Archive for the ‘Bribery’ Category

DOJ is also Defying Trump on Foreign Bribery

Thursday, September 6th, 2018

Millions of words have been published about Donald Trump’s feud with the Justice Department over the Mueller investigation. Little is being written about another way in which DOJ is thwarting the president’s will: the ongoing prosecution of foreign bribery.

Starting before he became a candidate for the White House, Trump has railed against the Foreign Corrupt Practices Act, the 1977 law that allows for both civil and criminal cases to be brought against officials that engage in bribery and related practices committed anywhere in the world as long as their company does business in or has securities trading in the United States. He continued to complain about FCPA’s supposed unfairness after taking office.

These complaints seem to have had little effect on DOJ or on the Securities and Exchange Commission, which enforces the civil side of the law. Data collected for Violation Tracker, including a forthcoming update, show that since Trump took office DOJ and SEC have announced more than a dozen case resolutions with total penalties of more than $1.5 billion.

Several of those resolutions have been announced during the past two months. In early July DOJ and SEC each announced cases with combined penalties of $76 million against Credit Suisse and one of its subsidiaries for improperly winning banking business by giving jobs to family members and friends of Chinese government officials. Just the other day, the SEC announced that the French pharmaceutical company Sanofi would pay $25 million to resolve allegations that its subsidiaries in Kazakhstan and the Middle East made corrupt payments to win business.

It is true that many of the cases announced under Trump have involved foreign companies. Others include Japan’s Panasonic, Sweden’s Telia, and Canada’s Kinross Gold. Yet the culprits have also included some U.S.-based companies. Last year, for example, Halliburton had to pay $29 million to resolve allegations relating to its actions in Angola. Earlier this year, Dun & Bradstreet paid $9 million in connection with two of its subsidiaries in China. Most recently, investment manager Legg Mason agreed to pay more than $34 million to settle allegations that one of its subsidiaries was involved in a scheme to bribe officials in Libya.

While DOJ and SEC seem to be carrying out their mission of investigating FCPA violations by a wide range of companies, it remains to be seen whether that includes the Trump Organization, which according to various media reports may have corrupt practices act liability in a variety of countries (see, for example, The New Yorker piece on Azerbaijan).

This may be another test of whether Trump – and his business interests – are exempt from the law, but for now it is good to see that Trump has not succeeded in undermining an important tool in prosecuting other corporate bad actors.

Novartis and Cohen: Two of a Kind

Thursday, May 10th, 2018

“Yesterday was not a good day for Novartis.” That’s what the chief executive of the pharmaceutical giant told his staff in the wake of embarrassing reports that it was among a handful of large corporations that made questionable payments to President Trump’s personal fixer Michael Cohen. Novartis, which initially struggled to come up with a plausible explanation for its $1.2 million contract with Cohen, ultimately admitted it was a “mistake.”

If so, it was not quite a honest mistake. Novartis, like the rest of Big Pharma, was unnerved by the seeming populism of Trump on the issue of drug prices. Yet it also apparently realized this was an administration that was susceptible to outside influences, especially if they came via someone like Cohen, who in 2017 seemed to be a much more significant player than he turned out to be.

It should come as no surprise that Novartis would resort to dubious measures to promote its interests, which include getting federal blessing for its leukemia drug Kymriah, which costs nearly $400,000 for a course of treatment.

The Swiss company has a long history of improper behavior. For example, in 2010 it had to pay $422 million to resolve criminal and civil liability arising from charges that it engaged in illegal marketing of its epilepsy drug Trileptal, including the payment of kickbacks to doctors to get them to prescribe the medication for off-label purposes. In 2015 Novartis agreed to pay $390 million to settle a case brought by the U.S. Attorney in Manhattan accusing it of making illegal kickbacks to get specialty pharmacies to recommend two of its drugs, Exjade and Myfortic.

Novartis does not limit its illicit marketing to the United States. In 2016 the Securities and Exchange Commission announced that the company would pay $25 million to settle charges that it violated the Foreign Corrupt Practices Act when its China-based subsidiaries engaged in pay-to-prescribe schemes to increase sales.

While Novartis seems willing to make questionable payments to sell its products or gain regulatory favor, it has been less interested in paying some of its employees what they should have received in compensation. The company will be featured in a report on wage theft my colleagues and I will publish next month.

