Episode 306 — 2023 FCPA Year in Review
FCPA trends often are relatively easy to describe and often overblown as a marketing technique by the usual cast of paparazzi suspects. (Self-proclaimed prognosticators that often push incorrect themes to promote business, or those that restate profound grasps of the obvious). 2023 has been a strange year in a number of respects — socially, politically and even in the small universe of DOJ enforcement and FCPA.
Why do I say that? For two years, this Administration has been pushing initiatives and made aggressive statements about enforcement policies, all designed to ready everyone for a large number of FCPA enforcement matters. The record, however, has not been backed up. Instead, we have witnessed DOJ policy changes, compliance guidance, voluntary disclosure encouragements, new merger and acquisition incentives. But along the way, something is missing — FCPA enforcement actions.
As a long-time DOJ prosecutor, I strongly believe in the hard work and dedication of federal law enforcement and prosecutors. Often, DOJ may make strong statements of enforcement and then back them up. In the last few years, we have experienced a disconnect. And I am perplexed by the failure to produce.
In the last three years, corporate fines for FCPA violations totaled: $345 million in 2021; $1.3 billion in 2022; and $819 million in 2023. Of course, I do not mean to belittle DOJ’s performance in 2022, which included the massive Glencore resolution. But the two years around 2022 — 2021 and 2023 stand out as slow years and the absence of any significant blockbuster cases. This stands in stark contrast to the six years before that: $2.4 billion in 2016; $1.1 billion in 2017; $1.3 billion in 2018; $2.7 billion in 2019; and $5 billion in 2020 (Goldman Sachs Malaysia year).
Perhaps even more perplexing in my view is the decline in individual FCPA prosecutions, a number one priority of DOJ’s Corporate Enforcement Program, particularly in the FCPA arena. After a record year in 2019 of 34 criminal indictments, I expected and predicted that DOJ would eclipse 40 cases each year. The decline in 2020 to 22 cases was expected in the year of the pandemic. But 2021 only 26 individuals were prosecuted, 23 in 2022 and a measly 12 in 2023 (3 of which were reindictments to move cases to a proper jurisdiction or respond to district court dismissals).
In the face of this uneven performance, it is no longer acceptable to offer the pipeline ups and downs theory. Something else is happening here — maybe it is the delays in coordinating international settlements with other jurisdictions? Or perhaps it is that the number of voluntary disclosures are tricking in at a much lower rate? Whatever the cause, the decline is difficult to explain.
On the other hand, when it comes to the SEC, 2023 was a consistent year with 9 corporate FCPA settlements and one involving the CFTC. The pace is relatively consistent with one significant exception. The SEC has not initiated an individual prosecution for at least two years. While the SEC has made statements as to the importance of individual prosecutions, the omission of any new individual prosecutions is inconsistent with its otherwise steady performance.