2022 has seen some big fines handed down by UK regulators to corporations for misconduct and violations. This blog will be reviewing the top 5 fines received by corporations this year, which (spoiler!) total a massive £502 million. This is for just 5 corporate fines. Let’s take a closer look at the events and issues surrounding these top 5 enforcement outcomes.
- Glencore Energy (UK) Limited – £280,965,092
In November, Glencore Energy (UK) Limited were fined £280 million by the Serious Fraud Office (‘SFO’) for a competition-related offence, namely bribery. According to the SFO press release, their investigation revealed ‘endemic’ corruption, highly corrosive behaviour and $29 million in bribes paid by Glencore to officials in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea and South Sudan, with the ambition of gaining preferential access to and illicit profits from oil in Africa.
In his judgement at Southwark Crown Court, Mr Justice Fraser stated that he felt it was a significant criminal offence using sophisticated methods to disguise what they were doing. Furthermore, another reasoning for the high fine was the endemic nature of the offence.
Whilst this is the biggest fine awarded this year, it is not the biggest fine in the SFO’s history, which would go to Airbus in 2020 for bribery offences in a fines package worth £991 million, although this also had a Deferred Prosecution Agreement attached to it, meaning they are safe against prosecution for this offence. The second biggest fine, £510 million, was imposed by the SFO on Rolls-Royce in 2017, also for bribery offences. Therefore, putting Glencore’s fine into context, it could’ve been worse.
- Santander UK PLC – £107,793,300
This month Santander UK PLC were given a £107.7 million fine by the Financial Conduct Authority for serious and persistent gaps in its anti-money laundering policies. This adversely impacted over 560,000 business customers, resulting in copious suspicious transactions through customer accounts amounting into the hundreds of millions of pounds. This happened over a period of 5 years.
It would seem that anti-money laundering offences are being taken increasingly seriously by UK regulators to try and stem dirty money flowing into and around the UK. This year alone there have been 6 cases involving lax anti-money laundering policies in companies, which is more than any previous years since 2010. However, the biggest ever fine for anti-money laundering deficiencies went to NatWest last year, with a fine of £264 million.
- Pfizer Limited – £63,300,000
In recent years, Pfizer have become known as a vaccine giant after their success with developing one of the COVID-19 vaccines widely given to millions of people globally. But this year Pfizer Limited were fined £63 million by the Competition and Markets Authority (‘CMA’) after it was found that Pfizer exploited their dominant market position to inflate the prices of phenytoin sodium capsules, a life-saving anti-epilepsy medicine. This overinflated price ultimately cost the NHS £48 million more in 2013 than in had in 2012, with Pfizer overinflating their prices between 780% and 1,600% more than they had previously. The fine represents 10% of its global turnover, which also happens to be the maximum statutory amount that CMA can impose for antitrust infringements.
- Mastercard – £31,560,062
At the beginning of 2022, Mastercard received a £31.5 million fine for price-fixing or anti-competitive practices by the Payments Systems Regulator (‘PSR’). It was found by the PSR that 5 payments companies had entered into agreements with each other not to compete or poach each other’s customers in the prepaid card market. The prepaid cards were being used by local authorities to pay welfare benefits to vulnerable members of society, such as those who’d suffered domestic violence, asylum seekers and homeless people. The PSR argues that the behaviour by the 5 firms is akin to cartel behaviour, with Mastercard being the worst and most involved offender. By doing this, these providers may have denied local authorities access to cheaper products and may have resulted in vulnerable people missing out on better quality services.
- KPMG LLP – £18,667,937
The Financial Reporting Council (‘FRC’) fined KPMG £20 million, reduced to £14.4 million plus £4.27 million in costs for their cooperation, self-reporting and admissions with the regulator. This is set to be one of the biggest fines in UK audit history. Former KPMG staff misled the FRC over audits, forging documents to do this including for collapsed outsourcer Carillion as well as Regenesis between 2014 and 2016. Mark Ellison, the QC representing the FRC at the tribunal stated that “the misconduct found in this case is extremely serious (…) it cuts at the very heart of the protection of the public interest (…) it was misconduct deliberately aimed at deceiving AQR inspectors appointed by the FRC”.
2022 Corporate Violations Takeaway
Whilst the totals of these top 5 fines for 2022 is an eye watering £502 million, if we compare the top 5 fines for 2021, then this figure seems somewhat smaller in comparison. In 2021, the top 5 corporations were collectively fined a total of £1 billion! Moreover, in 2022 there were a total of 9,620 enforcement actions, whilst in 2021 there were 10,000.
Somewhat interestingly, the top 5 consist of 5 different regulatory bodies, which means there wasn’t a dominant regulator within the top 5. But also, regulators such as the Environment Agency didn’t give out another record breaking (for the EA) fine like they did in 2021 with Southern Water and £90 million. This year, the highest fine a water company received was £1.6 million, which went to Yorkshire Water. It is worth mentioning that there was another case involving Yorkshire Water this year on Violation Tracker UK worth £100 million, but this was not a fine. Instead, it was an undertaking agreed between the Ofwat, the water services regulator, and Yorkshire Water for £100 million to be invested into their network and storm overflows. Therefore, as it is not a fine, it was not included in this list.
Overall, it’s been a busy year for regulators and corporate violators alike. For now, everyone at Good Jobs First and Violation Tracker UK would like to thank you for your support and wish you a Happy Christmas and prosperous New Year! We look forward to writing more blogs on corporate violations in 2023 and providing more interesting insights for you all.