There was a time when the U.S. Department of Justice primarily focused its attention on prosecuting companies responsible for bribing foreign officials. Critics of this practice argued that the resulting fines had become just another cost of doing business. So, about eight years ago, the DoJ announced a new strategy of targeting corporate officers and directors for criminal prosecution under the Foreign Corrupt Practices Act (FCPA) in order to more significantly deter global corporations from engaging in corrupt practices.
If the number of convictions is any indication, the strategy may be paying off: since 2005, dozens of corporate executives have been convicted of violating the FCPA, paid hefty fines from their personal assets, and spent years in prison. (Of course, companies are still the subject of federal agencies’ wrath: the most recent case will result in Pfizer paying more than $60 million to settle FCPA charges, according to the Wall Street Journal.)
Last month, law firm Chadbourne & Parke released a study of the 61 FCPA prosecutions involving individual defendants over the past six years. A surprising number, 35%, of the defendants were the president, chief executive officer, or chief operating officer of their firm. In all, 53 of the individuals charged with violating the FCPA during this period were senior officers — a staggering 87% of all defendants.
These findings should be of concern to corporate executives worldwide. Though the U.K. Bribery Act — which went into effect earlier this year — has captured headlines as a force to be reckoned with, in many ways, the 33-year-old FCPA still reigns supreme in its threat to CEOs and CFOs who do business in the United States.
To understand the potential magnitude, one need look no further than the recent News of the World phone-hacking scandal that has consumed Rupert Murdoch and his News Corp. for much of the year. The gravest threat of criminal prosecution facing the Murdochs and other senior executives of News Corp. might come not from British authorities, who would directly oversee the publication, but from the FCPA.