That’s because of a collective action lawsuit brought on behalf of the company’s sales representatives, who alleged that they were improperly classified as exempt from overtime pay. In 2012 Novartis paid $99 million to settle the suit.

In 2005 a group of women who had worked as sales reps for Novartis in the United States filed a lawsuit saying they were discriminated against in pay and promotions, especially after becoming pregnant. In 2010 a federal jury ruled in favor of the women, awarding them $3.3 million in compensatory damages and $250 million in punitive damages. Novartis appealed and then settled the case for $152 million.

All of this is to say that Novartis had long engaged in less than pristine business practices and got the impression it could go on doing so with the Trump Administration.

Will DOJ Give a Deep Discount to Wal-Mart?

Thursday, May 11th, 2017

The Justice Department has a lot on its plate these days, but it has apparently found time to cook up a deal that would save Wal-Mart hundreds of millions of dollars. According to Bloomberg and the Wall Street Journal, DOJ is offering the giant retailer the chance to settle a foreign bribery case for $300 million, an amount far less than the penalty of up to $1 billion the Obama Administration was seeking in the long-running negotiations to resolve the matter.

I suppose we should be grateful that DOJ is not letting Wal-Mart off the hook entirely, given that Donald Trump once described the Foreign Corrupt Practices Act as a “horrible law.” Moreover, there has been speculation that Trump’s own business dealings may be vulnerable to FCPA prosecution in places such as Azerbaijan.

Attorney General Jeff Sessions has gone out of his way to affirm the commitment of his department to enforcing the FCPA, yet this is the same person who just involved himself in the firing of FBI Director James Comey after promising to recuse himself from the probe of the Trump campaign’s Russian ties.

It could be that Sessions intends to go on bringing FCPA cases but with reduced settlement amounts. That would be at least a partial victory for companies like Wal-Mart, whose FCPA problems first gained widespread attention after the New York Times published a 2012 investigation of widespread bribery in the company’s Mexican operations. In response, the company launched its own examination of possible misconduct in countries such as Brazil, India and China.

Given Wal-Mart’s size and prominence, a large penalty would be appropriate to send a message to the corporate world about the consequences of corrupt practices. The $1 billion amount reportedly sought by the Obama Administration would have been the largest single FCPA penalty ever imposed.

Instead, the reported $300 million settlement amount would not even rank among the top ten, according to the list maintained by the FCPA Professor blog. That list, topped by Siemens at $800 million and Alstom at $772 million, is dominated by foreign companies, including some such as VimpelCom (now known as Veon) and Snamprogetti (now part of Italy’s Saipem) that are hardly household names.

Giving a deep discount to a domestic behemoth would raise questions about the enforcement of a law that is meant to fight corruption worldwide.

DOJ’s decision on what to do about the Wal-Mart FCPA case will provide an important clue about how it intends to deal with corporate crime in general. The Obama Administration struggled to find the best way to deter business misconduct, and if nothing else increased penalties in major cases to unprecedented levels. Imposing a relatively small penalty on Wal-Mart would reverse that trend and signal to corporations that they have less to worry about from the Trump Justice Department.

Obama’s Final Blows Against Corporate Crime

Thursday, January 19th, 2017

$335 billion: that’s what has been paid by companies in fines or settlements in cases brought by federal agencies and the Justice Department during the Obama Administration. The estimate comes from the amounts associated with entries already in Violation Tracker and an update that is in the works.

Preparing that update has proven to be a challenge because of the remarkable flurry of cases that the Obama Administration has resolved in the waning days of its existence. Since the election the penalty tally has risen by more than $30 billion, much of that coming this month alone. The past ten days have seen four ten-figure settlements: Deutsche Bank’s $7.2 billion toxic securities case; Credit Suisse’s $5.3 billion case in the same category; Volkswagen’s $4.3 billion case relating to emissions fraud; and Takata’s $1 billion case relating to defective airbag inflators.

