The
2018 Corporate Rap Sheet
By
Phil Mattera for the Dirt Diggers Digest
The
Trump Administration has been taking steps to weaken its enforcement activities
against corporate criminals and regulatory violators, but diligent prosecutors
and career agency administrators are still trying to do their job. Over the course of 2018 there has been a steady stream of announcements of substantial penalties imposed on major corporations for a wide range of offenses. The following is a selection of significant cases resolved during the year:
Sale
of Toxic Securities: In cases left over from the financial crisis of the
2000s, three major banks agreed to pay ten-figure settlements to the Justice
Department to resolve allegations of misleading investors in residential
mortgage-backed securities: $2 billion by Barclays, $2.1 billion by Wells Fargo
and $4.9 billion by The Royal Bank of Scotland.
Interest
Rate Benchmark Manipulation: The French bank Societe Generale agreed to
pay $475 million to settle allegations by the Commodity Futures Trading
Commission that it manipulated or attempted to manipulate LIBOR and other
interest rate benchmarks.
Foreign
Exchange Market Manipulation: The French bank BNP Paribas pleaded guilty
to participating in a price-fixing scheme in the foreign exchange market and
paid the U.S. Justice Department a criminal fine of $90 million.
Anti-Money
Laundering Deficiencies: U.S. Bancorp agreed to a $453 million civil
forfeiture to resolve a case brought by the U.S. Attorney for the Southern
District of New York alleging that it violated the Bank Secrecy Act by failing
to file required suspicious activity reports.
Foreign
Corrupt Practices Act: The Securities and Exchange Commission required
Panasonic Corporation to pay $143 million to resolve allegations of making
improper payments and committing accounting fraud in connection with its global
avionics business. It paid an additional $137.4 million to settle related
criminal charges brought by the Justice Department.
Consumer
Financial Protection Violation: Wells Fargo agreed to pay a total of $1
billion to the Consumer Financial Protection Bureau and the Office of the
Comptroller of the Currency in connection with abuses relating to a mandatory
insurance program tied to auto loans, mortgage interest-rate-lock extensions
and other practices.
Product
Safety Violation: Polaris Industries agreed to pay a $27.25 million civil
penalty to settle Consumer Product Safety Commission allegations that it failed
to immediately report to the agency that some of its recreational off-road
vehicles contained defects that could create a substantial product hazard or
that they created an unreasonable risk of serious injury or death.
Controlled
Substances Act Violations: Rite Aid agreed to pay $4 million and CVS
agreed to pay a total of $2.5 million in two cases, all to resolve allegations
of improper distribution of controlled substances.
Sexual
Harassment: Poultry processor Koch Foods agreed to pay $3.75 million to
settle allegations made by the Equal Employment Opportunity Commission
involving sexual harassment, national origin and race discrimination and
retaliation at a plant in Mississippi.
Clean
Air Act Violations: The Justice Department, the Environmental Protection
Agency and the Louisiana Department of Environmental Quality announced that
Shell Chemical would pay penalties of $350,000 and spend $10 million to install
pollution control equipment to reduce harmful emissions at its plant in Norco,
Louisiana.
False
Claims Act Violations: Toyobo Co. of Japan and its American subsidiary
agreed to pay $66 million to resolve claims under the False Claims Act that
they sold defective Zylon fiber used in bulletproof vests that the United
States purchased for federal, state, local, and tribal law enforcement
agencies.
Bid-Rigging: South
Korea-based companies SK Energy, GS Caltex, and Hanjin Transportation agreed to
plead guilty to criminal charges and pay a total of approximately $82 million
in criminal fines for their involvement in a decade-long bid-rigging conspiracy
that targeted contracts to supply fuel to United States Army, Navy, Marine
Corps, and Air Force bases in South Korea
Investor
Protection Violations: AEGON USA Investment Management and three other
Transamerica affiliates agreed to pay $97 million to the Securities and
Exchange Commission to resolve allegations that they misled investors through
the use of faulty financial models.
Hiring
of Undocumented Workers: Waste Management Texas agreed to forfeit $5.5
million and entered into a non-prosecution agreement with the U.S. Attorney’s
Office for the Southern District of Texas to resolve allegations that it hired
numerous undocumented workers at its Houston operation.
Tax
Evasion: The Swiss bank Zurcher Kantonalbank agreed to pay $98.5 million
and entered into a deferred prosecution agreement to resolve charges that it
conspired to help U.S. taxpayer-clients file false federal tax returns and hide
hundreds of millions of dollars in offshore bank accounts.
Data
Breach: Uber agreed to pay $148 million to settle allegations that emerged
from a nationwide investigation of a 2016 incident in which a hacker gained
access to personal information on 57 million riders and drivers.
Note:
Additional details on most of these cases can be found in Violation Tracker, which now contains
327,000 entries with total penalties of $440 billion, or in the next update of
the database, scheduled to appear in mid-January.