If the DOJ and SEC are prosecuting corporations instead of individuals for FCPA violations — an idea raised in another post — the numbers should show it. So let’s take a look.
We’ll use figures from Shearman & Sterling’s latest FCPA Digest to compare prosecutions from 2005 through 2009. For 2010, we’ll use our own numbers.
For all the years examined, a joint enforcement action by the DOJ and SEC against a corporate defendant and any its subsidiaries, or any one individual, is counted one time. For each year, only newly initiated enforcement actions are counted.
In 2005, there were eight corporate enforcement actions and eight individual prosecutions.
In 2006, there were eight corporate and nine individual prosecutions.
In 2007, the start of the modern FCPA era, there were 25 corporate and 17 individual enforcement actions.
In 2008, there were 16 corporate and 18 individual actions.
In 2009, there were 15 new corporate actions and 42 individuals charged, including the 22 shot-show defendants indicted in December 2009.
So far in 2010, our count is 13 new corporate actions and 12 individuals charged.
The combined numbers for 2005 through today show 84 corporate actions and 105 individuals charged.
What does that mean? There’s a rough equivalency between corporate and individual actions. In most years the ratio is nearly one-to-one if the 22 shot-show defendants aren’t counted. If the shot-show defendants are counted, there are five individual actions for every four corporate actions. And the ratio for each of the years, except the shot-show year of 2009, holds quite steady. The raw numbers, then, don’t support the idea that corporate enforcement is gaining the upper hand over individual actions.
But the raw numbers don’t tell a crucial fact — who the individual defendants worked for. If a significant number of them worked for companies that weren’t charged, or if multiple defendants worked for the same company, that would mean for many corporate enforcement actions, no individuals from those companies faced FCPA prosecutions.
Here’s what we know. There are several cases where two or more individual defendants worked for the same company that was itself an FCPA defendant. Examples would be the eight defendants from Control Components Inc., four from Nexus Technologies, four from Alliance One, and three from Willbros. And there are many cases where the employers of individual defendants weren’t charged. Included would be Ports Engineering Consultants Corporation, employer of Charles Jumet and John Warwick, AMAC International, employer of Shu Quan-Sheng, and JD Locator Services, employer of Juan Diaz. That leaves lots of corporate enforcement actions since 2005 where no individuals from those companies have been charged.
Which brings us back to the earlier question: Are corporate settlements replacing the prosecution of individuals from the companies involved in the settlements?
Coming up: A look at the enforcement record in a new way.