FCPA Penalties and Disgorgement: What the Money Actually Measures

FCPA penalties on the civil side can include a financial penalty, disgorgement of profits from violations and interest. The SEC can pursue both improper payments and the false accounting that hides them. If you know why a commission was paid, who approved an expense or which contract followed, you may know how the business made the money the government seeks to recover. The bribe is one part of that story. The business it bought can be much bigger.

What Does an FCPA Civil Penalty Depend On?

An FCPA civil penalty depends on the violation, who committed it and the schedule applicable to the relevant dates. The Foreign Corrupt Practices Act’s anti-bribery provisions address corrupt payments and offers to foreign officials for business. Its accounting provisions separately require covered companies to keep accurate books and maintain adequate accounting controls.

That distinction matters to someone who sees an expense report or a payment approval. A false description can conceal who benefited, while a failed approval process can let the payment through. The accounting obligation reaches the company’s records of the transaction, including records consolidated from a subsidiary. A commission agreement, a hospitality application and an expense receipt can each matter before anyone has worked out the company’s total profit.

The civil penalty schedule also distinguishes an individual from a company. Its higher general tiers address fraud and specified financial harm or risk, and the governing law can allow a penalty based on a greater financial gain.

A privately held U.S. company can face FCPA civil penalties too. The Justice Department has civil anti-bribery authority over U.S. businesses outside the SEC’s issuer jurisdiction, including private companies.

FCPA Civil Penalty Inflation Adjustment and Conduct Date

An FCPA civil penalty inflation adjustment depends on both the conduct date and the date the penalty is imposed. The SEC’s January 15, 2025 schedule applies its latest column to penalties imposed after that date for violations occurring after November 2, 2015. Earlier conduct has separate columns.

That schedule lists an issuer anti-bribery civil maximum of $26,262 per violation. Its general civil penalty tiers use different amounts for individuals and companies:

These are the dated schedule’s dollar ceilings. For an insider, the transaction dates and the records showing what happened are what connect a published rate to the conduct.

Why Is Disgorgement Different From a Penalty?

Disgorgement requires a company to give up profits from violations. A civil penalty imposes a separate financial sanction. That makes the contract, the revenue and the profit records important alongside the payment to the official. A business can spend relatively little to secure a much more valuable sale.

In a 2020 ruling on SEC disgorgement, the Supreme Court tied disgorgement to net profits and the benefit to victims. The opinion explained why legitimate expenses matter when separating revenue from profit. Congress gave the SEC explicit power to seek disgorgement in 2021.

Deere’s SEC order makes the distinction concrete. The SEC alleged that bribery of a private customer’s employees generated approximately $5.3 million in gross sales of machines and spare parts, with approximately $1.5 million in profits. Sales and profits were separate figures in the same account of the scheme. The order also said its disgorgement and prejudgment interest did not exceed Deere’s net profits from the violations and directed the money to the Treasury.

For someone in sales or finance, that changes the significance of an ordinary customer account. The machinery sale can lead to later spare-parts purchases, which the SEC’s Deere allegations expressly followed. The expense that concealed the payment and the sales account that recorded the benefit answer different parts of the money question.

What Does a Settlement Amount Actually Include?

A civil settlement can require a penalty, disgorgement and interest, each serving a different purpose. A settlement can also give credit for another payment. The order’s payment terms determine how those obligations fit together.

Petrobras illustrates why the destination matters. Its 2018 SEC order allowed its disgorgement and interest obligation to be satisfied through payments into a securities class-action settlement fund. That credit linked the SEC obligation to money for investors.

Foreign settlement credits can change the destination too. The SEC’s October 2020 order concerning Goldman Sachs set disgorgement at $606,300,000, with satisfaction through the Malaysia and 1MDB settlement. That arrangement connected an obligation in a U.S. order to a payment under a different settlement.

BHP’s Penalty Reached the Hospitality Approval Process

BHP Billiton agreed to a $25 million civil penalty in its May 2015 SEC settlement of books, records and accounting-controls allegations involving its Beijing Olympics hospitality program. The SEC’s order concerned invitations to officials who could influence contracts, access rights, regulatory actions and other business.

According to the SEC’s allegations, the hospitality packages included event tickets, luxury hotels and meals, with airfare offered in many instances. The applications used to approve invitations could obscure the invitee’s government role:

The SEC also alleged that the forms could remain unchanged when the business relationship changed. In Burundi, the SEC alleged, BHP began negotiating with the minister of mines to extend and modify a nickel exploration permit after the invitation process had begun. Employees allegedly left the hospitality application unchanged and did not reassess the invitation. The SEC said the minister and his wife attended as BHP’s guests.

