The Education Network Best Ten List Articles
Companies that have cost lives, caused environmental disasters or committed severe wrongdoing have paid back billions in damages for their mishaps.
Here are the most expensive criminal fines.
10. Pfizer – $2.3bn
Big pharma companies have had their fair share of expensive fines, mainly for advertising the use of drugs for purposes not approved by the government, called ‘off-label marketing.’
In 2009 Pfizer paid a 2.3billion dollar fine for false claims in one of the most significant fraud settlements in US history.
Pfizer Inc pleaded guilty to a U.S. criminal charge relating to promoting its now-withdrawn Bextra pain medicine.
The world’s biggest drugmaker with huge fines after being deemed a repeat offender in pitching drugs to patients and doctors for unapproved uses.
Pfizer’s marketing team promoted Bextra for acute pain, surgical pain, and other unapproved uses. In contrast, its salesforce promoted the drug directly to doctors for those unapproved uses and dosages.
9. GlaxoSmithKline – $3bn ($1bn criminal, $2bn civil)
Global health care giant GlaxoSmithKline LLC (GSK) agreed to plead guilty and to pay $3 billion to resolve its criminal and civil liability arising from the company’s unlawful promotion of certain prescription drugs, its failure to report specific safety data, and its civil liability for alleged false price reporting practices, the Justice Department announced today.
The resolution is the largest health care fraud settlement in U.S. history and the most significant payment ever by a drug company.
In 2013 Johnson & Johnson paid 1.4bn for the same offense.
8. Facebook – $5bn
In 2019, Facebook, Inc. paid a record-breaking $5 billion penalty. Besides that, it had to modify the corporate structure to hold the company accountable for its users’ privacy decisions.
This was done to settle Federal Trade Commission charges that the company violated a 2012 FTC order by deceiving users about their ability to control the privacy of their personal information.
The FTC launched an investigation into Facebook’s privacy practices in March 2018 in response to the Cambridge Analytica revelations. The inquiry has focused on whether the data practices that allowed Cambridge Analytica to obtain Facebook user data violated the company’s 2011 agreement with the FTC.
The $5 billion penalties against Facebook is the largest ever imposed on any company for violating consumers’ privacy and almost 20 times greater than the most significant privacy or data security penalty ever set worldwide. It is one of the most considerable penalties ever assessed by the U.S. government for any violation.
7. BNP Paribas – $8.9bn
BNP Paribas SA BNPP.PA was sentenced to five years probation by a U.S. judge on Friday with a record $8.9 billion settlement resolving claims that it violated sanctions against Sudan, Cuba, and Iran.
Authorities said that BNP essentially functioned as the “central bank for the government of Sudan,” concealing its tracks and failing to cooperate when first contacted by law enforcement.
Prosecutors said BNP also evaded sanctions against entities in Iran and Cuba, in part by stripping information from wire transfers so they could pass through the U.S. system without raising red flags.
6. Google – $9.5bn
Regulators in the US and Europe alike appear to be aiming for Silicon Valley. With growing concerns about cyber-security, data protection, and online privacy, the technology sector has emerged as the next target of multi-billion-dollar fines.
Over the past three years, the EU has levied a series of fines against Google for alleged anti-competitive practices, totaling around $9.5bn.
5. Deutsche Bank – $10bn
In 2015 Deutsche Bank had already been fined a record 2.5 billion dollars by US and British authorities for its role in an interest rate scam between 2003 and 2007.
The bank’s London subsidiary pleaded guilty to counts of criminal wire fraud after it was accused of fixing interest rates. British banking authorities said at least 29 Deutsche Bank employees were involved in the scam, while US regulators ordered the bank to fire seven employees, including directors and vice-presidents.
Deutsche Bank was one of many lenders guilty of selling and pooling toxic financial products in the lead-up to the 2007 and 2008 financial crises.
The bank signed a $7.2 billion settlement with the US Department of Justice in 2017 after being accused of selling investors bad mortgage-backed securities between 2005 and 2007.
4. Volkswagen – $15.3bn
In 2016, Volkswagen faced $15.3bn in civil and criminal penalties from the United States in the wake of its scandal over emissions cheating.
In a world increasingly concerned with the response to climate change, the VW case shook the entire automotive industry to the core. The VW scandal effectively doomed diesel as a fuel for the future.
