Bribery and Airbus

Given all the talk about the globalization of supply chains and other business activities, it is encouraging to see that international coordination can also occur when it comes to the investigation of corporate misconduct.

That is part of the story in the recent announcement that law enforcement agencies in the United States, Britain and France worked together to bring about a $4 billion settlement with Airbus to resolve allegations of bribery and export-control violations in its dealings with countries such as China, Malaysia and Ghana.

Unfortunately, cross-border cooperation can also result in the spread of undesirable practices. The Airbus deal included a deferred prosecution agreement offered by the UK’s Serious Fraud Office. Britain imported such arrangements from the United States, whose Justice Department also offered one to Airbus.

At least Britain has used DPAs sparingly – the Serious Fraud Office website lists half a dozen prior to Airbus, while the U.S. DOJ has handed out more than 200 of them, along with a roughly equal number of related non-prosecution agreements.

Part of the justification for these deals is that they will discourage corporations from repeating their offenses by holding out the possibility of an actual criminal prosecution should that occur. But Airbus is a company that already had a history of bribery.

A 2003 article in The Economist described this track record involving customers in countries such as Kuwait and India. In 2018 Airbus had to pay more than 80 million euros to resolve a bribery investigation conducted by the Munich Public Prosecutor relating to the sale of fighter aircraft to Austria. The new settlement with Airbus was the culmination of an investigation that lasted for years.

Bribery, in fact, has long been a pervasive problem in the aerospace industry, including U.S. players. Among the revelations that occurred during the Watergate investigation was the fact that companies such as Lockheed and Northrop frequently paid questionable payments to gain foreign contracts. The uproar over these payments, which also involved companies in other industries, helped bring about the Foreign Corrupt Practices Act—the key law used by U.S. prosecutors in their portion of the case against Airbus.

The FCPA has also been used against other foreign aerospace companies. These cases include an $800 million settlement with aircraft engine manufacturer Rolls-Royce that also involved prosecutors in the UK and Brazil; a $107 million settlement with Brazilian aircraft manufacturer Embraer; and a $400 million settlement with Britain’s BAE Systems.

Bribery has been such a significant issue for Airbus that the company had planned to include a chapter on its scandals in a book it had commissioned to celebrate its fiftieth anniversary. Airbus executives apparently thought that publishing that unflattering content would highlight the company’s purported commitment to transparency and thus help it negotiate a more favorable deal in its negotiations with prosecutors. Airbus subsequently decided that the move might actually have the opposite effect, and it cancelled the publication of the book.

That may have been the wiser course of action. Airbus got the deferred prosecution agreements it was seeking and thereby protected its ability to bid on government contracts. The public, however, is left to wonder whether the company and its competitors will ever cease their corrupt practices.

U.S. Prosecutors and Foreign Corporations

Federal prosecutors recently announced that telecommunications giant Ericsson will pay more than $1 billion to resolve allegations that it conspired to make illegal payments to win contracts in five countries. The settlement included a $520 million criminal penalty imposed by the Justice Department and a $540 million civil payment to the Securities and Exchange Commission.

This was the latest in a long series of cases brought under the Foreign Corrupt Practices Act, the 1977 law that emerged out of the Watergate-era revelations about improper overseas payments by U.S. corporations. But what the case against Sweden’s Ericsson highlights is the extent to which the law is being applied to foreign corporations as well as domestic ones.

In fact, companies based outside the United States increasingly appear to be the primary targets of prosecutors. In the period since the Trump Administration took office, foreign corporations have paid about $4 billion in FCPA penalties to DOJ and the SEC—more than seven times the sum paid by domestic firms. Apart from the Ericsson settlement, the largest combined penalties have been paid by a Russian company ($831 million by Mobile TeleSystems PJSC) and another Swedish one ($731 million by Telia).

By contrast, U.S.-based firms have gotten off with much lighter financial punishment. The only domestic company paying more than $100 million was Walmart, though its long-delayed $281 million penalty was well below what had been expected.

The tougher treatment of foreign companies can also be seen in the prosecution of price-fixing. Violation Tracker shows that during the Trump Administration foreign companies have paid more than $723 million to DOJ in criminal penalties, whereas domestic firms have been penalized only $44 million. There were seven fines of $50 million or more among the foreign companies; none among those based in the United States.

