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Harry Cassin
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Andy Spalding
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Thomas Fox
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Marc Alain Bohn
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Contributing Editor

When Money Talks, Do Individuals Walk?

Corporations can’t be jailed for violating the FCPA. Their main punishment is financial — criminal fines and, for issuers, civil penalties and disgorgement of profits.

Under the federal sentencing guidelines, corporate punishment depends in part on how much money was involved in the crime. For the FCPA, that means how much was paid in bribes and how much revenue and profit were generated by the bribes.

For example, the DOJ’s Lanny Breuer has said Siemens got off cheap. Its $450 million criminal fine was “a far cry from the advisory range of $1.35 billion to $2.7 billion called for in the Sentencing Guidelines.” Siemens, he said, received a penalty that was 67 to 84 percent less than what it otherwise could have faced had it not cooperated and taken dramatic corrective action.

Siemens also agreed to pay $350 million to the SEC in disgorgement. So the U.S. portion of its financial penalty was $800 million, still the largest FCPA settlement on record.

With so much money at stake, you’d expect FCPA units at the DOJ and SEC to be growing, and they are. Our question, though, is whether those agencies still want to prosecute individuals who violate the FCPA when they can instead deal with cooperating companies?

The DOJ says individuals are still a target. It cites the shot-show prosecutions — 22 individuals indicted for FCPA violations — and last year’s mass FCPA indictment of eight CCI executives, six at one time.

But no one from Siemens, which Mr. Breuer himself called “arguably the most egregious example of systemic foreign corruption ever prosecuted” by the DOJ, has been indicted in the U.S. Even if that’s because of jurisdictional problems, the Siemens executives walked on the FCPA violations. It’s the same with the brass from U.K.-based BAE. The company paid $400 million to settle an FCPA case last year. But no one from BAE has faced U.S. charges. Again, Daimler AG paid $185 million in penalties this year, and so far no one from that company has been charged here.

The pattern is broken, but only slightly, by the biggest enforcement action of them all. From the four companies that made up the TSKJ consortium — Technip, Saipem, KBR, and JGC — just one U.S. executive and two Britons have been charged. Meanwhile, three of the four TSKJ companies have paid $1.28 billon to settle with the DOJ and SEC.

None of this proves that FCPA-related mega settlements are replacing individual prosecutions. But the pattern that’s emerging suggests it.

Coming up: A look at individual and corporate enforcement numbers and the story they tell.

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