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2-1-2012

The Foreign Corrupt Practices Act: AnExamination of Cases and Enforcement ActionsMichael AkersMarquette University, michael.akers@marquette.edu

Brittany Zeske

Published version. The CPA Journal, Vol. 8, No. 2 (February 2012): 60-64. Publisher link. © 2012New York State Society of Certified Public Accountants. Used with permission.

Recently, two American companiescame into conflict with the ForeignCorrupt Practices Act (FCPA). Thefirst, Avon Products Inc., began an

internal investigation in 2008 regarding pos-sible bribery payments, including travel andentertainment expenses, to officials in China.Now, Avon’s investigation is widening touncover possible payments to officials inArgentina, Brazil, India, Japan, and Mexicofrom 2004 to 2010. Avon is also perform-ing compliance reviews in various markets.It disclosed the investigation and is cooper-ating with the SEC and the U.S. Departmentof Justice (Ellen Byron, “Avon BribeInvestigation Widens,” Wall Street Journal,May 5, 2011, pp. B1–B2). The second com-pany, Lindsey Manufacturing Co., wasrecently convicted in a bribery case for vio-lating the FCPA. Lindsey Manufacturing andtwo of its executives used Mexican salesagents to pay bribes to officials at theComisión Federal de Electricidad (CFE), aMexican state-owned utility from whichLindsey Manufacturing sought business. Thisconviction marks the “first time a companyhas been convicted at a U.S. trial in a for-eign bribery case” (Samuel Rubenfeld,“Conviction in Foreign Bribery Case Is Firstin U.S. Trial,” Wall Street Journal, May11, 2011, p. B4). Prior to this, companieseither pleaded guilty or signed a deferredprosecution agreement.

These two cases point to the increasedattention to enforcement of the FCPA by theDepartment of Justice and the SEC. Leadersfrom both the accounting and legal profes-sions suggest that some reasons for thisincreased attention to FCPA enforcement areintolerance of fraud and corruption, theSarbanes-Oxley Act of 2002 (SOX), andgrowth into remote areas of the world wherebribes are accepted business practices.

This article examines the court casesfiled by the Department of Justice against

individuals and corporations involving vio-lations of the FCPA from 1998 through2010. An analysis of these cases providesuseful information for the auditors of inter-national clients as well as the managementof such organizations.

A Historical PerspectiveIn the mid-1970s, the SEC performed

investigations that resulted in more than 400American companies admitting to makingpayments that were illegal, or possibly illegal,to foreign government officials, politicians,and political parties. These payments totaledmore than $300 million. The findings fromthis investigation diminished public confidencein the integrity of American corporations.

These investigations spurred the SEC topass the FCPA in 1977. It was enacted toput an end to payments being made to bribeforeign officials and to restore public confi-dence in American businesses. The provisionsof the FCPA “make it unlawful for a U.S.person, and certain foreign issuers of securi-

ties, to make a corrupt payment to a foreignofficial for the purpose of obtaining orretaining business for or with, or directingbusiness to, any person.” This antibribery pro-vision applies to both privately held andpublicly traded companies. The FCPA alsorequires companies whose securities are list-ed in the United States to meet certainaccounting provisions, which require corpo-rations covered by the antibribery provisions“to make and keep books and records thataccurately and fairly reflect the transactionsof the corporation and to devise and main-tain an adequate system of internal account-ing controls” (www.justice.gov/criminal/fraud/fcpa/docs/lay-persons-guide.pdf). In1998, the FCPA was amended by theInternational Antibribery and Fair CompetitionAct. The 1998 amendments extended antib-ribery provisions to also apply to foreign firmsand persons who participate in corrupt pay-ments while in the United States.

There are five elements to be met inorder for a violation of the FCPA to occur.

