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How Big Is the Risk of FCPA Recidivism?

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September 22, 2021

It’s not as high as the risk of repeating other white-collar crimes, and it’s not anywhere near as high as the rate for criminals in general, but it is real. The DOJ and SEC have prosecuted 240 different companies for Foreign Corrupt Practices Act offenses. Thirteen are repeaters, a rate of 5.5 percent (the recidivism rate for individuals who were singled out for prosecution is zero, but that’s probably because they lost their jobs and couldn’t be rehired in a setting where they could backslide). Here is the list of corporate FCPA recidivists, all of which were prosecuted twice: ABB Ltd.;  Baker Hughes Inc.; Deutsche Bank AG: Eni S.p.A.; Goodyear International Corp. and Goodyear Tire & Rubber Company; Halliburton Co; International Business Machines Corp; Marubeni Corp.; Novartis AG; Orthofix International N.V.; Stryker Corp.; Technip S.A. and TechnipFMC plc; Tyco International Ltd. Why did the programs they all put in place to prevent FCPA violations fail? According to Prof Peter Henning of Wayne State University, who studies white-collar crime, the deterrent effect of a fine, even in the billions of dollars, doesn’t resonate much beyond the particular industry in which the company operates. That accounts for a lot first time FCPA violations. As for repeaters. The simple fact that there is a low chance of getting caught is probably behind it. Despite their earlier prosecutions, those 13 companies believed they’d get away with it.

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