The world’s largest corporations have racked up $700 billion in monetary penalties linked to regulatory infringements in 45 countries since 2010. 

Major banks, especially those based in the United States and Europe, account for more than one-third of the penalties. 

Ninety-five parent companies have been hit with $1 billion or more in penalties.

These are some of the revelations from data contained in Violation Tracker Global, a new website created by the US non-governmental organization Good Jobs First, which previously produced similar databases focused on the United States and the United Kingdom. 

“Violation Tracker Global documents a wide range of misconduct by multinational corporations in their operations around the world,” said Philip Mattera, who directs the Violation Tracker project.

“We hope it will be a valuable tool for those promoting corporate accountability efforts in many countries, including the EU’s Corporate Sustainability Due Diligence Directive.”

Violation Tracker Global documents more than 50,000 regulatory penalties imposed on 1,600 multinational corporations and their subsidiaries by over 700 regulatory agencies and courts in 45 of the world’s largest economies. 

These include countries in both the Global North – such as the USA, 17 members of the European Union, United Kingdom, Japan, South Korea, Canada, and Australia – and the Global South – such as Brazil, Mexico, South Africa, and India). Some information is also included from China and Russia. 

What is Violation Tracker?

“Violation Tracker is an attempt to provide a comprehensive resource on corporate crime and misconduct, especially cases in which companies pay a monetary penalty for breaking the law,” Mattera told Corporate Crime Reporter in an interview last week.

“We started with a US version. Then we added a UK version. And now we have a multi-country version with data from 45 countries.”

The multi-country version must incorporate the other two versions, right?

“There are some differences. The multi-country version only has cases that are linked to large corporations. And we have a universe of about 1,600 large multinationals that we include. We extracted the cases from the US and UK versions that related to that same universe of large corporations. And those are the companies that carried over into Violation Tracker Global.”

“There were two other differences. The global version only goes back to 2010, whereas the U.S. version goes back to 2000. And the global version does not yet include class action lawsuits.”

“We’re still in the process of trying to collect that information from other countries that have class action systems. We decided to wait to include the US cases until we have something from some other countries.” 

Why did you decide to cut it off at large multinationals?

“It partially has to do with feasibility. It’s a lot of work to collect this data, particularly from 45 different countries, and it just wasn’t practical to include all data from all countries.” 

“The other issue is that the reason why we took the more comprehensive approach in the US was that the US has much better disclosure. I have to admit, I was surprised that the US ends up looking pretty good compared to the rest of the world in terms of the quality of the online disclosure. For example, I was very surprised to see that the big EU countries generally do not disclose environmental and labor cases online. Part of it has to do with privacy restrictions, which seems bizarre to me. You are talking not about the corporate executives’ privacy, but the privacy rights of the corporation.”

“For example, in Germany, they have an employment court that handles these cases that in the United States would be handled by the Wage and Hour Division of the Labor Department. In Germany, the employment court handles the cases.”

“They publish their decisions, but the names of the employers are redacted for privacy reasons. So we were not able to include those in our database because there were no company names.” 

“This is true one way or another for just about all of the EU countries that we looked at. We have data from 17 of the 27 EU countries. I think Ireland is the only one where we have labor cases. There were similar gaps in other parts of the world as well, especially with environmental and labor cases.” 

“We had much better luck with financial cases and competition or antitrust cases. It seems bizarre to me that these countries decided – it’s okay to disclose the name of the corporation that’s involved in a financial or antitrust offense, but not if it’s an employment or environmental offense, I’m still trying to figure out why there’s that discrepancy.”

“Another issue here is that the enforcement mechanisms in these countries are much more decentralized than in the US. You don’t have national agencies like the EPA and OSHA. You will have local prosecutors that are handling these matters and the names of the companies are kept confidential.” 

“There were some exceptions, for example, for major cases that ended up in court. Those details would become public. So for example, the Volkswagen emissions cheating case. As in the US, there were some big cases in countries like Germany and those became part of the public record. And we did create entries on those cases, on an ad hoc basis using secondary sources.” 

“So it’s not like we have nothing from these countries on the environment, but we don’t have the comprehensive data that we would like, because they just don’t make the information available.” 

Why would, for example, the UK’s Serious Fraud Office disclose enforcement actions, but not the other agencies?

“Well, the UK is different from the EU countries, so the UK does a pretty good job across the board, and that was one of the reasons why we were able to create a whole database on the UK.” 

“But the countries where there are these gaps are countries like France, Germany, Italy, Spain, the Netherlands. I’ve tried to figure out why the discrepancy. I’ve talked to dozens of people, and so far, I can’t get a good explanation.” 

“Some of it may have to do with the difference between the US and the UK common law tradition and the different legal systems in the European countries. That’s one possibility. But I’m still trying to track down somebody who has studied this in detail and can give me a good explanation, if there is one.” 

For the enforcement actions that you were able to document from Europe and around the world, how did you compile the cases?

“We used the same standard approach that we use for the US and the UK databases – we try to get as much as possible from the websites of the regulators. We went to all of those.”

“One thing that helped is that there are these associations of regulators. So for example, there’s an association of regulators that deal with antitrust and competition cases. There’s an association of regulators dealing with securities cases.”

“That made it easier for us to identify the appropriate agency in a given country. In some countries, we had to just hunt around and look for the right regulator.” 

Did you find cases where the enforcement agency was bringing cases but not announcing them?

“Yes, this is an interesting situation in countries like South Korea. The agency would have nothing on its website. In those cases, I would do a Nexis search for the name of the agency and then enter keywords like penalties. And a bunch of cases would show up.” 

“I realized that what was going on was that the agency would not announce its cases, but  these penalties would get leaked to the local media in the country, and the reporters would write stories. So in those cases, we would use secondary sources, because the primary source wasn’t there.”

Who was leaking the information?

“I assume somebody in the regulatory agency wants this information to get out to the world.”

Do you have any sense as to why the agency was not announcing the enforcement cases and penalties?

“I don’t know whether it’s because they want to protect the companies, or it’s because there might be some privacy rules. But it just struck me as odd. And these were in these were in areas like the financial cases, not even though, much less the environmental cases.”

“The one thing we haven’t done yet, because we don’t yet have the resources, is to do open records requests in these other countries. We know that in some cases, we might not be able to make those requests from abroad. They might not be willing to respond to a foreign requester, but when we have the resources, we are going to try to supplement the data that we got online with open records requests and see what kinds of replies we get.”

[For the complete q/a format Interview with Philip Mattera, 38 Corporate Crime Reporter 41(12), Monday October 21, 2024, print edition only.]