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A Double Standard? Part V

Prior posts have explored the issue of whether there is a double standard between enforcement of the Foreign Corrupt Practices Act and enforcement of U.S. domestic bribery statutes.

See here [1] for “A Double Standard?” here [2] for “A Double Standard? Part II,” here [3] for “A Double Standard? Part III,” and here [4] for “Double Standard? Part IV.”

The following questions were posed:  will a U.S. company’s interaction with a “foreign official” (however that term is interpreted) be subject to more scrutiny and different standards than its interaction with a U.S. official; do we reflexively label a “foreign official” who receives “things of value” from private business interests as corrupt, yet when a U.S. official similarly receives “things of value” from private business interests we merely say “well, no one said our system is perfect”?

Wal-Mart’s recent FCPA scrutiny has shined a light on many topics directly and indirectly related to the FCPA in recent days.  One topic that is frequently showing up in my daily FCPA searches is the notion of a double standard as explored in the above posts.

In this [5] recent clip from The War Room with Jennifer Granholm on Current TV, Granholm makes the general point that in the U.S., corporations frequently seek to influence the political process in ways that benefit its business interests.  Referring to Wal-Mart’s FCPA scrutiny, Granholm termed it “wildly ironic” that the company is under criminal investigation for potential violations of the FCPA for its interactions with Mexican officials, yet corporations have various legal vehicles, post-Citizens United, to influence U.S. officials.

In this [6] recent Fox News segment, commentators note that “the [U.S.] government wants to give the impression that it is law-abiding and others are not when the same behavior is engaged” in by both and that “when the government itself gives bribes in foreign countries every day of the week, they just call it foreign aid.”  During the segment, an issue explored is how, when a U.S. company needs to receive a permit in the local community or needs something done, the company may call up its lobbyist who then may make a campaign donation to the official.  Guests on the program stated that there is a contradiction between potential FCPA scrutiny and legal U.S. corporate practices that “does not make moral sense.”

See this [7] prior post “Is There a Difference?” for a discussion of similar issues.  Also, see this [8] prior post discussing the sentencing of FCPA defendant Bobby Elkins during which the sentencing judge reportedly stated that the CIA routinely bribes Afghan warlords, but the CIA’s conduct is not illegal and that this parallel “sort of goes to the morality of the situation” Elkins faced.  And then of course there is the James Giffen FCPA enforcement action.  The enforcement action began with allegations (here [9]) that Giffen made more than $78 million in unlawful payments to two senior Kazakhstan officials in connection with oil transactions for major American oil companies and abruptly ended in August 2010 with a one-paragraph superseding information (here [10]) charging a misdemeanor tax violation and the company he worked for settling an FCPA enforcement action focused solely on two snowmobiles (here [11]).  Part of Giffen’s defense was that his actions were taken with the knowledge and support of the CIA, the National Security Council, the Department of State and the White House. (See here [12] for a prior post).

A while back, a reader sent me this [13] article from Salon titled “America’s Pervasive Pay-Off System.”  The author discusses petty bribery in Africa and states as follows.  “It’s not that the United States lacks corruption, […]— or even pervasive corruption.  It’s just not of the low-level and petty variety like the kind [the author explained in Africa], not most of the time anyway.  In America, corruption is concentrated at the highest levels of society — and it masquerades, for example, under the name of “campaign finance.””  Likewise, the St. Louis Post-Dispatch recently carried this [14] editorial that stated as follows.  “The fact is that even the United States government pays bribes. The “Great  Sunni Awakening” that shut off the worst of the insurgency in the Iraq War was  made possible by payments  to tribal leaders. In Afghanistan, the U.S. military routinely paid  off warlords, including some with ties to the Taliban. And then there all the U.S. politicians taking campaign contributions in  return for ‘access.’ This is a difference without a distinction.”

One of my favorite quotes from the FCPA’s legislative history was made by Theodore Sorensen who stated in the midst of Congressional deliberations regarding what would become the FCPA as follows.   “Corporate bribery is not the simple, safe issue it seems at first blush.”  Noting “countless situations in which a fair-minded investigator or judge will be hard-put to determine whether a particular payment or practice is a legitimate and permissible business activity or a means of improper influence,” Sorensen stated that “reasonable men and even angels will differ on the answers … [and] such distinctions should make us less sweeping in our judgments and less confident of our solutions.”

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The above post is further to my work in progress “A Double Standard?” first presented at the Law and Society Annual Meeting in San Francisco in June 2011 during a panel titled “Corruption, International Business and Economic Development.”