Midst all the fines, penalties and recoveries against banks, we tend to get jaded about large settlements with governmental investigators.  But the Foreign Corrupt Practices Act continues to provide us with mega-penalties for US companies which bribe government officials, and these penalties are grossly disproportionate to the gains secured by the miscreants.

Take the case announded last Friday by the SEC against food giant Archer-Daniels-Midland Company, which resulted in civil and criminal fines totalling about $54,000,000 for transactions (the most recent five years ago) that netted a benefit of about $33,000,000.  Okay, not that startling, but note this:

THE BRIBES WERE PAID TO RELEASE VAT TAX REFUNDS THAT CLEARLY BELONGED TO ADM AND WHICH WERE BEING ILLEGALLY HELD BY THE UKRAINIAN GOVERNMENT.

So ADM paid Ukrainian government officials 18 to 20 cents on the dollar to receive money that belonged to ADM and was being improperly held by the government.  ADM’s own money!

I dislike these kinds of breathless disclosures of information that is already in the public domain, but that is outrageous.  And the SEC stated that the fines were LOW because ADM turned itself in, cooperated and took  “significant remedial measures.”

In defense of the government, it did uncover improper recordation of the expenses involved; they were characterized on the company books as fake insurance premiums or false commodities contracts.  The statute is two-edged; the payment to government officials is illegal and falsely characterizing it in the books is a separate offense.

One wants to say that the new strategy for FCPA violations is to honestly enter each bribe under a separate P&L line item called “Off-shore bribes to facilitate governmental performance that is being corruptly withheld.”  At least in that case only ONE part of the statute is being violated…. 

The serious message about all this is the continued focus by the SEC and DOJ on foreign payments.  Many of these cases are old and cold, and arose before there was intense regulatory focus on this issue.  It is hard to imagine the regulatory fervor that will be applied to cases which arise more recently, during the period when the government has been making its statement against off-shore bribery.  While it is hard to feel true pity for a company that violates the law, it is anomalous that the law would have you sit idly by while someone simply steals your money.