It’s not hard to find reasons why the DOJ and SEC would rather prosecute corporations instead of individuals.
Here are a few:
Corporations can’t defend themselves. They’re strictly liable under respondeat superior for crimes committed by employees in the scope of their jobs. That’s why no company has fought against FCPA charges in court for more than two decades. Individuals, on the hand, can and do fight in court and sometimes win. Recent examples of tough trials with mixed results include Frederick Bourke and William Jefferson.
Corporations cooperate. No all companies self-disclose their FCPA offenses, but most do. They hire outsiders to conduct in-depth internal investigations and hand the results over to the government. That makes life easier for prosecutors and in theory benefits the company. Individuals can also plead guilty, of course, and many do. But they usually first try to defend themselves, which increases the government’s burden.
Corporations can’t run or hide. Domestic companies are all registered in their home states and can be brought to court there. Foreign corporations that are issuers under the FCPA have also submitted to the jurisdiction of U.S. courts. But individuals of any nationality can run. If they make it to another country, they have to be extradited back to the U.S. to face trial, a complicated process that can take years and may not be successful. Some examples include Viktor Kozeny and Jeffrey Tesler.
Corporate cases make headlines. For years, journalists have known that FCPA cases don’t generate much buzz with the general public, and cases involving individuals hardly make a ripple (the Bourke and Jefferson cases were exceptions because of the defendants’ fame). But giant penalties assessed against well-known global corporations are widely reported. Recent examples are Siemens, KBR, Daimler, and BAE. If the DOJ and SEC want to spread the word about the FCPA, chasing big companies is a good way to do it.
Corporate prosecutions are cost effective. They don’t require long and expensive trials, so there’s less drain on agency resources. And the payday for the U.S. government can be a quarter or even a half billion dollars per case, swamping the top fines for individuals.
How do any of the above influence prosecutorial decisions, if at all? The DOJ and SEC would say they don’t. In other posts, we’ll look at the recent enforcement track record, and we’ll try to see things from the perspective of the prosecutors.