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A Positive Correlation Between Bureaucracy and Corruption

Overlap

Previous posts (see herehere and here) have posed the question several times.

Why do Foreign Corrupt Practices Act violations occur?

Do companies subject to the FCPA do business in foreign markets: (i) intent on engaging in bribery as a business strategy and without a committment to FCPA compliance; or (ii) with a committment to FCPA compliance, yet subject to difficult business conditions?

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BellSouth Gets Hung Up In Latin America

bellsouth

[This post is part of a periodic series regarding “old” FCPA enforcement actions]

In 2002, the SEC announced the filing of a settled civil complaint against BellSouth Corporation charging the telecommunications company with violations of the FCPA’s books and records and internal controls provisions.

The conduct at issue focused on an indirect subsidiary in Venezuela (and BellSouth’s inability to “reconstruct the circumstances of purpose” of certain payments) and an indirect subsidiary in Nicaragua (which retained the wife of the chairman of a Nicaraguan legislative committee with oversight of telecommunications).

As frequently highlighted on these pages, the root cause of many FCPA enforcement actions are foreign trade barriers and restrictions and in this regard, as the complaint notes, Nicaraguan law prohibited foreign companies from acquiring a majority interest in Nicaraguan telecommunications companies.”

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Issues To Consider From The Telia Enforcement Action

Issues

This previous post went in-depth into the Telia Foreign Corrupt Practices Act enforcement action which contemplates a net $483 million settlement (after accounting for various credits and deductions for contemplated Swedish and Dutch enforcement actions) – the 5th largest net FCPA settlement of all-time.

Set forth below are several additional issues to consider from the enforcement action.

No Books and Records Findings

Off the top of my head, I can recall only one prior instance (BNY Mellon) of an SEC FCPA enforcement action not involving books and records violations or findings. The Telia action is the second instance which is odd given that the SEC found that the “bribe payments were funneled through payments for sham lobbying and consulting services to a front company controlled by the official.”

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The U.S. Government Bears Some Responsibility For Certain Root Causes Of Foreign Bribery And Corruption

Double Standard4

This post is not about the U.S. government’s two-pronged approach to fighting bribery and corruption: Foreign Corrupt Practices Act enforcement and the DOJ’s so-called Kleptocracy Asset Recovery Initiative.

Rather, this post highlights this dandy op-ed by Jay Newman recently published in the Wall Street Journal to explore a picture issue previously explored on these pages and that is whether the U.S. government bears some responsibility for certain root causes of foreign bribery and corruption.

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Friday Roundup

Roundup

Quotable, no reliable way to measure, Microsoft explains, scrutiny alert, a direct selling license in China, and offensive use of the FCPA. It’s all here in the Friday roundup.

Quotable

Some think – or at least I’ve been told – that certain of my Foreign Corrupt Practices Act views are controversial or out of the “main stream” (whatever the “main stream” actually is or means). Yet, I am confident that much of what I write and talk about represents silent majority views.

Indeed, as I’ve commented before, one of the interesting things about writing about the FCPA and related issues on a daily basis is that often I just need to wait for a former FCPA enforcement official to say the same thing. 

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