Here are some of the next-tier cases that would normally get significant coverage but may have gotten lost in the stream of announcements:

  • Moody’s agreed to pay $864 million to resolve allegations relating to flawed credit ratings provided for mortgage-backed securities during the run-up to the financial crisis.
  • Western Union agreed to pay $586 million to settle charges that it failed to guard against the use of its system for money laundering.
  • Shire Pharmaceuticals agreed to pay $350 million to settle allegations that one of its subsidiaries violated the False Claims Act by paying kickbacks to healthcare providers.
  • Rolls-Royce agreed to pay $170 million to resolve foreign bribery criminal charges; the military contractor was offered a deferred prosecution agreement.
  • McKesson, a large pharmaceutical distribution, was fined $150 million by the Drug Enforcement Administration for failing to report suspicious bulk purchases of opioids.

Although a few of these cases — including Volkswagen, Takata and Western Union– have involved criminal charges, for the most part the Obama Justice Department has kept its focus on extracting substantial monetary penalties from corporate wrongdoers.

While this approach has served the purpose of highlighting the magnitude of business misconduct, it remains unclear whether it has done much to deter such behavior. One of the aims of Violation Tracker is to document the problem of ongoing recidivism among corporate offenders by listing their repeated transgressions. JPMorgan Chase, for example, has racked up $28 billion in penalties in more than 40 cases resolved since the beginning of 2010. The list is likely to continue growing.

The steady stream of big-ticket cases has provided a constant source of new content for Violation Tracker, but it would have been preferable if federal prosecutors and regulators had figured out a way to get the bank and others like it to behave properly.

The Obama Justice Department’s rush to complete the recent settlements seems to be based in part on uncertainty as to whether the Trump Administration will continue to give priority to the prosecution of corporate crime. Attorney General nominee Jeff Sessions has not said much on the subject, while the President-elect has been uncharacteristically silent — both during his campaign and since the election — about corporate scandals such as the Wells Fargo bogus-account case while being outspoken in his critique of regulation.

We may soon look back fondly at the Obama approach as the new administration takes an even weaker posture toward the ongoing corporate crime wave.

The 2016 Corporate Rap Sheet

Thursday, December 22nd, 2016

The two biggest corporate crime stories of 2016 were cases not just of technical lawbreaking but also remarkable chutzpah. It was bad enough, as first came to light in 2015, that Volkswagen for years installed “cheat devices” in many of its cars to give deceptively low readings on emissions testing.

Earlier this year it came out that the company continued to mislead U.S. regulators after they discovered the fraud. VW has agreed to pay out more than $15 billion in civil settlements but it is not yet clear what is going to happen in the ongoing criminal investigation.

Brazenness was also at the center of the revelation in August that employees at Wells Fargo, presumably under pressure from managers, created more than one million bogus accounts in order to generate fees from customers who had no idea what was going on. The story came out when the Consumer Financial Protection Bureau announced that the bank would pay $100 million to settle with the agency and another $85 million in related cases.

But that was just the beginning of the consequences for Wells. CEO John Stumpf was raked over the coals in House and Senate hearings, and he subsequently had to resign. Criminal charges remain a possibility.

The other biggest corporate scandal of the year involved drugmaker Mylan, which imposed steep price increases for its EpiPens, which deliver lifesaving treatment in severe allergy attacks. The increases had nothing to do with rising production costs and everything to do with boosting profits. The company’s CEO was also grilled by Congress, which however could do little about the price gouging.

Here are some of the other major cases of the year:

Toxic Securities. There is still fallout from the reckless behavior of the banks leading up to the 2008 financial meltdown. Goldman Sachs paid more than $5 billion to settle a case involving the packaging and sale of toxic securities, while Morgan Stanley paid $2.6 billion in a similar case.

Mortgage Fraud. Wells Fargo had to pay $1.2 billion to settle allegations that during the early 2000s it falsely certified that certain residential home mortgage loans were eligible for Federal Housing Administration insurance. Many of those loans later defaulted.

False Claims Act. Wyeth and Pfizer agreed to pay $784 million to resolve allegations that Wyeth (later acquired by Pfizer) knowingly reported to the government false and fraudulent prices on two of its proton pump inhibitor drugs.

Kickbacks. Olympus Corp. of the Americas, the largest U.S. distributor of endoscopes and related equipment, agreed to pay $623 million to resolve criminal charges and civil claims relating to a scheme to pay kickbacks to doctors and hospitals in the United States and Latin America.