The Foreign Corrupt Practices Act

M A N A G E M E N T

c o r p o r a t e g o v e r n a n c e

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By Brittany Zeske and Michael D. Akers

An Examination of Cases and Enforcement Actions

FEBRUARY 2012 / THE CPA JOURNAL 61

First, the person making the payment canbe either a firm or an individual.Individuals include officers, directors, andemployees. Issuers are corporations thathave issued securities that are registered inthe United States or corporations that needto file reports with the SEC. Since the 1998amendments, foreign companies and indi-viduals can also be held liable under theFCPA. U.S. parent corporations may beheld responsible for corrupt payments madeby their foreign subsidiaries. Second, theaction must involve “corrupt intent”—thatis, the person making the payment musthave the corrupt intent to cause a foreignofficial to act wrongfully in his position.The third element requires that a paymentis made or that an offer or promise to payis made; this includes offering not onlymoney, but also anything else of value.Fourth, the recipient must be a “foreignofficial, a foreign political party or partyofficial, or any candidate for foreignpolitical office” in order to cause a viola-tion of the FCPA. Lastly, there is a busi-ness purpose test to determine whetherthe payment was made to obtain or retainbusiness, which is prohibited. In such cases,the resulting business does not necessari-ly have to be with the foreign govern-ment or government instrumentality(www.justice.gov/criminal/fraud/fcpa/docs/lay-persons-guide.pdf).

International InitiativesThere has also been increased attention

toward corrupt payments internationally.Countries in North America, South America,Europe, Asia, Southeast Asia, and the PacificRim have foreign anticorruption laws. TheUnited States, for example, ratified theOrganization for Economic Cooperationand Development Convention on CombatingBribery of Foreign Public Officials inInternational Business Transactions (OECDConvention) in 1998. The OECD Conventionprovides elements that a foreign corrupt prac-tices statute should include. Both Canada andMexico have implemented the OECDConvention—in Canada through adoption ofthe Corruption of Foreign Public OfficialsAct (46-47 Elizabeth II Ch. 34) and inMexico through amendments to its FederalPenal Code. Both of these laws set forthpenalties for bribing foreign officials. In SouthAmerica, Argentina is the only country withforeign anticorruption laws, enacted under theStatute on Ethics in the Exercise of PublicOffice in 1999, which amended Argentina’sPenal Code to criminalize bribery of foreignofficials. There are 23 countries in Europethat have enacted anticorruption laws: Austria,Belgium, Bulgaria, the Czech Republic,Denmark, Finland, France, Germany, Greece,Hungary, Iceland, Italy, Lithuania,Luxembourg, the Netherlands, Norway,Poland, Portugal, Slovakia, Spain, Sweden,Switzerland, and the United Kingdom.Twenty of these countries amended theirexisting laws or enacted new legislation inorder to implement the OECD Convention.Lithuania did not implement the OECDConvention; however, it participates on theCouncil of Europe Criminal Convention on

Corruption and it adopted a new CriminalCode in 2000. Lastly, there are countries inAsia, Southeast Asia, and the Pacific Rimthat have FCPA initiatives. Japan, NewZealand, and South Korea have implement-ed the OECD Convention by amending orenacting legislation to criminalize bribery offoreign officials and to penalize those actions.Australia also amended its Criminal CodeAct of 1995 by enacting the Criminal CodeAmendment (Bribery of Foreign PublicOfficials) in 1999 to implement theConvention (www.fcpaenforcement.com/documents/documents.asp?PAGE=4).

There have also been international agree-ments put into place to enforce the FCPA,including the U.N. Convention AgainstCorruption, the African Union Conventionon Preventing and Combating Corruption,the Organization of American States(OAS) Convention, and the OECDConvention; however, this is not anexhaustive list of the international agreementsthat exist (see www.fcpaenforcement.com/documents/documents.asp?PAGE=4).

The United Kingdom intensified its battleagainst corruption with the passage of the2010 U.K. Bribery Act. This act, whichbecame enforceable in July 2011, coversactivities of any person or third parties act-ing on behalf of a business, such asemployees, agents, or subsidiaries. This leg-islation is more extensive than the FCPAbecause it pertains to all bribery, whether pub-lic or private. The four offenses in the U.K.Bribery Act include bribing a foreign publicofficial and the failure to prevent bribery. Andbecause the U.K. legislation is more exten-sive than the FCPA, U.S. businesses needto understand that compliance with the FCPAYear Number of Cases

1998 41999 22000 02001 62002 42003 52004 52005 62006 72007 192008 232009 342010 31Total 146

EXHIBIT 1Foreign Corrupt Practices Act (FCPA)

Court Cases

Position of Perpetrator Number InvolvedPresident or Officer 47Vice President 20Director 17Manager 9Employee 13Corporation1 741 For companies whose securities are listed in the United States, no specific individual was charged; instead, the company itself was charged. The total exceeds 146 because some cases involved multiple individuals or corporations.

