What are the ramifications of not having an effective compliance program? In this segment Tom looks at the Good and the Bad.
Video 4: FCPA Enforcement Actions Case Studies – the Good and the Bad?
What are the ramifications of not having an effective compliance program? In this segment Tom looks at the Good – Morgan Stanley, a company the DOJ declined to prosecute based on its ethics and compliance program and the Bad – French energy company Total whose bribery scheme was to pay over $61 million to an Iranian oil minister to receive concessions. The message from these two polar examples is crystal clear: if your company does not have an effective compliance program, you will pay the price.
There have been a wide range of fines and penalties in FCPA enforcement over the years. The top FCPA enforcement action involved the German company Siemens which was penalized $800 million for its world-wide bribery scheme in 2008. The largest fine paid by a US based company was by Halliburton in 2009 in the amount of $579 million.
As staggering as these numbers are for the fines and penalties paid, they pale next to the overall costs that a company can incur for an internal investigation and related expenses for a FCPA violation. So clearly companies need to avoid getting into FCPA hot water in the first place.
However if a company finds itself in an internal investigation regarding potential FCPA violations there are things which it can do to mitigate the damage. Indeed, there is one FCPA matter which stands out for a company’s response. That is the Morgan Stanley matter.
You will not find the name of Morgan Stanley in any FCPA enforcement action because after thoroughly investigating the company, the DOJ declined to prosecute Morgan Stanley, providing Morgan Stanley with a Declination to Prosecute.
This past June the DOJ announced a FCPA enforcement action against the French energy company Total. The company paid fines and penalties of $398 million, making it the 4th largest fine in the history of FCPA enforcement. Total’s bribery scheme was to pay over $61 million to an Iranian oil minister to receive concessions in Iran. Total completely failed to take FCPA compliance seriously.
The message from these two examples is clear. If you do not set up an effective FCPA compliance program, you will pay the price.