A recent report by NYU School of Law professors Stephen Choi and Kevin Davis examines FCPA sanctions and the factors related to penalties. They examine the factors that explain the distribution across companies and countries of sanctions imposed in Foreign Corrupt Practices Act (FCPA) enforcement actions. They use a dataset of FCPA actions resolved from 2004 to 2011. They find evidence that the sanctions in an individual FCPA action are positively correlated with the size of bribe, the profit related to the bribe, and the amount of business affected by the bribe. The sanction increases if a subsidiary faces FCPA charges, if the FCPA violation occurs in multiple countries, if the ultimate parent company of entities involved in the FCPA violation is foreign, and if foreign regulators are involved in the action. They also conduct a number of country-level tests to assess factors that explain the ultimate distribution of FCPA sanctions across countries. Looking to the distribution of aggregate total monetary sanctions by country where FCPA violations take place, they find that aggregate sanctions are proportional to their measure of overall bribe activity in a violation country.
They report evidence that the SEC and DOJ impose disproportionately greater aggregate sanctions for violations in countries with a lower GNI per capita as well as weaker local anti-bribery institutions. The SEC and DOJ also impose disproportionately greater aggregate sanctions for violations where the home country of the ultimate parent company of FCPA defendants has a bilateral cooperation agreement with the SEC, a Mutual Legal Assistance Treaty with the United States, and stronger local anti-bribery institutions.
Choi, Stephen J. and Davis, Kevin E., Foreign Affairs and Enforcement of the Foreign Corrupt Practices Act (July 20, 2012). NYU Law and Economics Research Paper No. 12-15; NYU School of Law, Public Law Research Paper No. 12-35. Available at SSRN: http://ssrn.com/abstract=2116487