EXHIBIT 2Perpetrators

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won’t guarantee compliance with the U.K.Bribery Act.

Case StudiesThe Department of Justice has criminal

and civil enforcement responsibilities foractivities related to the antibribery provisionsfor domestic concerns and foreign companies, while the SEC has civil enforce-ment responsibilities regarding the antib-ribery provisions for issuers. This articleexamines all Department of Justice FCPAEnforcement Action cases from 1998through 2010 (www.justice.gov/criminal/fraud/fcpa/cases/control-systems.html). Ninemajor criteria were used to analyze the cases:position of the person paying the bribe,country of the foreign official that receivedthe bribe, bribe amount, type of transac-tion, level of the conspirator, length ofimprisonment, imprisonment location,amount of the fine, and amount of the spe-cial assessment. The SEC has increased itsefforts in recent years to monitor compli-ance with the FCPA. According to LannyBreuer, the head of the U.S. Department ofJustice Criminal Division, the FCPA allowsthe United States to target the foreign briberyproblem. In addition, the FCPA discouragescorruption from occurring in the first place(Dick Carozza, “The Aggressive Enforcers,”Fraud, May/June 2011, pp. 36–40). Exhibit 1 shows the number of cases involv-ing violations of the FCPA from 1998through 2010. This number has significant-ly increased in recent years; there were 39cases from 1998 through 2006, comparedto 107 cases from 2007 through 2010.

Antonia Chion, the Associate Director ofthe SEC’s Division of Enforcement, statedin a press release, “The SEC will not toler-ate violations of the FCPA, regardless of thelengths to which public companies will goto structure their corrupt transactions to avoiddetection”(www.sec.gov/news/press/2009/2009-23.htm). Companies should not be puttinggreed before the law in order to gain busi-ness, and the SEC is working to punish thisillegal conduct. Thus, the number of FCPAcases and the penalties imposed has increaseddramatically, which will hopefully discour-age future violations of the FCPA. The fol-lowing discussion highlights each criterionused when analyzing the cases.

Position of the perpetrator. There werevarious positions of the perpetratorsinvolved in the FCPA cases—that is, the

Country Number of FCPA Cases ScoreNetherlands 1 8.8Germany 1 7.9United Kingdom 4 7.6France 1 6.8United Arab Emirates 4 6.3Spain 1 6.1Taiwan 1 5.8South Korea 1 5.4Costa Rica 4 5.3Hungary 2 4.7Saudi Arabia 6 4.7Czech Republic 1 4.6Malaysia 3 4.4Turkey 2 4.4Latvia 1 4.3Croatia 1 4.1Ghana 1 4.1Rwanda 3 4.0Brazil 5 3.7Montenegro 1 3.7Romania 1 3.7Panama 4 3.6China 15 3.5Greece 1 3.5Serbia 1 3.5Thailand 6 3.5India 3 3.3Liberia 1 3.3Egypt 1 3.1Mexico 6 3.1Argentina 3 2.9Kazakhstan 6 2.9Senegal 3 2.9Benin 2 2.8Indonesia 4 2.8Vietnam 2 2.7Ecuador 3 2.5Azerbaijan 7 2.4Bangladesh 1 2.4Honduras 3 2.4Nigeria 25 2.4Philippines 1 2.4Haiti 5 2.2Iran 1 2.2Yemen 1 2.2Kenya 2 2.1Russia 3 2.1Kyrgyzstan 2 2.0Venezuela 3 2.0Turkmenistan 2 1.6Uzbekistan 1 1.6Iraq 17 1.5Total1 180Scale: 0 = most corrupt to 10 = least corrupt1Total portrayed here exceeds the total number of cases because a case sometimesinvolved more than one country.