Misuse of customer funds. Merrill Lynch, a subsidiary of Bank of America, agreed to pay $415 million to settle Securities and Exchange Commission allegations that it misused customer cash to generate profits for the firm and failed to safeguard customer securities from the claims of its creditors.

Price-fixing. Japan’s Nishikawa Rubber Co. agreed to plead guilty and pay a $130 million criminal fine for its role in a conspiracy to fix the prices of and rig the bids for automotive body sealing products installed in cars sold to U.S. consumers.

Accounting fraud. Monsanto agreed to pay an $80 million penalty and retain an independent compliance consultant to settle allegations that it violated accounting rules and misstated company earnings pertaining to its flagship product Roundup.

Consumer deception. Herbalife agreed to fully restructure its U.S. business operations and pay $200 million to compensate consumers to settle Federal Trade Commission allegations that the company deceived customers into believing they could earn substantial money selling diet, nutritional supplement, and personal care products.

Discriminatory practices. To resolve a federal discrimination case, Toyota Motor Credit Corp. agreed to pay $21.9 million in restitution to thousands of African-American and Asian and Pacific Islander borrowers who were charged higher interest rates than white borrowers for their auto loans, without regard to their creditworthiness.

Sale of contaminated products. B. Braun Medical Inc. agreed to pay $4.8 million in penalties and forfeiture and up to an additional $3 million in restitution to resolve its criminal liability for selling contaminated pre-filled saline flush syringes in 2007.

Pipeline spills. To resolve allegations relating to pipeline oil spills in Michigan and Illinois and 2010, Enbridge agreed to pay Clean Water Act civil penalties totaling $62 million and spend at least $110 million on a series of measures to prevent spills and improve operations across nearly 2,000 miles of its pipeline system in the Great Lakes region.

Mine safety. Donald Blankenship, former chief executive of Massey Energy, was sentenced to a year in prison for conspiring to violate federal mine safety standards in a case stemming from the 2010 Upper Big Branch disaster that killed 29 miners.

Wage theft. A Labor Department investigation found that Restaurant Associates and a subcontractor operating Capitol Hill cafeterias violated the Service Contract Act by misclassifying employees and paying them for lower-wage work than they actually performed. The workers were awarded more than $1 million in back pay.

False advertising. For-profit DeVry University agreed to pay $100 million to settle Federal Trade Commission allegations that it misled prospective students in ads touting the success of graduates.

Trump University. Shortly after being elected president, Donald Trump agreed to pay $25 million to settle fraud allegations made by the New York State Attorney General and others concerning a real estate investment training course.

Remember: thousands of such cases can be found in the Violation Tracker database my colleagues and I at the Corporate Research Project of Good Jobs First produce. Look for expanded coverage in 2017.

The Lax Prosecution of Corporate Crime

Thursday, June 23rd, 2016

vt_logo-full_1When an individual commits a serious offense, chances are that he or she is going to face a criminal charge. When a corporation breaks the law in a significant way, in most cases it faces a civil penalty.

This disparity between the treatment of human persons and corporate ones became increasingly apparent to me as I finished processing the data for the expansion of the Violation Tracker database my colleagues and I at the Corporate Research Project of Good Jobs First are releasing on June 28.

Violation Tracker 2.0 adds data on some 700 cases involving banks and other financial services companies brought by the Justice Department and ten federal regulatory agencies as well as 600 involving non-financial firms in areas such as price-fixing and foreign bribery. These 1,300 cases account for well over $100 billion in fines and settlements.

These plus the environmental, safety and health cases that made up the initial version of Violation Tracker bring the total number of entries in the database to 110,000 for the period since the beginning of 2010. Of that number, only 473 — less than one half of one percent — involve criminal charges.

It may come as a surprise that the largest portion of the criminal cases involve serious environmental matters referred to the Justice Department by the Environmental Protection Agency and a few from agencies such as the Coast Guard. The largest of these was a $400 million settlement with Transocean in connection with the Deepwater Horizon disaster in the Gulf of Mexico but most have penalties below $1 million.

The next most common category is price-fixing, with 99 cases that imposed penalties ranging up to the $500 million paid by the Taiwanese company AU Optronics. There are 82 tax cases, most of which involve charges against Swiss banks for helping U.S. taxpayers keep their offshore accounts hidden from the IRS. Foreign Corrupt Practices Act cases brought by the Justice Department account for 53 cases, with the biggest penalty, $772 million, paid by the French company Alstom.