This tendency toward imposing heavier penalties on foreign companies is not unique to the Trump years. During the Obama Administration, seven of the ten largest FCPA settlements involved foreign corporations, as did nine of the ten largest price-fixing cases.

There is no evidence to suggest that foreign companies are more prone to law-breaking and thus account for more of the penalties. When it comes to offenses that are more purely domestic in nature – such as environmental, consumer protection and employment violations – U.S.-based companies more than hold their own.

The question is whether the federal government is using those portions of its enforcement powers that impact more heavily on international trade to put an added burden on the foreign competitors of U.S. companies. Perhaps this is an indirect form of protectionism.

Personally, I have no problem with the prosecution of foreign corporations that are engaged in misconduct, as long as domestic companies doing the same thing are not being let off the hook.

The 2019 Corporate Rap Sheet

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 information.

Opioid Marketing Abuses: The British company Reckitt Benckiser agreed 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 Department, the 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 Mexico.

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 Alphabet agreed 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 states.

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.

Another Type of Quid Pro Quo

As the political news is dominated by discussion of quid pro quo and bribery, there has been another ongoing series of allegations about improper payments for things of value. The other quid pro quo relates to the pharmaceutical industry, which has been the subject of a seemingly never-ending scandals about financial inducements given to healthcare professionals.

The most significant recent case involves a company called Avanir Pharmaceuticals, which had to pay more than $115 million to resolve allegations that it paid kickbacks to physicians to get them to prescribe its drug Nuedexta for uses not approved as safe by the Food and Drug Administration.

Among those uses were the treatment of behaviors associated with dementia among residents of long-term care facilities. Nuedexta was tested and approved for patients exhibiting what is known as pseudobulbar affect (PBA) — involuntary, sudden, and frequent episodes of laughing or crying that occur secondary to a neurologic disease or brain injury.

The case against Avanir included allegations that physicians receiving its payments ended up putting large numbers of patients on Nuedexta who showed no symptoms of PBA, exposing them to unknown risks.

The Justice Department regarded Avanir’s behavior to be serious enough to warrant criminal charges, but like in so many other cases, the company was offered a deferred prosecution agreement that allowed it to buy its way out of full legal jeopardy by paying criminal penalties of nearly $13 million. The company agreed to cooperate in the prosecution of several individuals who received the kickbacks and whose liability may end up being more than financial in nature.

In addition to the criminal matter, Avanir agreed to pay $103 million to settle a related civil False Claims Act case based on the fact that federal and state healthcare programs ended up paying claims stemming from the improper prescribing of Nuedexta.

Avanir’s alleged behavior is especially troublesome because of the involvement of elderly dementia patients, but the use of kickbacks is far from unknown in the pharmaceutical industry. In Violation Tracker we document about 50 drug industry cases in which kickbacks were the primary or secondary offense.

These cases, which have resulted in more than $7 billion in fines and settlements, have implicated pretty much every large pharmaceutical producer and numerous smaller ones as well. Some companies show up on the list several times. These include Abbott Laboratories, which along with its subsidiaries has been involved in six cases between 2003 and 2017 that resulted in $630 million in penalties, and Pfizer, which together with its subsidiaries has paid $531 million in five cases between 2004 and 2018.

The extent of the recidivism in drug industry kickback cases suggests that the industry is not taking the problem very seriously and that the Justice Department’s approach has not had the necessary deterrent effect. Perhaps there is a lesson here for the political world as well.

Back Pedaling on Kickbacks?

It’s hard not to be suspicious when the Secretary of Health and Human Services promotes a supposed reform by stating that “President Trump has promised American patients a healthcare system with affordable, personalized care, a system that puts you in control, provides peace of mind, and treats you like a human being, not a number. But too often, government regulations have stood in the way of delivering that kind of care.”

Secretary Alex Azar used those dubious statements in a press release about his department’s plan to “modernize and clarify” the regulations that interpret the Physician Self-Referral Law (known as the Stark Law) and the Federal Anti-Kickback Statute.

