Executive Accountability for Corporate Crime - the “First Priority”

US Deputy Attorney General Lisa Monaco’s September announcement regarding the US DOJ’s criminal enforcement policies and practices, reflected greater emphasis on executive accountability for regulators around the world. DAG Monaco strongly reinforced the message on individual liability: “The [DOJ]’s first priority in corporate criminal matters is to hold accountable the individuals who commit and profit from corporate crime” (emphasis added).

Here we touch on the US Foreign Corrupt Practices Act (“FCPA”) provisions and the actions of the Securities Exchange Commission (“SEC”), the Department of Justice (“DOJ”) and the UK’s Serious Fraud Office (“SFO”).

Officers and directors may be liable for violations of the FCPA anti-bribery provisions if they engage directly or indirectly in, or conceal FCPA violations, or if they ignore or consciously disregard potential misconduct.

Executives risk prosecution and fines (up to $250,000) and imprisonment (up to five years). The SEC may also seek disgorgement of ill-gotten gains. Importantly, the FCPA prohibits corporations from paying fines assessed against its employees, officers, and directors.

Examples of executives being held accountable include a 2021 judgment obtained by the SEC against a former executive of a financial services company for his role in orchestrating a bribery scheme to win a government contract. The former executive was instrumental in bribes of over $260,000 paid to various foreign government officials. The former executive was ordered to disgorge $275,000 in ill-gotten gains.

In May 2022this year, Glencore, a multi-national commodity trading and mining firm, pleaded guilty in the US and agreed to pay over $1.1 billion for violations of the FCPA and a commodity price manipulation scheme. Subsequently, Glencore pleaded guilty in the UK and agreed to pay £280 million after an SFO investigation revealed it paid $29 million in bribes to gain preferential access to oil in Africa. But the story continues, is unlikely to end with the corporate conviction, as the UK SFOSerious Fraud Office seeks executive accountability - reportedly 11 former Glencore employees are under investigation. The SFO intends to make a charging decision by next April.

Overall, the message to executives tempted to engage in bribery or other financial misconduct is clear: it is not only the corporation (and indirectly its shareholders) who will suffer. For the DOJ at least: individuals who commit and profit from corporate crime are the “first priority”.