Today, all major automotive companies are directing their investments (and future) towards electric cars while striving to meet increasingly aggressive emissions targets.
3. Bank of America – $16.65bn
In the wake of the 2008 financial crisis, new regulatory bodies were created, and banks were under increased scrutiny from dodgy dealings.
A large part of the crisis was caused by banks lending a subprime loan to people who would be very unlikely to pay it back.
At the time, President Barack Obama said the mortgage finance practices that led to the economic meltdown were “immoral, inappropriate and reckless,” but not necessarily illegal, making it difficult to punish key players, specifically in the subprime debacle.
However, the Bank of American paid a vast $16.65billion in damages in 2014 for its role. $ 13billion was paid by JP Morgan to resolve similar charges.
Significant fines have also been levied on Citigroup, Royal Bank of Scotland, Goldman Sachs, Credit Suisse, Wells Fargo, and HSBC holdings for conduct ranging from money laundering to rate manipulation, retail practices, and tax evasion.
2. British Petroleum – $64bn
If you cast your mind back to 2010, there was a gigantic oil spill in the Gulf of Mexico in what is known as the largest marine oil spill in history, the Deepwater Horizon Oil Spill.
Just off the Texas coast, it’s suspected to have covered a whopping 60,000 square miles and poured into the sea for four months.
A massive response followed to protect beaches, wetlands, and estuaries from the spreading oil using skimmer ships, floating booms, controlled burns, and 7,000 square miles of oil dispersant.
Along with adverse effects from the response and cleanup activities, extensive damage to marine and wildlife habitats and fishing and tourism industries was extreme and known as the most significant industrial environmental disaster in US history.
Petrol company BP settled with the US Department of Justice for £15billion in 2016; the company’s total compensation ultimately paid out reportedly exceeded $64bn.
In February 2022, brighter after Russia invaded Ukraine, BP has been under pressure from the UK government to make a move in response. “This military action represents a fundamental change,” said Helge Lund, BP’s chairman, in a statement. BP has owned shares in the Russian company since 2013. According to Reuters, the move could cost it anywhere from $14 billion to $25 billion.
1. TEPCO – $450bn
After the Fukushima nuclear disaster in 2011, critics blamed the lack of preparedness for the event and a chaotic response from the plant operator Tokyo Electric Power and the government.
An independent investigation set up by Japan’s parliament concluded that Fukushima was “a profoundly man-made disaster,” blaming the energy company for failing to meet safety requirements or to plan for such an event.
In 2019 a Japanese court cleared three former Tepco executives of negligence in the only criminal case to come out of the disaster.
But the company faced compensation claims totaling 5trillion yen from the tens of thousands of people who have been driven from their homes by radiation leaks.
FAQs
Who paid the largest criminal fine in history and why?
Tepco, which stands for Tokyo Electric Power Co, was ordered to pay a whopping $450 billion to compensate victims of 2011’s Fukushima disaster. The dramatic triple meltdown at the Fukushima Nuclear Power Plant in Japan resulted from the devastating aftermath of the Tōhoku earthquake and tsunami in March 2011. It was the most severe nuclear disaster since Chernobyl’s.
How hefty was Pfizer’s criminal fine, and why did it have to pay?
The criminal fine of $2.3 billion levied against Pfizer in 2009 set a new record as the largest healthcare fraud settlement and criminal fine to date. Pfizer was ordered to pay the fine by US regulators after it was found to have engaged in fraud by mispromoting now-withdrawn painkiller Bextra. The company pleaded guilty to charges of advertising the medication for ‘off-label’ purposes, not approved by the US Food and Drug Administration (FDA).
Conclusion on largest criminal fines
The massive scope of today’s fines – and even more significant reputational fallout of the wrongdoing they quantify – means that companies cannot afford to view such payments as mere “costs of doing business.” Instead, they need to take a hard look at their business practices and make significant changes.
Public and media attention, programs that reward whistleblowers, and multi-jurisdictional information sharing by national enforcement agencies mean that global companies are under more regulatory scrutiny than ever before.
What do you think about these huge fines?
Have they covered the wrongdoing by the companies and will prevent others do the same? Let us know in the comments below.
