This slow, steady ramp-up in FCPA enforecement has been going on for some time.
Maybe it has something to do with the fact that companies rarely fight FCPA fines? When you're staring down trillions in debt any little bit helps.
Certainly the expansive Siemens bribery scandal showed that there was lucre to be found in FCPA prospecutions. The German conglomerate was slapped with the largest FCPA-related penalty of all time - $1.6 billion.
But what makes companies so ready to pay up when OFAC comes calling? The roots go a bit deeper. Some keen insight via Kevin Drawbaugh from Reuters in September of 2005:
...the [FCPA prosection] tally is rising fast, due partly to recent international agreements to combat bribery and partly to renewed M&A activity, lawyers said.
If the current M&A spurt continues, deal volumes in 2005 will come near levels not seen since the 1990s boom years, Wall Street investment bank J.P. Morgan Chase said last week.
Corporate buyers are increasingly keen to wash acquisitions clean before closing on deals to avoid future liability, lawyers said. As a result, some are bringing FCPA problems to the SEC and the Justice Department. Both have new powers and a new vigor for tackling white-collar crooks.
The M&A market remains hot and bothered, up 21% globally in the third quarter of 2010, the hottest quarterly growth number since late 2008. The U.S accounts for 43% of global activity, with emerging markets the next largest contributor. Likewise FCPA investigations are humming along, up significantly year-over-year.
In recent years, the Justice Department and Securities and Exchange Commission have filed an increasing number of foreign corruption cases...
The Justice Department took 48 enforcement actions under the FCPA in 2010, up from two in 2004, and the SEC took 26, up from three in 2004, according to a study by the law firm Gibson, Dunn & Crutcher....
As of last year, the Justice Department was conducting more than 150 criminal investigations under the FCPA, according to an international law enforcement report.
For a look at all the ongoing or pending FCPA actions, as of the beginning of March, check out the FCPA Blog. Richard Cassin is doing the Lord's work over there.
Fundamentally FCPA fines are a drop in the bucket compared to the money to be made in emerging markets where bribery is as much a part doing business as the power lunch.
As the recent attention to Libya has illustrated, corporations are more than willing to roll dice on an enforcement action to secure by securing a foothold in potentially fertile territory.
Unless the penalties increase in severity along with the number of prosecutions, there will be very little hope in altering corporate behavior.
