalties.
- Microsoft Corporation - $24 Million
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Microsoft paid the SEC and the federal government over $24 million to settle claims that it violated the FCPA in Hungary, Thailand, Saudi Arabia, and Turkey. The company also faced criminal charges related to its business dealings in Hungary.
Microsoft’s Hungarian subsidiary allegedly obtained $13.7 million in business in the European country through illegal bribes. Between 2013 and 2015, the subsidiary paid Hungarian officials “through third-party vendors, consultants, distributors, and resellers, including in circumstances where there was no evidence of any services provided by the third parties,” the SEC said. “Improper payments were also funded through excessive discounts that Microsoft’s senior executives in Hungary approved based on vague justifications without ensuring they were passed on to the end government customers.”
- Deutsche Bank - $16 Million
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Deutsche Bank paid over $16 million to settle allegations of FCPA violations relating to its hiring practices. According to the SEC, the German bank hired “relatives of foreign government officials in order to improperly influence them in connection with investment banking business” in “both the Asia-Pacific region [including China] and Russia.”
As FCPA recoveries increase in number and value, so do their associated whistleblower awards. FCPA whistleblowers who provide the SEC with “original, timely, and credible information” leading to a successful enforcement action can receive between 10 and 30 percent of the total monetary sanctions, as long as these penalties surpass $1 million.
Between the implementation of its whistleblower program in 2012 and the end of the 2019 fiscal year, the SEC “awarded approximately $387 million to 67 [whistleblowers]. . . in FY 2019, the SEC awarded approximately $60 million in whistleblower awards to eight individuals whose information and cooperation assisted the Commission in bringing successful enforcement actions.”