EXHIBIT 32010 Corruption Perceptions Index (CPI)

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individuals involved ranged from high-ranking officials to employees. Theyincluded CEOs, directors, managers, andemployees. Although there were variouspositions involved, the majority of the indi-viduals worked in upper-level management.Corporations were also charged with vio-lating the FCPA. Exhibit 2 shows thebreakdown of the positions of corporationsand individuals involved in the cases. Insome of the cases, more than one individ-ual was charged with violating the FCPA.

Countries involved. In the 146 FCPAcases that were examined, corrupt paymentsoccurred in 52 countries. TransparencyInternational—a nonpartisan organizationthat was founded in 1993 to fight corruptionand has more than 90 national chapters orchapters-in-formation throughout theworld—publishes the Corruption PerceptionsIndex (CPI), which ranks countries by theirperceived levels of corruption. The CPI scaleranges from 0 to 10; a score of 0 means acountry is highly corrupt, and a score of 10indicates a country is very clean. The 2010CPI ranked 178 countries. These results wereused to evaluate the countries involved inthe FCPA bribery schemes (www.transparency.org/about_us).

The countries involved in the FCPA casesadhere to the expectations of the CPI results.The majority of the countries whose officialsreceived bribes scored lower than 5 on theCPI scale. There were nine countries involved,however, that scored higher than 5. TheNetherlands was the highest ranking countryto receive a bribe payment, and it was onlyinvolved in one such case; it ranked seventh,with a score of 8.8. The remaining countriesinvolved all scored lower than 5 and wereperceived as being moderately to highly cor-rupt. Officials in Nigeria, Iraq, and Chinareceived bribes most frequently, cited in 25,17, and 16 cases, respectively. Iraq appearedto be the most corrupt country involved; itranked 175th out of 178 countries, with ascore of only 1.5. Nigeria ranked slightly high-er, scoring 2.4, which put it in the 134th posi-tion. China is actually ranked 78th but onlyhad a score of 3.5. Of the 178 countries thatthe CPI ranked, fewer than 50 countries scoredin the top half of the index. Exhibit 3 showsthe CPI scores for all of the countries involvedin the FCPA cases (www.transparency.org/policy_research/surveys_indices/cpi/2010/results). Using the number of FCPA cases andthe CPI, Exhibit 4 lists the eight countries that

represent the greatest risk for management of companies and auditors ofcompanies that conduct business in thesecountries.

Bribe amount. Exhibit 5 displays the rangeof bribe amounts for individuals and corpo-rations. The largest bribe paid by individualswas $300 million and this amount was con-nected to multiple cases. Several individualsand investors invested money knowing that itwould be used for corrupt payments. Theyagreed to make payments and offers of pay-ments to officials of the Republic ofAzerbaijan to induce them to assist severalcorporations in acquiring a controlling inter-est in the State Oil Company of AzerbaijanRepublic (SOCAR). The $300 million did notcome from just one individual.

Many of the bribes paid in excess of $1 million were paid by corporations or byindividuals who held a fairly high rank intheir companies. Individuals in these caseswere typically officers or directors, not justemployees. These findings are consistentwith the results of the Association ofCertified Fraud Examiners (ACFE) studythat examined the relationship between theposition of the perpetrator and the amountof loss caused by fraud. The ACFE sur-veyed a group of respondents and inquiredwhether the perpetrator was an employee,a manager, or an owner or executive. Therespondents were then asked to give infor-mation about the perpetrators in fraud cases,such as the amount of loss, age, job type,gender, and education. The results of thesurvey concluded that there was a strongcorrelation between the perpetrator’s rankwithin a company and the median loss. The2010 study showed that the median losscaused by an owner or executive was$723,000, while the loss caused by anemployee was only $80,000 (ACFE,“Report to the Nations on OccupationalFraud and Abuse,” 2010, pp. 28–40).

Type of transaction. The specific rea-sons for the bribe payments in the FPCAcases varied; however, the payments werealways made to obtain or retain sometype of business. Some corporations andindividuals were trying to win contractsto sell their products or services. Otherswere trying to receive preferential treat-ment by circumventing foreign customsregulations, receiving favorable tax assess-ments, and avoiding customs or tariffs.Two transactions—payments to Iraq

through the United Nations Oil for FoodProgram and bribes to a minister of defensein Africa—are particularly interesting.