Other categories include serious food safety violations, market manipulation and failure to adhere to rules against doing business with countries deemed to be enemies of the United States.

The significance of the 473 cases is diminished by the fact that in 35 percent of them the companies weren’t really prosecuted. Instead, they paid a penalty and signed either a non-prosecution agreement or a deferred prosecution agreement. These are gimmicks that allow companies to avoid the consequences of a criminal conviction.

Of the 308 cases in which there was an actual guilty plea or verdict, 161 were environmental matters, many of which were brought against small companies for things such as toxic dumping. Relatively few large corporations were targeted.

The category with the largest number of big business convictions is price-fixing, which in recent times has often meant Asian automotive parts companies. Seven big U.S. and foreign banks (or their subsidiaries) have had to enter guilty pleas. In just two cases did U.S.  bank parent companies — Citigroup and JPMorgan Chase  — enter those pleas. These were in a case involving manipulation of the foreign exchange market. After their pleas, they and the foreign banks also charged got waivers from SEC rules that bar firms with felony convictions from operating in the securities business.

So here’s what it comes down to: Apart from when they engage in price-fixing, large corporations rarely face criminal charges. When they do, they are often allowed to settle without a formal prosecution. And when they do plead guilty, these can get waivers from the consequences of their conviction.

Keep this in mind the next time a corporate lobbyist complains about excessive regulation.

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Note:  Violation Tracker 2.0 will be released on June 28.

The Ongoing Business Watergate Scandal

Thursday, June 16th, 2016

It is often forgotten that the Watergate scandal of the 1970s was not only about the misdeeds of the Nixon Administration. Investigations by the Senate and the Watergate Special Prosecutor forced companies such as 3M, American Airlines and Goodyear Tire & Rubber to admit that they or their executives had made illegal contributions to the infamous Committee to Re-Elect the President.

Subsequent inquiries into illegal payments of all kinds led to revelations that companies such as Lockheed, Northrop and Gulf Oil had engaged in widespread foreign bribery. Under pressure from the SEC, more than 150 publicly traded companies admitted that they had been involved in questionable overseas payments or outright bribes to obtain contracts from foreign governments. A 1976 tally by the Council on Economic Priorities found that more than $300 million in such payments had been disclosed in what some were calling “the Business Watergate.”

While some observers insisted that a certain amount of baksheesh was necessary to making deals in many parts of the world, Congress responded to the revelations by enacting the Foreign Corrupt Practices Act in 1977, making bribery of foreign government officials a criminal offense under U.S. law.

That laws is still on the books, and despite all the talk of corporate social responsibility, quite a few corporations still get caught in its net.

As part of the forthcoming expansion of the Violation Tracker database I produce with my colleagues at the Corporate Research Project of Good Jobs First, I’ve been looking at recent FCPA data and have been struck by the enduring inclination of businesspeople to engage in foreign bribery.

Since the beginning of 2010 about 90 companies have been hit with either criminal charges brought by the Justice Department or civil charges filed by the SEC or both. The 53 companies charged by the DOJ had to pay nearly $4 billion to settle their cases, while the 72 firms targeted by the SEC had to pay $1.7 billion.

The companies involved in the cases include some very familiar U.S. corporate names, including: Alcoa, General Electric, Goodyear, Johnson & Johnson, Pfizer, Ralph Lauren and Smith & Wesson.

Yet some of the biggest penalties have been paid by foreign companies such as the French conglomerate Alstom ($772 million), British military contractor BAE Systems ($400 million), Italian petroleum company ENI ($125 million) and German automaker Daimler ($91 million).

That reflects the long reach of the law, which allows for cases to be brought against foreign corporations involving corrupt practices in third countries. For example, the Japanese trading company Marubeni was charged with paying bribes to high-ranking government officials in Indonesia to secure a lucrative power project. Germany’s Deutsche Telekom and its Hungarian subsidiary Magyar Telecom were charged with making illegal payments in Macedonia and Montenegro.

From the time the FCPA was enacted, corporate lobbyists have complained about the law and have sought to have it weakened or repealed. The smarter companies have realized that the bribery rules are not going away and that they simply need to clean up their act when doing business abroad.

