How do you calculate FCPA settlement amounts?

In January, Airbus entered into a $4 billion global settlement to resolve bribery offenses. Why did the FCPA Blog assess Airbus’ FCPA penalty at about half that number for the top ten list?

When calculating FCPA-related settlement amounts, we use the following guidelines:

The total monetary value of the enforcement action is derived from the enforcement documents filed or otherwise produced by the DOJ or SEC or both. The settlement includes all criminal and civil penalties imposed on the highest-level entity and all related entities named in the enforcement action documents, as well as special assessments, forfeiture, disgorgement, and prejudgment interest, without regard to where the DOJ and / or SEC said the money would or could be paid.

In other words: DOJ Order + SEC Order = Total FCPA Settlement

But the total FCPA settlement amount is not the same as the amount actually paid to the U.S. Treasury. Checks made out to the U.S. government may be considerably smaller.

Here’s how this works for criminal and civil FCPA-related settlements.

The Criminal Enforcement Action

Airbus’ DPA with the U.S. Department of Justice can be viewed here. Monetary calculations begin on page eleven.

Ultimately, the DOJ set appropriate criminal fine for FCPA-related offenses at $2.09 billion.

The DPA calls this amount the “Total Criminal Corruption Penalty,” and it only covers the penalty to satisfy FCPA-related activities (and not the trade-related offenses that were also part of the enforcement action).

As part of the U.S. settlement, payments up to $1.78 billion made by Airbus to French national prosecutor Parquet National Financier (PNF) will be credited by the DOJ.

This leaves Airbus with a balance of just $294 million payable the DOJ to settle the FCPA offenses.

But $2.09 billion is the total penalty ordered by the DOJ in its deferred prosecution agreement to satisfy the FCPA-related offenses in the settlement.

While included in the same global settlement, other penalties Airbus paid are not included in the FCPA tally, including:

• $237.7 million paid the DOJ to settle International Traffic in Arms Regulations (ITAR) charges.
• $55 million bond forfeited to the DOJ in a civil forfeiture action.
• $10 million settlement reached with the U.S. State Department to resolve violations of the Arms Export Control Act (AECA) and ITAR.
• €991 million ($1.09 billion) paid the Serious Fraud Office to settle Bribery Act charges and entered into a separate three-year DPA with the UK agency.
• €2.1 billion ($2.3 billion) paid to the PNF to settle anti-corruption charges brought by the French government.

The DOJ only credited a portion ($1.78 billion) of Airbus’ French settlement ($2.3 billion) towards the FCPA-related offenses.

The Airbus enforcement action didn’t involve a settlement with the SEC, so there is no U.S. civil penalty or disgorgement to add.

The Civil Enforcement Action 

When issuers are involved, the U.S. Securities and Exchange Commission handles the civil actions (if any) in FCPA settlements.

In 2017, for example, Telia reached a $1.01 billion settlement included a criminal penalty of $548.6 million and disgorgement to the SEC of $457 million.

Telia’s SEC administrative order can be found here. The disgorgement details begin on page eight.

Telia didn’t actually pay the SEC $457 million in disgorgement, however.

About $40 million of the disgorgement was satisfied by a forfeiture payment to the DOJ. And up to $208.5 million was offset for any confiscation or forfeiture payment Telia made to Swedish or Dutch prosecutors.

So from the total disgorgement of $457 million ordered by the SEC, subtract $40 million for the DOJ forfeiture, and $208.5 million for the Dutch and Swedish payments.

That leaves disgorgement actually payable to the SEC of $208.5 million, or half of the ordered $457 million disgorgement.

But $457 million is the total disgorgement ordered by the SEC in its administrative action to satisfy the FCPA-related settlement.

In Telia’s case, the total FCPA settlement about would be: $548.6 million + $457 million = $1.01 billion

Finding the exact settlement amount of an FCPA corporate resolution is not always straightforward, and there are many different ways to do the math. This is how the FCPA Blog calculates FCPA-related settlement amounts, and we aim to stay consistent with the methodology laid out above.