The majority of the cases pertaining topayments made to Iraqi government offi-cials were made in connection with the Oilfor Food Program established by theUnited Nations in 1995. The programwas designed to allow Iraq to sell its oilin exchange for humanitarian goods, suchas food and medicine. Program guidelinesrequired the Iraqi government to use theproceeds from oil sales only to purchasehumanitarian goods and services, whichhad to be approved by the United Nations(www.un.org/Depts/oip/background/index.html). In 2000, companies that wanted tosell humanitarian goods to the Iraqi gov-ernment were required to pay a kickbackto the government in order to receive acontract. The kickbacks were usually cov-ered up by being called “after-sales servicefees.” These payments abused the pur-pose of the Oil for Food Program andviolated the FCPA.

In 2009, there were 15 cases involving22 individuals that were interrelated. The indi-viduals were executives and employees ofmilitary and law enforcement productscompanies who agreed to pay a total of $3million as a commission in order to winpart of a $15 million deal. They thought theywere paying bribes to the minister of defensein an African country; however, there wasno actual minister of defense involved.Instead, an undercover FBI agent was pos-ing as a sales agent. This was the first timethat an undercover operation was used toexpose violations of the FCPA on such alarge scale and it represented the largest actionever undertaken by the Department of Justiceagainst individuals for FCPA violations(www.justice.gov/opa/pr/2010/January/10-crm-048.html).

Level of conspirator. In the majority ofthe FCPA cases examined, the bribe recip-ients were government officials of the coun-try involved. There were also some caseswhere bribes were paid to foreign customsofficials or employees of customs servicesin order to receive preferential treatment incustoms clearance or avoidance of cus-toms. Employees of foreign state-owned enti-ties, who are considered “foreign officials”under the FCPA, also received bribes in afew of the cases. Lastly, in several casesinvolving Nigeria, the conspirators were offi-

FEBRUARY 2012 / THE CPA JOURNAL 63

individuals involved ranged from high-ranking officials to employees. Theyincluded CEOs, directors, managers, andemployees. Although there were variouspositions involved, the majority of the indi-viduals worked in upper-level management.Corporations were also charged with vio-lating the FCPA. Exhibit 2 shows thebreakdown of the positions of corporationsand individuals involved in the cases. Insome of the cases, more than one individ-ual was charged with violating the FCPA.

Countries involved. In the 146 FCPAcases that were examined, corrupt paymentsoccurred in 52 countries. TransparencyInternational—a nonpartisan organizationthat was founded in 1993 to fight corruptionand has more than 90 national chapters orchapters-in-formation throughout theworld—publishes the Corruption PerceptionsIndex (CPI), which ranks countries by theirperceived levels of corruption. The CPI scaleranges from 0 to 10; a score of 0 means acountry is highly corrupt, and a score of 10indicates a country is very clean. The 2010CPI ranked 178 countries. These results wereused to evaluate the countries involved inthe FCPA bribery schemes (www.transparency.org/about_us).

The countries involved in the FCPA casesadhere to the expectations of the CPI results.The majority of the countries whose officialsreceived bribes scored lower than 5 on theCPI scale. There were nine countries involved,however, that scored higher than 5. TheNetherlands was the highest ranking countryto receive a bribe payment, and it was onlyinvolved in one such case; it ranked seventh,with a score of 8.8. The remaining countriesinvolved all scored lower than 5 and wereperceived as being moderately to highly cor-rupt. Officials in Nigeria, Iraq, and Chinareceived bribes most frequently, cited in 25,17, and 16 cases, respectively. Iraq appearedto be the most corrupt country involved; itranked 175th out of 178 countries, with ascore of only 1.5. Nigeria ranked slightly high-er, scoring 2.4, which put it in the 134th posi-tion. China is actually ranked 78th but onlyhad a score of 3.5. Of the 178 countries thatthe CPI ranked, fewer than 50 countries scoredin the top half of the index. Exhibit 3 showsthe CPI scores for all of the countries involvedin the FCPA cases (www.transparency.org/policy_research/surveys_indices/cpi/2010/results). Using the number of FCPA cases andthe CPI, Exhibit 4 lists the eight countries that

represent the greatest risk for management of companies and auditors ofcompanies that conduct business in thesecountries.

