by Brian Mahany
More arrests and tough prison sentences for were the topic at the Senate Subcommittee on Drugs and Crime last week in Washington D.C. Committee chair Sen. Arlen Specter grilled Justice Department officials on November 30th asking why so few individuals are prosecuted under the Foreign Corrupt Practices Act (FCPA).
Specter said he took interest last month when Justice Department officials and the SEC announced settlement of foreign bribery charges against a freight forwarding company, Panalpina World Transport. That case resulted in fines of $236 million. “Fines come out of the corporation…but that doesn’t deal with the individual conduct violating the law,” said Specter. He went on to ask a senior deputy assistant attorney general why no individuals were charged in that case. Justice Department officials refused to comment saying only that the investigation was “ongoing”.
Public records show that the government has been charging more individuals, although apparently not enough for some members of Congress. In 2004, just two individuals were charged with FCPA violations. In 2005 that number increased to five. Since 2009, the number of individuals charged has skyrocketed to over 50 in the last two years.
Fines have also increased to over $1 billion in criminal penalties and more than $600 million in civil fines during the last year.
What has some senators upset is the lack of criminal prosecutions against individuals. What is the difference between a corporate and individual prosecution? A judge can’t put a corporation in jail. The only sanction in a criminal case brought against a company is a fine.
The Justice Department was able to point to one recent case where a corporate official was sentenced to 87 months in jail.
The battle lines appear drawn. Specter and other ranking Congressional leaders are calling for more prosecutions of corporate executives and stiff prison sentences. President Obama has echoed the call for tougher enforcement.
Business leaders have criticized enforcement efforts and called for an amnesty program.
Specter leaves the U.S. Senate this year. The World Bank estimates that $1 trillion is paid in bribes to foreign officials each year.
Brian Mahany is a lawyer that helps individuals and businesses charged with white-collar crimes. He also concentrates in asset recovery and complex fraud matters. Brian has partnered with CPA Tracy Coenen (www.sequenceinc.com) and attorney James McGrath (www.mcgrathgrace.com) to offer full service FCPA compliance and defense services. Together they offer discrete internal audits designed to detect problems before they surface and are ready to vigorously defend existing investigations and complaints.
Brian can be reached directly at (414) 704-6731 or through his website, https://www.mahanyertl.com