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The High Cost of FCPA Violations

Foreign Corrupt Practices Act (FCPA) violations are good examples of just how costly compliance failures can be. According to the Stanford Law School FCPA Clearinghouse, a total of $13,414,657,337 has been paid to foreign governments in monetary sanctions in FCPA-related Enforcement Actions since 1977. The 10 largest monetary sanctions imposed in U.S. Securities and Exchange Commission (SEC) enforcement actions initiated since the FCPA’s enactment in 1977 include Odebrecht S.A. totaling $3,557,626,137 and The Goldman Sachs Group, Inc. in the amount of $2,617,088,000. You can view a full list of SEC enforcement actions on FCPA cases.

In 2022, large fines for anti-bribery schemes were imposed on Gol Intelligent Airlines Inc ($160 million), Tenaris ($78 million), Stericycle, Inc. ($28 million), and KT Corporation ($6.3 million). And last month, Oracle Corporation was ordered to pay $23 million when the SEC announced charges that the company violated FCPA provisions when subsidiaries in Turkey, the United Arab Emirates (UAE), and India “created and used slush funds to bribe foreign officials in return for business between 2016 and 2019.”

An FCPA violation in progress

According to the SEC, the slush funds were also used by the subsidiaries in Turkey and UAE to pay for officials to attend technology conferences, in violation of Oracle policies and procedures. In some cases, employees of the subsidiary in Turkey also used the funds to pay for officials’ families to accompany them to international conferences or take related side trips.

This is Oracle’s second offense in India. In 2012, the SEC issued a public notice fining the company $2 million for corrupt practices in India. Oracle was charged with an FCPA violation for failing to prevent a subsidiary from making unauthorized payments to fake vendors in India. The FCPA “generally prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business.” It can apply to activity anywhere in the world to publicly traded companies and their officers, directors, employees, stockholders, and agents (third parties, consultants, distributors, join-venture partners, and more). Companies are required to maintain accurate books and records and have a system of internal controls to account for transactions.

Bribery and corruption are among the most common—and most costly—risks facing organizations today. Enforcement of the FCPA continues to be a high priority for the SEC, which highlights the need for effective Anti-Bribery and Anti-Corruption training. Ethics and compliance programs in companies around the world rely on SAI360 Anti-Bribery and Anti-Corruption training to help ensure that relationships employees form with stakeholders, potential customers, third parties and vendors, and government officials comply with FCPA other regulatory expectations.

Anti-corruption efforts play a pivotal role in Environmental, Social, and Governance (ESG) matters that are growing in importance to investors, policymakers, and other stakeholders as an indication of long-term sustainability and profitability. Creating a culture that influences employees’ actions, decision-making, and behavior can be a challenging and lengthy process, requiring sensitivity, patience, and resources. Our state-of-the-art online compliance training helps move your ESG goals forward to create an ethical culture.

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