Bribe amount. Exhibit 5 displays the rangeof bribe amounts for individuals and corpo-rations. The largest bribe paid by individu-als was $300 million and this amount wasconnected to multiple cases. Several indi-viduals and investors invested moneyknowing that it would be used for corruptpayments. They agreed to make paymentsand offers of payments to officials of theRepublic of Azerbaijan to induce them toassist several corporations in acquiring a con-trolling interest in the State Oil Company ofAzerbaijan Republic (SOCAR). The $300million did come from just one individual.

Many of the bribes paid in excess of $1 million were paid by corporations or byindividuals who held a fairly high rank intheir companies. Individuals in these caseswere typically officers or directors, not justemployees. These findings are consistentwith the results of the Association ofCertified Fraud Examiners (ACFE) studythat examined the relationship between theposition of the perpetrator and the amountof loss caused by fraud. The ACFE sur-veyed a group of respondents and inquiredwhether the perpetrator was an employee,a manager, or an owner or executive. Therespondents were then asked to give infor-mation about the perpetrators in fraud cases,such as the amount of loss, age, job type,gender, and education. The results of thesurvey concluded that there was a strongcorrelation between the perpetrator’s rankwithin a company and the median loss. The2010 study showed that the median losscaused by an owner or executive was$723,000, while the loss caused by anemployee was only $80,000 (ACFE,“Report to the Nations on OccupationalFraud and Abuse,” 2010, pp. 28–40).

Type of transaction. The specific rea-sons for the bribe payments in the FPCAcases varied; however, the payments werealways made to obtain or retain sometype of business. Some corporations andindividuals were trying to win contractsto sell their products or services. Otherswere trying to receive preferential treat-ment by circumventing foreign customsregulations, receiving favorable tax assess-ments, and avoiding customs or tariffs.Two transactions—payments to Iraq

through the United Nations Oil for FoodProgram and bribes to a minister of defensein Africa—are particularly interesting.

The majority of the cases pertaining topayments made to Iraqi government offi-cials were made in connection with the Oilfor Food Program established by theUnited Nations in 1995. The programwas designed to allow Iraq to sell its oilin exchange for humanitarian goods, suchas food and medicine. Program guidelinesrequired the Iraqi government to use theproceeds from oil sales only to purchasehumanitarian goods and services, whichhad to be approved by the United Nations(www.un.org/Depts/oip/background/index.html). In 2000, companies that wanted tosell humanitarian goods to the Iraqi gov-ernment were required to pay a kickbackto the government in order to receive acontract. The kickbacks were usually cov-ered up by being called “after-sales servicefees.” These payments abused the pur-pose of the Oil for Food Program andviolated the FCPA.

In 2009, there were 15 cases involving22 individuals that were interrelated. The indi-viduals were executives and employees ofmilitary and law enforcement productscompanies who agreed to pay a total of $3million as a commission in order to winpart of a $15 million deal. They thought theywere paying bribes to the minister of defensein an African country; however, there wasno actual minister of defense involved.Instead, an undercover FBI agent was pos-ing as a sales agent. This was the first timethat an undercover operation was used toexpose violations of the FCPA on such alarge scale and it represented the largest actionever undertaken by the Department of Justiceagainst individuals for FCPA violations(www.justice.gov/opa/pr/2010/January/10-crm-048.html).

Level of conspirator. In the majority ofthe FCPA cases examined, the bribe recip-ients were government officials of the coun-try involved. There were also some caseswhere bribes were paid to foreign customsofficials or employees of customs servicesin order to receive preferential treatment incustoms clearance or avoidance of cus-toms. Employees of foreign state-owned enti-ties, who are considered “foreign officials”under the FCPA, also received bribes in afew of the cases. Lastly, in several casesinvolving Nigeria, the conspirators were offi-

FEBRUARY 2012 / THE CPA JOURNAL64

cials of the National Petroleum InvestmentManagement Services (NAPIMS). In thesecases, the defendants were trying to obtaincontracts for oil exploration in Nigeria.