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Note: Violation Tracker 2.0 — which will add banking offenses and cases involving price-fixing, money laundering, defrauding of consumers and export-control/sanctions violations as well as foreign bribery — will be released on June 28.

Johnson & Johnson’s Self-Inflicted Wounds

Thursday, May 5th, 2016

Baby powder, the product along with Band-Aids that for decades gave Johnson & Johnson a benign image, is now the latest symbol of its deterioration into one of the most unreliable of large corporations. Juries have recently awarded a total of $127 million to women with ovarian cancer who charge that their disease was caused by the talc in the company’s powder.

J&J, which disputes the allegations and is appealing the verdicts, faces some 1,400 additional similar lawsuits brought by plaintiffs’ lawyers armed with company documents they say show that J&J was concerned about a link between talcum powder and ovarian cancer as early as the 1970s. It is unclear what will happen with the litigation, but the lawsuits are part of a long string of scandals that have plagued the giant medical products firm during the past decade and forced it to pay out vast sums in civil settlements and criminal fines.

The most serious of those cases involved allegations that several of its subsidiaries marketed prescription drugs for purposes not approved as safe by the Food and Drug Administration, thus creating potentially life-threatening risks for patients.

In 2010 J&J subsidiaries Ortho-McNeil Pharmaceutical and Ortho-McNeil-Janssen had to pay $81 million to settle charges that they promoted their epilepsy drug Topamax for uses not approved as safe. The following year, J&J subsidiary Scios Inc. had to pay $85 million to settle similar charges relating to its heart failure drug Natrecor.

In 2013 the Justice Department announced that J&J and several of its subsidiaries would pay more than $2.2 billion in criminal fines and civil settlements to resolve allegations that the company had marketed it anti-psychotic medication Risperdal and other drugs for unapproved uses as well as allegations that they had paid kickbacks to physicians and pharmacists to encourage off-label usage. The amount included $485 million in criminal fines and forfeiture and $1.72 billion in civil settlements with both the federal government and 45 states that had also sued the company.

At a press conference announcing the resolution of the case, U.S. Attorney General Eric Holder said the company’s practices ”recklessly put at risk the health of some of the most vulnerable members of our society — including young children, the elderly and the disabled.”

Other J&J problems resulted from faulty production practices. During 2009 and 2010 the company had to announce around a dozen recalls of medications, contact lenses and hip implants. The most serious of these was the massive recall of liquid Tylenol and Motrin for infants and children after batches of the medication were found to be contaminated with metal particles.

The company’s handling of the matter was so poor that J&J subsidiary McNeil-PPC became the subject of a criminal investigation and later entered a guilty plea and paid a criminal fine of $20 million and forfeited $5 million.

J&J also faced criminal charges in an investigation of questionable foreign transactions. In 2011 it agreed to pay a $21.4 million criminal penalty as part of a deferred prosecution agreement with the Justice Department resolving allegations of improper payments by J&J subsidiaries to government officials in Greece, Poland and Romania in violation of the Foreign Corrupt Practices Act. The settlement also covered kickbacks paid to the former government of Iraq under the United Nations Oil for Food Program.

All of this has been a humiliating comedown for a company that was once regarded as a model of corporate social responsibility and which set the standard for crisis management in its handling of the 1980s episode in which a madman laced packages of Tylenol with cyanide. While the company was then being victimized, the more recent crises have been largely of its own making.

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Note: This piece is drawn from my new Corporate Rap Sheet on Johnson & Johnson, which can be found here.

The 2015 Corporate Rap Sheet

Thursday, December 17th, 2015

gotojailThe ongoing corporate crime wave showed no signs of abating in 2015. BP paid a record $20 billion to settle the remaining civil charges relating to the Deepwater Horizon disaster (on top of the $4 billion in previous criminal penalties), and Volkswagen is facing perhaps even greater liability in connection with its scheme to evade emission standards.

Other automakers and suppliers were hit with large penalties for safety violations, including a $900 million fine (and deferred criminal prosecution) for General Motors, a record civil penalty of $200 million for Japanese airbag maker Takata, penalties of $105 million and $70 million for Fiat Chrysler, and $70 million for Honda.

