Are Commercial Bribes the "Broken Windows" of the FCPA?
Client Alert | 1 min read | 02.25.15
The Department of Justice has a long history of prosecuting commercial bribery uncovered in FCPA cases under the Travel Act (18 U.S.C. § 1952), which prohibits the use of interstate commerce in furtherance of any "unlawful activity" such as commercial bribery in violation of state law. See United States v. Control Components Inc. (C.D. Cal. July 31, 2009). Similarly, the UK Bribery Act prohibits both commercial bribery and bribery of foreign government officials.
By contrast, the SEC traditionally has been reluctant to pursue purely commercial bribes. The SEC's position first shifted some 18 months, and is now confirmed again with Goodyear Tire & Rubber's $16 million settlement with the SEC on Tuesday, which resolved allegations that Goodyear subsidiaries in Kenya and Angola paid more than $3.2 million in bribes, and "falsely recorded [the bribery payments] as legitimate business expenses in [their] books and records." Highlighting the agency's renewed interest in pursuing liability based on commercial bribery, Scott W. Friestad, Associate Director of the SEC's Enforcement Division said in a press release that "[t]his settlement ensures that Goodyear must forfeit all of the illicit profits from business obtained through bribes to foreign officials as well as employees at commercial companies in Angola and Kenya." Notably, the Goodyear case was settled without any civil monetary penalty as Goodyear was required only to disgorge ill-gotten gains and pay pre-judgment interest.
In light of the apparent trend, Tuesday's settlement raises some key questions: Are the books and records provisions the SEC equivalent of the Travel Act? Do commercial bribes portend bribes to government officials such that they are the "broken windows" of SEC FCPA enforcement?
We certainly now have a good sense of how the SEC would answer these questions.
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Client Alert | 3 min read | 11.21.25
On November 7, 2025, in Thornton v. National Academy of Sciences, No. 25-cv-2155, 2025 WL 3123732 (D.D.C. Nov. 7, 2025), the District Court for the District of Columbia dismissed a False Claims Act (FCA) retaliation complaint on the basis that the plaintiff’s allegations that he was fired after blowing the whistle on purported illegally discriminatory use of federal funding was not sufficient to support his FCA claim. This case appears to be one of the first filed, and subsequently dismissed, following Deputy Attorney General Todd Blanche’s announcement of the creation of the Civil Rights Fraud Initiative on May 19, 2025, which “strongly encourages” private individuals to file lawsuits under the FCA relating to purportedly discriminatory and illegal use of federal funding for diversity, equity, and inclusion (DEI) initiatives in violation of Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025). In this case, the court dismissed the FCA retaliation claim and rejected the argument that an organization could violate the FCA merely by “engaging in discriminatory conduct while conducting a federally funded study.” The analysis in Thornton could be a sign of how forthcoming arguments of retaliation based on reporting allegedly fraudulent DEI activity will be analyzed in the future.
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