While the news has lately focused on political high crimes
and misdemeanors, 2019 has also seen plenty of corporate crimes and violations.
Continuing the pattern of the past few years, diligent prosecutors and career
agency officials have pursued their mission to combat business misconduct even
as the Trump Administration tries to erode the regulatory system. The following
is a selection of significant cases resolved during the year.
Online Privacy Violations: Facebook agreed
to pay $5 billion and to modify its corporate governance to resolve a Federal
Trade Commission case alleging that the company violated a 2012 FTC order by
deceiving users about their ability to control the privacy of their personal
Opioid Marketing Abuses: The British company Reckitt
to pay more than $1.3 billion to resolve criminal and civil allegations that it
engaged in an illicit scheme to increase prescriptions for an opioid addiction
treatment called Suboxone.
Wildfire Complicity: Pacific Gas & Electric reached
a $1 billion settlement with a group of localities in California to resolve a
lawsuit concerning the company’s responsibility for damage caused by major
wildfires in 2015, 2017 and 2018. PG&E later agreed
to a related $1.7 billion settlement with state regulators.
International Economic Sanctions: Britain’s Standard
Chartered Bank agreed to pay a total of more than $900 million in settlements
with the U.S.
Justice Department, the Treasury
Federal Reserve, the New
York Department of Financial Services and the Manhattan
District Attorney’s Office concerning alleged violations of economic
sanctions in its dealing with Iranian entities.
Emissions Cheating: Fiat Chrysler agreed
to pay a civil penalty of $305 million and spend around $200 million more on
recalls and repairs to resolve allegations that it installed software on more
than 100,000 vehicles to facilitate cheating on emissions control testing.
Foreign Bribery: Walmart agreed to pay $137
million to the Justice Department and $144
million to the Securities and Exchange Commission to resolve alleged
violations of the Foreign Corrupt Practices Act in Brazil, China, India and
False Claims Act Violations: Walgreens agreed
to pay the federal government and the states $269 million to resolve
allegations that it improperly billed Medicare, Medicaid, and other federal
healthcare programs for hundreds of thousands of insulin pens it knowingly
dispensed to program beneficiaries who did not need them.
Price-fixing: StarKist Co. was sentenced
to pay a criminal fine of $100 million, the statutory maximum, for its role in
a conspiracy to fix prices for canned tuna sold in the United States. StarKist was also sentenced to a 13-month
term of probation.
Employment Discrimination: Google’s parent company
to pay $11 million to settle a class action lawsuit alleging that it engaged in
age discrimination in its hiring process.
Investor Protection Violation: State Street Bank and
Trust Company agreed
to pay over $88 million to the SEC to settle allegations of overcharging mutual
funds and other registered investment company clients for expenses related to
the firm’s custody of client assets.
Illegal Kickbacks: Mallinckrodt agreed
to pay $15 million to resolve claims that Questcor Pharmaceuticals, which it
acquired, paid illegal kickbacks to doctors, in the form of lavish dinners and
entertainment, to induce them to write prescriptions for the company’s drug
H.P. Acthar Gel.
Worker Misclassification: Uber Technologies agreed
to pay $20 million to settle a lawsuit alleging that it misclassified drivers
as independent contractors to avoid complying with labor protection standards.
Accounting Fraud: KPMG agreed
to pay $50 million to the SEC to settle allegations of altering past audit work
after receiving stolen information about inspections of the firm that would be
conducted by the Public Company Accounting Oversight Board. The SEC also found that numerous KPMG audit
professionals cheated on internal training exams by improperly sharing answers
and manipulating test results.
Trade Violations: A subsidiary of Univar Inc. agreed
to pay the United States $62 million to settle allegations that it violated
customs regulations when it imported saccharin that was manufactured in China
and transshipped through Taiwan to evade a 329 percent antidumping duty.
Consumer Protection Violation: As part of the
settlement of allegations that it engaged in unfair and deceptive practices in
connection with a 2017 data breach, Equifax agreed
to provide $425 million in consumer relief and pay a $100 million civil penalty
to the Consumer Financial Protection Bureau. It also paid $175 million to the
Ocean Dumping: Princess Cruise Lines and its parent Carnival Cruises were ordered to pay a $20 million criminal penalty after admitting to violating the terms of their probation in connection with a previous case relating to illegal ocean dumping of oil-contaminated waste.
Additional details on these cases can be found in Violation Tracker, which now contains 397,000 civil and criminal cases with total penalties of $604 billion.
Note: I have just completed a thorough update of the Dirt Diggers Digest Guide to Strategic Corporate Research. I’ve added dozens of new sources (and fixed many outdated links) in all four of the guide’s parts: Key Sources of Company Information; Exploring A Company’s Essential Relationships; Analyzing A Company’s Accountability Record; and Industry-Specific Sources.