The alleged gap also ran across business divisions. According to the SEC, hospitality applications generally reflected the submitting division’s dealings, and BHP had no process to determine whether another division was negotiating with the same official. An employee working on one contract could therefore know about a government relationship that the invitation’s reviewer had never considered.

We see the absurdity in treating an official as an ordinary customer while leaving the pending negotiation off the form. The person reviewing hospitality needs the very fact the application omits. Someone working on the permit may know what the approval form left out. The evidence sits where the commercial team and the expense process meet.

Deere’s Order Separated the Profit From the Penalty

Deere’s September 2024 SEC settlement required $4,343,401 in disgorgement, $1,086,954 in prejudgment interest and a $4,500,000 civil penalty. The order resolved books-and-records and internal-controls allegations involving Wirtgen Thailand, its road-equipment subsidiary. The SEC alleged that improper payments helped win government business and sales to a private customer while Deere had not fully integrated the acquired business into its compliance controls.

The allegations described more than cash handed to an official. Wirtgen Thailand allegedly entertained officials at massage parlors, recorded the spending as legitimate expenses and added employees to receipts to make the expenses look more reasonable:

The SEC also alleged that a trip described as a factory visit consisted entirely of sightseeing in Switzerland. According to the SEC, Wirtgen Thailand submitted a government tender bid while the trip was underway and won the tender shortly afterward. We see a vacation dressed up as a factory visit, with a government bid running alongside it. The invoice, itinerary and tender connect the expense to the business sought.

A third-party consultant allegedly supplied another payment route. The SEC described sham commission agreements for a consultant who provided no legitimate services and served as a conduit for bribes. One agreement allegedly directed the commission payment to an account held by a senior highway official. In the SEC’s account, the consultant’s name on the agreement and the official’s name on the receiving account exposed a connection the expense category concealed.

These are the kinds of payment and accounting records that can connect a benefit to a decision. The receipt describes the expense, the approval identifies who authorized it, and the tender identifies the business sought. An insider may know why those records tell different stories, including who supplied the false explanation.

The SEC said it considered Deere’s cooperation and remedial work in accepting the settlement. That cooperation included forensic accounting analysis, relevant emails, company documents and access to current and former employees, including witnesses overseas. The practical point for an insider is the detail behind the account: which payment, whose approval, which customer and what the company earned.

A Distributor’s Margin Can Finance the Payment

The payment that matters can sit inside a distributor’s margin rather than in an expense explicitly described as a benefit to an official. In a 2015 speech on pharmaceutical enforcement, the SEC’s enforcement director explained how distributors could use their margin or spread to create cash for bribes. The extra layer of cash flow could leave the manufacturer recording the payment as a legitimate business expense.

The same speech described payments for prescriptions, access to approved drug lists and benefits disguised as charitable contributions. Public-hospital doctors and administrators could influence which products the hospital bought. For someone who knows the distribution agreement, the discount and the resulting sales, the important connection is how the commercial margin funded the benefit and what business followed. That is where industry knowledge can explain what an accounting entry hides.

Why Inside Knowledge Changes the Calculation

Whistleblower incentives can affect company behavior before a penalty is imposed. Do Corporate Whistleblower Laws Deter Accounting Fraud?, a March 2019 working paper from the University of Chicago Booth School of Business and Baruch College, studied companies exposed to state whistleblower laws through state pension-fund ownership. It found a lower estimated likelihood of accounting fraud after that exposure, using financial measures of fraud risk.

The study found little evidence, in its smaller internal-audit sample, that increased audit spending, staffing or hours explained the change. That finding puts the possibility of someone speaking up alongside the formal control system. We take the distinction seriously: the person who knows why an expense was disguised can supply something a signed approval never will, the explanation behind the entry.

What Money Determines the Reward?

For FCPA whistleblower rewards, the SEC program looks to qualifying monetary sanctions actually collected. Its program guidance provides an eligible whistleblower with 10% to 30% of that money. The company payment and the whistleblower’s reward remain separate amounts, and we assess how your information contributed to the enforcement result.

The SEC whistleblower award program rewards original information that helps build a case. A person who can explain a hidden payment or identify the records connecting it to a sale may contribute to a new investigation or significantly help an existing one. We work with you on that connection and the program that fits it.

Where the conduct also involves false claims for U.S. government money, a whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We assess that distinct question with you alongside the foreign-bribery evidence.

You Know Why the Payment Was Made

If you know the real purpose behind a commission, a hospitality approval or a false expense, speak with our whistleblower experts about the business it bought. We connect your inside knowledge to the payments, profits and decisions that can support your case, and bring in FCPA whistleblower lawyers with the expertise it needs. You get partners who understand the transaction and stay with you through the case.