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SEC Maintains Pressure on Foreign Corrupt Practices Act Enforcement

The SEC announced a number of Foreign Corrupt Practices Act (FCPA) enforcement actions in the first half of 2023, a strong indication that the SEC continues to prioritize FCPA enforcement. And all indications are that SEC whistleblower claims continue to have a significant impact on FCPA enforcement.

The SEC has vigorously enforced the Foreign Corrupt Practice Act for many years. Those efforts have yielded a number of significant results. Just since 2022, the SEC has announced five FCPA cases resulting in financial sanctions of $50 million or more. Within the past five years, the SEC has announced three FCPA resolutions that exceeded $1 billion.

About the Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act is an anti-bribery law that makes it illegal to bribe foreign officials and combats foreign corruption in other ways. The FCPA (1) makes it illegal for individuals and businesses to bribe foreign officials to get or keep business, and (2) imposes certain record keeping and internal control requirements and prohibits individuals and businesses from falsifying those records or circumventing those controls.

The Securities and Exchange Commission and the Department of Justice jointly enforce the FCPA. In a joint statement issued in 2020, officials from the DOJ and the SEC stated, “Foreign bribery is a scourge that must be eradicated.  It undermines the rule of law, empowers authoritarian rulers, distorts free and fair markets, disadvantages honest and ethical companies, and threatens national security and sustainable development.” [1]

Recent SEC Enforcement of the FCPA

In 2023, the SEC announced that Koninklijke Philips N.V. agreed to pay $62 million to resolve charges that violated the FCPA’s books and records and internal controls provisions related to alleged improper conduct intended to influence hospital officials in China to draft technical specifications in public tenders to favor Philips’ medical diagnostic products.

In May, the SEC also announced a $2.45 million settlement with a research company, Gartner, Inc. for FCPA violations in connection with a South African consulting firm working to obtain contracts from the South African Revenue Service. In April, the SEC announced an $8 million settlement arising from allegations in connection with payments made to an Angolan government official. In March, the SEC announced that Rio Tinto plc, a global mining and metals company, agreed to pay $15 million for FCPA violations arising from a bribery scheme in Guinea. Also in March, the SEC announced that Flutter Entertainment, a global gaming and sports betting company, agreed to pay $4 million for failing to maintain sufficient internal accounting controls and keep accurate books and records in connection with payments made to consultants in Russia.

Impact of Whistleblowers on the SEC’s FCPA Enforcement

The SEC is obligated to protect the confidentiality of whistleblowers, with certain limited exceptions, so it is often not possible to determine which enforcement actions benefited from whistleblower tips. 17 CFR § 240.21F-7.

However, we know that the SEC received over 200 whistleblower tips regarding potential violations of the FCPA in 2022 alone. The SEC’s Whistleblower Office noted in its 2022 report that, “the Whistleblower Program has become fundamentally international in character, with tips received from all over the world.” The SEC received tips from Canada, the United Kingdom, Germany, China, Mexico, and Brazil in 2022.

The SEC pays rewards to whistleblowers who provide original information about FCPA violations when the information results in a successful enforcement action and a financial recovery for the government.

About the Author

Attorney John T. Crutchlow

John T. Crutchlow is a former SEC Enforcement Division attorney and a former Assistant United States Attorney with the Department of Justice where he specialized in civil fraud cases under the False Claims Act. He represents whistleblowers before the SEC, CFTC, and IRS, and in qui tam actions filed under the False Claims Act.