James B. Stewart, left, arguably America's finest business writer, has looked at the Tyson FCPA case for the New York Times. And he's asked some tough questions about enforcement.
In February, Tyson Foods settled FCPA violations with the DOJ and SEC for $5.2 million. Tyson had made illegal payments to government-employed inspectors in Mexico, and covered-up the payments.
The SEC said it was "not until two years after Tyson Foods officials first learned about the illicit payments that its counsel instructed Tyson de Mexico to cease making the payments." That fact was curious. It showed that people at the company decided to continue the bribery after it was discovered.
Yet no individuals were prosecuted.
On Friday, from his new perch at the Times, Stewart (BA DePauw University, JD Harvard Law, former associate at Cravath, Swaine & Moore, and winner of a Pulitzer Prize) picked up the story:
When I called this week, press officers for both the Justice Department and SEC said the investigation was over and no one would be named or charged. This seems to reflect the belief that the deferred prosecution agreement, penalty and SEC settlement largely achieved the government’s objectives, which were to stop the illegal conduct at Tyson and deter future instances. The decision not to pursue cases against individuals seems also to reflect budgetary constraints at both agencies (cases involving foreign witnesses can be especially costly) and, for the Justice Department, the burden in a criminal case of proving guilt beyond a reasonable doubt. But surely bribery, not to mention other forms of corporate wrongdoing, would be more effectively deterred if someone was actually held accountable for it.
As we reported last year, more than sixty percent of the companies that have settled FCPA enforcement actions since 2005 had no individual employees or agents who were charged.
The DOJ has consistently said individuals are still a target. As examples, it cites the shot-show prosecutions -- 22 individuals indicted for FCPA violations -- and the mass FCPA indictment of eight CCI executives, six at one time. It also prosecuted Frederic Bourke, Gerald and Patricia Green, and Keith Lindsey and Steve Lee of Lindsey Manufacturing, among others.
But then there's Siemens, an $800 million enforcement action. The DOJ's Lanny Breuer called it "arguably the most egregious example of systemic foreign corruption ever prosecuted." Yet no one from the company was ever indicted in the U.S.
U.K.-based BAE paid $400 million to settle an FCPA case. No one from BAE has faced U.S. charges. Again, Daimler AG from Germany paid $185 million in penalties, and so far no one from that company has been charged here.
The pattern is broken, but only slightly, by the biggest enforcement action of them all. From the four companies that made up the TSKJ Nigeria consortium -- Technip, Saipem, KBR, and JGC -- just one U.S. executive and two Britons have been charged. Meanwhile, the four TSKJ companies have paid $1.5 billion to settle with the DOJ and SEC.
Unlike the foreign executives from Siemens, BAE, and Daimler, the Tyson executives responsible for the Mexican bribery were in the U.S. The DOJ and SEC didn't name them but Stewart did.
As Stewart wrote, "Companies seem all too willing to go along with this, passing settlement costs on to the shareholders while sweeping the details — and names — under the rug."
Do current FCPA enforcement practices really deter bribery? Or do they weaken the rule of law and encourage cynicism?