The Foreign Corrupt Practices Act (FCPA) is one of the most successful anti-corruption laws in the United States. Whistleblowers who alert the U.S. government to corruption are entitled to up to 30% of the funds recovered. The FCPA has two primary requirements organizations must follow, centered around proper accounting procedures and anti-bribery stipulations.
Here's everything you need to know about the FCPA, how whistleblowers qualify for money, and the cases that resulted in the most significant monetary sanctions.
What Is the Foreign Corrupt Practices Act?
Initially implemented by the U.S. Congress in 1977, the FCPA's wide-ranging scope is enforceable worldwide. Since its enaction, the FCPA has undergone several revisions and become increasingly influential in curbing corruption. The laws outlined apply to all U.S. or foreign companies falling into one of the following categories:
They are listed on U.S. stock exchanges
They are required to file reports with the U.S. Securities and Exchange Commission
The laws also apply to an organization's employees, officers, stockholders, and third-party agents, including consultants, joint-venture partners, and distributors.
What Actions Are Covered Under the Foreign Corrupt Practices Act?
Under the FCPA's anti-bribery regulations, individuals and organizations cannot offer foreign officials payments or anything of value to obtain or retain business. The accounting provisions require firms to keep records to reflect transactions accurately.
The FCPA is mutually enforced by the U.S. Department of Justice and the U.S. Securities and Exchange Commission. The SEC is the federal agency with the authority to approve rewards for whistleblowers.
How Do Whistleblowers Qualify for Rewards?
In 2010, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, whistleblowers gained safeguards for notifying authorities of FCPA violations. The Dodd-Frank Act allows whistleblowers to claim a financial reward in cases resulting in more than $1 million in monetary sanctions. Whistleblowers, who do not need to be U.S. citizens, can claim between
10% to 30% of the money collected.
Under the Dodd-Frank Act and the Sarbanes-Oxley Act, FCPA whistleblowers are entitled to protection from employer retaliation. Whistleblowers who report retaliation may be eligible for reinstatement and compensation.
What Are the Largest FCPA Whistleblower Cases?
Many foreign and U.S. companies have paid significant penalties arising from FCPA violations. However, while many cases involve millions of dollars in monetary sanctions, some of the most prominent cases resulted in billions of dollars in penalties.
In 2017, Swedish telecommunications company Telia paid more than $1.01 billion to resolve FCPA corruption violations arising from bribes executives made to win business in Uzbekistan. Telia paid $548.6 million in criminal penalties to the DOJ and $457 in civil penalties to the SEC. It is publicly unknown whether a whistleblower initiated the case.
In 2018, Brazil's state energy company Petrobas paid $1.78 billion in assessed penalties to resolve FCPA violations stemming from massive bribes paid to politicians and political parties in Brazil. The assessed penalties included an $853.2 million criminal penalty paid to the DOJ as part of a non-prosecution agreement. It is publicly unknown whether a whistleblower initiated the case.
Swedish multinational telecommunication Ericsson paid more than $1 billion to the DOJ and the SEC stemming from charges it violated FCPA bribery provisions in 2019. The large-scale bribery scheme covertly used fake consultants to funnel funds to government representatives in many countries. The case required Ericsson to pay a criminal penalty of $520 million to the DOJ and $540 million to the SEC in disgorgement civil charges. It is not known whether the allegations stemmed from a whistleblower.
In 2020, French multinational aerospace corporation Airbus SE paid more than $3.9 billion to settle FCPA violations and foreign bribery accusations by France and the United Kingdom. The company used third-party business consultants to bribe government officials around the world. The case was resolved after an eight-year investigation, which a British whistleblower initiated.
Multinational investment bank Goldman Sachs Group agreed to pay more than $3.3 billion to the DOJ and the SEC to settle FCPA violations in 2020. The U.S. government said Goldman Sachs violated FCPA internal accounting controls, anti-bribery provisions, and books and records regulations. The company admitted to using third-party contractors to bribe government officials in Malaysia and the Emirate of Abu Dhabi. The U.S. government has not disclosed whether a whistleblower initiated the allegations.
Contact an Expert
If you have information about FCPA fraud, contact us at Piacentile, Stefanowski & Associates LLP, also known as Whistleblowers International. We evaluate your information confidentially and free of charge. We do not charge you anything unless and until we secure you a monetary reward, and even then, it is based on a percentage of your recovery. Thanks for reading!