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Department of Justice and Foreign Corrupt Practices Act Settlements

Tuesday, November 9, 2010

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

  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 complaint 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.