Azar claims that the rule changes would promote new methods of delivering healthcare based on greater coordination among providers, including those with financial relationships with one another.

The changes are technical in nature, but I cannot help but worry that the scheme would serve to legitimize dubious dealings and enable providers to avoid prosecution under laws that have been in place for several decades.

I have become more familiar with these laws in the course of collecting data for Violation Tracker. The database currently contains more than 360 cases in which kickbacks and bribery are involved as the primary or secondary offense. These cases have resulted in more than $14 billion in fines and settlements involving many of the largest names in pharmaceuticals (Merck, Amgen, Bristol-Myers Squibb, Pfizer, et al.), hospitals (Tenet, HCA, among others) and pharmacies (such as CVS).

The biggest penalty is a $2.2 billion agreement signed by Johnson & Johnson in 2013 to resolve civil and criminal charges of paying kickbacks to physicians to encourage them to prescribe several of its drugs for uses not approved by the Food and Drug Administration.

One of those drugs was the anti-psychotic medication Risperdal, which was only approved for schizophrenia but which J&J was allegedly promoting for other less serious conditions among elderly patients through financial inducements to providers.

In an interesting coincidence, the announcement of the new HHS proposal came at almost exactly the same time that a jury in Philadelphia hit J&J with an $8 billion verdict over its marketing of Risperdal for use by children.

It will be interesting to see whether the new HHS rules on kickbacks, if they go through, manage to distinguish between more innocent financial dealings among providers and the corrupt practices that have been so common among the larger players. Given this administration’s track record on healthcare and so many other issues, we cannot give it the benefit of the doubt.

Will Prosecutors Get Tough with the Largest Corporate Lawbreakers?

By the standards of corporate law enforcement, the Justice Department is throwing the book at Insys Therapeutics. To resolve a civil and criminal case alleging that the company paid illegal kickbacks to healthcare providers to market its powerful opioid Subsys, DOJ required Insys to pay a total of $225 million in fines and forfeitures. Its operating subsidiary had to plead guilty to five counts of mail fraud.

A few weeks earlier, a federal jury in Massachusetts delivered guilty verdicts against the Insys founder John Kapoor (photo) and four former top executives on racketeering charges relating to the kickbacks and other actions such as misleading insurance companies about the need for Subsys, which was supposed to be used in limited circumstances by cancer patients but which Insys tried to get prescribed more widely.

Although Insys itself was offered a deferred prosecution agreement, the company has felt the effects of these legal setbacks. It has been forced to file for Chapter 11 bankruptcy, its stock price has plunged, and it has agreed to sell off Subsys.

If Insys ends up going out of business entirely – and if Kapoor and the others end up in prison for a substantial period of time – this will serve as a warning to other players in the pharmaceutical industry that there can be dire consequences for serious misconduct.

Yet the challenge for prosecutors is whether they can apply similar punishments to larger malefactors in the drug business and related sectors. Insys, after all, had only $82 million in revenue last year and has a workforce of only 226. Its disappearance from the scene would not cause major disruptions.

Consider the case of Johnson & Johnson, with over $80 billion in annual revenues and about 135,000 employees. Despite a carefully cultivated image of purity in connection with its products for infants, J&J has been involved in a series of scandals over the past decade. Violation Tracker shows that it has paid out more than $3 billion in penalties.

The company has received a lot of unfavorable attention in recent months in connection with allegations that it covered up internal concerns about possible asbestos contamination of its baby powder and other talc-based products. J&J has been hit with a flood of lawsuits and has already received some massive adverse verdicts.

The company is also on the defensive for its role in the opioid crisis, facing a lawsuit brought by the state of Oklahoma, which has already collected substantial settlements in related cases brought against Purdue Pharma and Teva Pharmaceutics. J&J may wish it had settled.

An expert witness in the case recently accused the company of contributing to a “public health catastrophe” and charged that its behavior in some ways was even worse than that of widely vilified Purdue. It remains to be seen whether a company of the size and prominence of J&J will be subjected to the same kind of federal prosecutorial offensive launched against Insys. It is only when business giants face existential threats for their misdeeds that we may see real change in corporate behavior.

DOJ is also Defying Trump on Foreign Bribery

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

“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?

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

$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.