Length of imprisonment. The maximumterm of imprisonment for violation of theFCPA is five years. In cases where the defen-dant received more than five years, she hadother counts charged against her as well. Forexample, the defendant could have also con-spired to commit money laundering.

Exhibit 6 shows the ranges for lengthof imprisonment. While terms ranged fromtwo months to 13 years, the majority ofthose imprisoned spent 24 months or lessin jail. In addition to incarceration, defen-dants usually received a period of super-vised release following their imprisonment.These periods normally lasted two or threeyears. There were also individuals who didnot face jail time, but were placed on pro-bation. In four cases, the punishment alsoincluded community service, which rangedfrom 200 to 300 hours. Some of the cases

examined did not provide a judgment doc-ument for the defendant.

Imprisonment: facility and location.The judgment documents indicated that thecourt could recommend the type of facili-ty and location of incarceration. Individualswere typically sentenced to minimum secu-rity facilities. For example, in a 2005case, a defendant was sentenced to a min-imum security camp adjacent to FCIEnglewood in Colorado. In 2008, the courtrecommended a minimum security satel-lite work camp at Lompoc FederalCorrectional Complex in Lompoc,California. There was only one case in2002 that suggested incarceration in afederal prison. In some of these cases, thereason given for a specific location wasan attempt to keep the defendant near hisfamily. In cases where a location was notsuggested, the judgment document indi-cated that the defendant should serve hissentence at an institution designated by theUnited States Bureau of Prisons.

Fine amount. Both individuals and cor-porations are subject to fines under FCPA.Sanctions may be imposed for both criminaland civil violations of the FCPA as follows:� Criminal: Under FCPA antibribery pro-visions, corporations, and other business-es are subject to fines up to $2 million,while officers, directors, employees, andagents are subject to fines up to $100,000.These fines could be higher under theAlternative Fines Act.� Civil: Under antibribery provisions, firms,officers, directors, employees, or agents offirms are subject to fines up to $10,000.

It should also be noted that actions thatviolate the antibribery provisions of theFCPA can result in private cause for theRacketeer Influenced and CorruptOrganization (RICO) Act, where sanctionsare for treble damages.

Exhibit 7 and Exhibit 8 show the fineamounts for individuals and corporations,respectively. While the highest fine assessedfor an individual was $1 million, the major-ity of the fines were $50,000 and below. Infour cases, the defendant was ordered to payrestitution, which ranged from $250,000 to$3.5 million, instead of a fine. For corpo-rations, the fines ranged from $1,000 to$448.5 million, with half of the corporationspaying $5 million or less and half payingmore than $5 million.

Country Number of FCPA Cases ScoreNigeria 25 2.4Iraq 17 1.5China 15 3.5Azerbaijan 7 2.4Kazakhstan 6 2.9Mexico 6 3.1Thailand 6 3.5Saudi Arabia 6 4.7

EXHIBIT 4Most Corrupt Countries, Based on FCPA Cases and CPI

Bribe Amount Number of Cases1

$ 0 to 500,000 43$ 500,001 to 1,000,000 14$ 1,000,001 to 5,000,000 35$ 5,000,001 to 10,000,000 8$ 10,000,001 or more 151 The number of cases doesn’t total 146 because in some instances, the documentation didn’t specify the amount of the bribe. There were 15 related cases (undercover investigation) with a total bribe of $3 million.

EXHIBIT 5Range of Bribe Amounts

Number Jail Term of Cases1

1 month to 6 months 67 months to 12 months 513 months to 24 months 625 months to 36 months 337 months to 48 months 449 months to 60 months 260 months or more 31The number of cases doesn’t equal 146 because there are caseswhere information regarding theimprisonment term was not provided,cases that were announced but not prosecuted, cases where thedefendant was placed on probationrather than incarcerated, and casespending final sentencing.

EXHIBIT 6Length of Imprisonment

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