(WASHINGTON, D.C.) – Bipartisan legislation that would increase public transparency around financial settlements reached by federal enforcement agencies, The Truth in Settlements Act, is one step closer to become a reality. Originally introduced by U.S. Senators Tom Coburn, M.D. (R-OK) and Elizabeth Warren (D-MA), passed the Senate Homeland Security & Governmental Affairs Committee today.
"Taxpayers deserve to know the settlement details corporations arrange with the government, and the best place for Congress to start is with policies that enhance transparency," Dr. Coburn said. "Since agencies are not currently required to disclose the financial structure of government settlements, too often the true value of those settlements is not known because often companies are allowed to deduct part of the payment. Our bill gives taxpayers the transparency tools they need to access real information and numbers regarding enforcement settlements."
“When government agencies reach settlements with companies that break the law, they should disclose the key terms of those deals to the public," said Senator Warren. "Today’s vote moves us one step closer to increased transparency and stronger accountability around government settlements. This bill will help shut down backroom deal-making and ensure that Congress, citizens and watchdog groups can hold regulatory agencies accountable for stronger and more effective enforcement to the law."
When federal agencies settle cases, they often tout the dollar amount obtained from the offender, but in many cases that amount is misleading because of tax deductions and other "credits" built into the settlement that reduce the settlement's true value. Worse, sometimes agreements are deemed confidential, with key details or even the fact of a settlement hidden from the public. The Truth in Settlements Act will require more accessible and detailed disclosures about these agreements to allow the public to hold regulators accountable for the true value of these deals.
Under the Truth in Settlements Act, any agency that issues a written public statement that references the amount to be paid under a settlement will be required to include explanations of how those payments are categorized for tax purposes and whether those payments may be offset by "credits" for particular conduct. Companies that settle with enforcement agencies will be required to disclose in their Securities and Exchange Commission (SEC) filings whether they have deducted any or all of the dollar amounts of their settlements from their taxes; and federal agencies will be required to post basic information about settlements and provide copies of those agreements on their websites.