Major banks continued to pay large penalties to resolve a variety of legal entanglements. Five banks (Citigroup, JPMorgan Chase, Barclays, Royal Bank of Scotland and UBS) had to pay a total of $2.5 billion to the Justice Department and $1.8 billion to the Federal Reserve in connection with charges that they conspired to manipulate foreign exchange markets. The DOJ case was unusual in that the banks had to enter guilty pleas, but it is unclear that this hampered their ability to conduct business as usual.

Anadarko Petroleum agreed to pay more than $5 billion to resolve charges relating to toxic dumping by Kerr-McGee, which was acquired by Anadarko in 2006. In another major environmental case, fertilizer company Mosaic agreed to resolve hazardous waste allegations at eight facilities by creating a $630 million trust fund and spending $170 million on mitigation projects.

These examples and the additional ones below were assembled with the help of Violation Tracker, the new database of corporate misconduct my colleagues and I at the Corporate Research Project of Good Jobs First introduced this year. The database currently covers environmental, health and safety cases from 13 federal agencies, but we will be adding other violation categories in 2016.

Deceptive financial practices. The Consumer Financial Protection Bureau fined Citibank $700 million for the deceptive marketing of credit card add-on products.

Cheating depositors. Citizens Bank was fined $18.5 million by the CFPB for pocketing the difference when customers mistakenly filled out deposit slips for amounts lower than the sums actually transferred.

Overcharging customers. An investigation by officials in New York City found that pre-packaged products at Whole Foods had mislabeled weights, resulting in grossly inflated unit prices.

Food contamination. In a rare financial penalty in a food safety case, a subsidiary of ConAgra was fined $11.2 million for distributing salmonella-tainted peanut butter.

Adulterated medication. Johnson & Johnson subsidiary McNeill-PPC entered a guilty plea and paid $25 million in fines and forfeiture in connection with charges that it sold adulterated children’s over-the-counter medications.

Illegal marketing. Sanofi subsidiary Genzyme Corporation entered into a deferred prosecution agreement and paid a penalty of $32.6 million in connection with charges that it promoted its Seprafilm devices for uses not approved as safe by the Food and Drug Administration.

Failure to report safety defects. Among the companies hit this year with civil penalties by the Consumer Product Safety Commission for failing to promptly report safety hazards were: General Electric ($3.5 million fine), Office Depot ($3.4 million) and LG Electronics ($1.8 million).

Workplace hazards. Tuna producer Bumble Bee agreed to pay $6 million to settle state charges that it willfully violated worker safety rules in connection with the death of an employee who was trapped in an industrial oven at the company’s plant in Southern California.

Sanctions violations. Deutsche Bank was fined $258 million for violations in connection with transactions on behalf of countries (such as Iran and Syria) and entities subject to U.S. economic sanctions.

Air pollution. Glass manufacturer Guardian Industries settled Clean Air Act violations brought by the EPA by agreeing to spend $70 million on new emission controls.

Ocean dumping. An Italian company called Carbofin was hit with a $2.75 million criminal fine for falsifying its records to hide the fact that it was using a device known as a “magic hose” to dispose of sludge, waste oil and oil-contaminated bilge water directly into the sea rather than using required pollution prevention equipment.

Climate denial. The New York Attorney General is investigating whether Exxon Mobil deliberately deceived shareholders and the public about the risks of climate change.

False claims. Millennium Health agreed to pay $256 million to resolve allegations that it billed Medicare, Medicaid and other federal health programs for unnecessary tests.

Illegal lobbying. Lockheed Martin paid $4.7 million to settle charges that it illegally used government money to lobby federal officials for an extension of its contract to run the Sandia nuclear weapons lab.

Price-fixing. German auto parts maker Robert Bosch was fined $57.8 million after pleading guilty to Justice Department charges of conspiring to fix prices and rig bids for spark plugs, oxygen sensors and starter motors sold to automakers in the United States and elsewhere.

Foreign bribery. Goodyear Tire & Rubber paid $16 million to resolve Securities and Exchange Commission allegations that company subsidiaries paid bribes to obtain sales in Kenya and Angola.

Wage theft. Oilfield services company Halliburton paid $18 million to resolve Labor Department allegations that it improperly categorized more than 1,000 workers to deny them overtime pay.

