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Department of Justice and Foreign Corrupt Practices Act Settlements

  
  
  
  

Department of Justice SettlementsFor years a battle cry for United States-based companies went something like this:  

Bribery is wrong. But if you enforce anti-bribery laws against U.S. companies then those companies simply cannot effectively compete with foreign companies, which are immune from prosecution under U.S. anti-bribery laws. 

While always a bit unsavory, it is now flat-out untrue.

Today, eight of the top 10 Foreign Corrupt Practices Act (FCPA) whistleblower settlements involve foreign companies. The Department of Justice (DOJ) has even-handedly applied the FCPA across all industries and participants.  Indeed, foreign companies now account for eight of the top ten FCPA enforcement settlements.  The below list comes from FCPABlog.com:

  1. Siemens (Germany): $800 million in 2008.
  2. KBR/Halliburton (USA): $579 million in 2009.
  3. BAE (UK): $400 million in 2010.
  4. Snamprogetti Netherlands B.V. ENI S.p.A (Holland/Italy): $365 million in 2010.
  5. Technip S.A. (France): $338 million in 2010.
  6. Daimler AG (Germany): $185 million in 2010.
  7. Panalpina (Switzerland): $81.8 million in 2010.
  8. ABB Ltd(Switzerland): $58.3 million in 2010.
  9. Pride (USA): $56.1 million in 2010.
  10. Shell (UK/Holland): $48.1 million in 2010.

Because FCPA whistleblower laws now apply to non-issuer foreign companies, it is wrong to assume that a foreign company can avoid liability under the FCPA because that foreign company does not issue securities that must be registered with the SEC. 

Panalpina World Transport Ltd. (PWT) is a Swiss shipping and freight logistics company.  It does not have to register its securities with the SEC.  It does have a wholly owned United States subsidiary called Panalpina Inc. (number seven on the above list), which is incorporated in New York and has a principle place of business in New Jersey.  According to the DOJ’s FCPA complant against Panalpina Inc, the company was a domestic concern and subject to FCPA

This DOJ enforcement action reiterates a basic premise behind the FCPA; namely that if a business has sufficient ties to the United States, that business is subject to the anti-bribery provisions of the FCPA.