Top 5 Largest Foreign Corrupt Practices Act Cases

With the announcement of a Department of Justice ("DOJ") Corporate Whistleblower Awards Pilot Program earlier this year, enforcement of the Foreign Corrupt Practices Act ("FCPA") has emerged as a new priority for DOJ whistleblower investigations. Under the new program, whistleblowers submit information that results in a successful prosecution may be eligible to receive a percentage of the resulting settlement. In this article, we will discuss the five largest FCPA awards as well as background on the FCPA.

The Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§ 78dd-1, et seq., criminalizes the payment of foreign government officials for the purpose of obtaining or retaining business. Critically, the FCPA does not differentiate between whether an offending company is principally based in the United States or not. The only relevant consideration is whether the firm is registered to operate in the United States. Because of this, many of the firms investigated by the FCPA have been foreign in origin, making the law a first-of-its-kind avenue for policing corruption by domestic and international companies alike.

The FCPA Whistleblower Program

Like other federal statutes that criminalize complex corporate fraud, the DOJ has created a whistleblower program for employees or other individuals who have internal information relating to corporate misconduct. Whistleblower programs create a financial incentive for individuals with critical information or evidence to contact the DOJ, while also shielding them from retaliation by the offending firm. The information provided by whistleblowers is typically not publicly available, making their role critical to the success of DOJ investigating, prosecuting, and punishing fraudsters.

Whistleblowers are particularly valuable in FCPA cases, as the expressly illegal nature of bribery means that few will be privy to the offending conduct save a small group of insiders. The FCPA whistleblower program seeks to combat bribery of foreign officials by providing a financial incentive to employees for reporting violations. Generally, whistleblowers who provide information that directly leads to a successful prosecution will receive between 15% and 30% of the resulting sanctions. As demonstrated by the cases within this article, this can be a tremendously large windfall in FCPA cases.

Top 5 Largest Settlements in FCPA History

The following settlement/sanction figures are sourced from the Stanford Law School Foreign Corrupt Practices Act Clearinghouse database.

5) Ericsson: $1.2 Billion

Telefonaktiebolaget LM Ericsson ("Ericsson") is a Swedish telecommunications company. In 2019, Ericcson agreed to a non-prosecution agreement after a DOJ investigation unveiled a campaign of corruption that stretched across China, Indonesia, Vietnam, Kuwait, and Djibouti. Ericcson, like many violators of the FCPA, used bribes to secure infrastructure contracts that require the approval of foreign officials in countries without strong internal bribery controls. In the case of Ericcson, these contracts were to install telecommunication infrastructure, including telephone lines. As part of the non-prosecution agreement, Ericcson was expected to pay over $1.2 billion in sanctions.

4) Petrobras: $1.7 Billion

Petroleo Brasileiro S.A. ("Petrobras") is the state-owned oil company of Brazil. In 2018, Petrobras agreed to pay a combined $1.7 billion across two investigations by the SEC and DOJ. As part of the agreement, Petrobras admitted to "facilitating payments to politicians and political parties in Brazil." Despite the firm being headquartered in and engaging in the bribery in Brazil, Petrobras was prosecuted by United States agencies due to its participation in United States markets. 80% of the penalties paid by Petrobras were turned over to the Brazilian government, with the remaining 20% being split between the two prosecuting agencies.

3) Airbus: $2 Billion

Airbus SE ("Airbus") is a French aerospace company that, as of 2019, is the largest manufacturer of airliners in the world. In 2020, following an investigation by authorities in the United States, France, and the United Kingdom, Airbus agreed to pay over $3.9 billion in damages relating to a scheme to "use third-party business partners to bribe government officials, as well as non-government airline executives." Bribes were issued to officials and executives in China. Of the damages, $2 billion was recovered in connection with the FCPA action.

2) Goldman Sachs: $2.6 Billion

Goldman Sachs Group Inc. ("Goldman Sachs") is a global financial institution headquartered in New York. In 2020, the financial services giant agreed to pay over $2.6 billion in association with a FCPA investigation into bribes to Malaysian and Abu Dhabi officials. These bribes were paid "to obtain lucrative business for Goldman Sachs, including . . . underwriting approximately $6.5 billion in three bond deals." Because of the scale of the bonds, Godman Sachs received hundreds of millions in fees over the course of the execution of these deals.

1) Odebrecht and Braskem: $3.5 Billion

Odebrecht S.A. ("Odebrecht") is a Brazilian conglomerate whose principal business is in the manufacturing of petrochemicals. Braskem S.A. ("Braskem") is a Brazilian petrochemical company. In 2016, Odebrecht and Braskem pled guilty and agreed to pay at least $3.5 billion in connection with a combined bribery investigation by United States and Swiss authorities. Odebrecht admitted to paying hundreds of millions of dollars' worth of bribes to authorities across multiple continents in a scheme that was so intimately related to its business operations that a de-facto "department of bribery" existed within Odebrecht's finance department, per Deputy Assistant Attorney General Sung-Hee Suh. Similarly, Braskem admitted to its involvement in the bribery conspiracy. The various penalties were divided amongst Brazil, the United States, and Switzerland.

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