The 2014 Corporate Rap Sheet

Wednesday, December 31st, 2014

gotojailThe bull market in corporate crime surged in 2014 as large corporations continued to pay hefty fines and settlements that seem to do little to deter misbehavior in the suites. Payouts in excess of $1 billion have become commonplace and some even reach into eleven figures, as seen in the $16.65 billion settlement Bank of America reached with the Justice Department to resolve federal and state claims relating to the practices of its Merrill Lynch and Countrywide units in the run-up to the financial meltdown.

This came in the same year in which BofA reached a $9.3 billion settlement with the Federal Housing Finance Agency concerning the sale of deficient mortgage-backed securities to Fannie Mae and Freddie Mac and in which the Consumer Financial Protection Bureau ordered the bank to pay $727 million to compensate consumers harmed by deceptive marketing of credit card add-on products.

The BofA cases helped boost the total penalties paid by U.S. and European banks during the year to nearly $65 billion, a 40 percent increase over the previous year, according to a tally by the Boston Consulting Group reported by the Wall Street Journal.

Among the other big banking cases were the following:

  • France’s BNP Paribas pleaded guilty to criminal charges and paid an $8.9 billion penalty to U.S. authorities in connection with charges that it violated financial sanctions against countries such as Sudan and Iran.
  • Citigroup paid $7 billion to settle federal charges relating to the packaging and sale of toxic mortgage-backed securities.
  • U.S. and European regulators fined five banks — JP Morgan Chase, Citigroup, HSBC, Royal Bank of Scotland and UBS — a total of more than $4 billion after accusing them of conspiring to manipulate the foreign currency market.
  • Credit Suisse pleaded guilty to one criminal count of conspiring to aid tax evasion by U.S. customers and paid a penalty of $2.6 billion.
  • JPMorgan Chase paid $1.7 billion to victims of the Ponzi scheme perpetuated by Bernard Madoff to settle civil and criminal charges that it failed to alert authorities about large numbers of suspicious transactions made by Madoff while it was his banker.

Banks were not the only large corporations that found themselves in legal trouble during the year. The auto industry faced a never-ending storm of controversy over its safety practices. Toyota was hit with a $1.2 billion criminal penalty by U.S. authorities for concealing defects from customers and regulators. The National Highway Traffic Safety Administration fined General Motors $35 million (the maximum allowable) for failing to promptly report an ignition switch defect that has been linked to numerous deaths. Hyundai and its subsidiary Kia paid $300 million to settle allegations that they misstated the greenhouse gas emissions of their vehicles.

Toxic dumping. Anadarko Petroleum paid $5.1 billion to resolve federal charges that had been brought in connection with the clean-up of thousands of toxic waste sites around the country resulting from decades of questionable practices by Kerr-McGee, now a subsidiary of Anadarko.

Pipeline safety. The California Public Utilities Commission proposed that $1.4 billion in penalties and fined be imposed on Pacific Gas & Electric in connection with allegations that the company violated federal and state pipeline safety rules before a 2010 natural gas explosion that killed eight people.

Contractor fraud. Supreme Group BV had to pay $288 million in criminal fines and a $146 million civil settlement in connection with allegations that it grossly overcharged the federal government while supplying food and bottled water to U.S. personnel in Afghanistan.

Bribery. The French industrial group Alstom consented to pay $772 million to settle U.S. government charges that it bribed officials in Indonesia and other countries to win power contracts. Earlier in the year, Alcoa paid $384 million to resolve federal charges that it used a middleman to bribe members of Bahrain’s royal family and other officials to win lucrative contracts from the Bahraini government.

Price-fixing. Japan’s Bridgestone Corporation pleaded guilty to charges that it conspired to fix prices of anti-vibration rubber auto parts and had to pay a criminal fine of $425 million.

Defrauding consumers. AT&T Mobility had to pay $105 million to settle allegations by the Federal Trade Commission and the Federal Communications Commission that it unlawfully billed customers for services without their prior knowledge or consent.

The list goes on. Whether the economy is strong or weak, many corporative executives cannot resist the temptation to break the law in the pursuit of profit.

Note: For fuller dossiers on some of the companies listed here, see my Corporate Rap Sheets.