Top Menu

Second Circuit Affirms Seng’s Conviction

Seng2

Previous posts here, here and here highlighted Ng Lap Seng’s Second Circuit appeal after a federal jury convicted him in July 2017 of two counts of violating the FCPA, one count of paying bribes and gratuities, one count of money laundering and two counts of conspiracy “for his role in a scheme to bribe United Nations ambassadors to obtain support to build a conference center in Macau that would host, among other events, the annual United Nations Global South-South Development Expo.”

Recently, in this decision the Second Circuit affirmed Seng’s conviction. As stated in the opinion, the issues on appeal were: (i) whether the United Nations is an “organization” within the meaning of 18 U.S.C. 666; (ii) whether the jury was correctly instructed as to controlling law, particularly as pertains to bribery in light of McDonnell v. United States (see here for the prior post concerning the Supreme Court’s 2016 decision construing 18 USC 201 – the domestic bribery statute – particularly the meaning of “official act”; and (iii) whether the evidence was insufficient to support a guilty plea.

Continue Reading

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 for “A Double Standard?” here for “A Double Standard? Part II,” here for “A Double Standard? Part III,” and here 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 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 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 prior post “Is There a Difference?” for a discussion of similar issues.  Also, see this 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) 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) charging a misdemeanor tax violation and the company he worked for settling an FCPA enforcement action focused solely on two snowmobiles (here).  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 for a prior post).

A while back, a reader sent me this 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 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.”

*****

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.”

A Double Standard? Part III

A government official sets up a foundation to aid local organizations. It is funded by business entities that often turn to the government official for help – and usually succeed in getting such help.

Over a six week period, a company sends at least $45,000 in donations to four charitable programs founded by government officials – just as the companies were seeking approval of favorable legislation.

Another company supports a fundraiser for the scholarship fund of a government official.

Another company sponsors a sport competition to help the favorite food bank of a government official.

Another company subsidizes a spa outing in a popular tourist destination to aid the charity of a government official.

Another company helps sponsor a golf tournament benefiting the foundation of a government official.

Another company acknowledges that it participates in government officials’ charitable events to get access to the officials to push the company’s agenda.

*****

“Google” Foreign Corrupt Practices Act and charitable giving and you will have enough reading material to keep you busy the rest of the day.

This material will likely reference the 2004 FCPA enforcement action against Schering-Plough (see here).

In that action, the SEC alleged (here) that Schering-Plough violated the FCPA when its wholly-owned Polish subsidiary (“S-P Poland”) improperly recorded a bona fide charitable donation to a Polish foundation where the founder/president of the foundation was also the director of a government health fund (the “Director”) that provided money to hospitals throughout Poland for the purchase of pharmaceutical products.

Although the SEC and Schering-Plough ultimately resolved the matter based only on violations of the FCPA’s books and records and internal control provisions, the enforcement action is commonly viewed as broadening the “anything of value” element of an FCPA anti-bribery violation. (See here).

The SEC’s tacit interpretation of the “anything of value” element in the Schering-Plough matter is significant because there was no allegation or indication that any tangible monetary benefit accrued to the Director, an individual deemed by the SEC to be a “foreign official” under the FCPA.

Rather, the SEC brought the enforcement action on the basis of its apparent conclusion that S-P Poland’s bona fide charitable donations constituted a “thing of value” to the “foreign official” because the donations were subjectively valued by the official and provided him with an intangible benefit of enhanced self-worth or
prestige.

*****

So will the above donations to government official charities result in FCPA scrutiny?

Nope!

Why not?

Because the government officials are U.S. government officials. See here for the recent New York Times story.

The U.S. has a domestic bribery statute (18 USC 201) (see here) which has similar elements to the FCPA. Yet, I would not hold your breath waiting for domestic bribery prosecutions.

This all begs the question – is there a double standard?

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”?

For more on the FCPA’s double standard (see here and here).

A Double Standard?

A government official (and his wife) tour a foreign vineyard and castle and spend an afternoon at a ski resort in the Alps. A company can’t foot the bill directly, so it funds a group that then picks up the tab.

Another government official is flown across the world to help close a business deal for a large corporate financial backer (and friend).

Sounds like some potential FCPA issues, right?

Wrong.

Why?

Because the government officials involved are not “foreign officials,” but rather U.S. government officials. (See here for the recent story in the NY Times. The WSJ also recently ran a similar story here – although less focused on privately funded travel).

For those interested in other examples, you will want to visit LegiStorm.com (here) a web site that allows one to search such trips by U.S. official, sponsor, most active sponsor, most expensive trips, etc.

This raises the question of whether there is a double standard.

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”?

The U.S. has a domestic bribery statute (18 USC 201) (see here) which has similar (yet not identical) elements to the FCPA. Should not there at least be some level of intellectual and enforcement consistency with these statutes?

No doubt many of the trips identified by LegiStorm had a core, legitimate purpose. However, often times payment of a “foreign official’s” travel expenses also have a core, legitimate purpose. The FCPA enforcement action most “on-point” is the 2007 action against Lucent (see here and here).

It’s just not payment of a “foreign official’s” travel expenses which seem to be subject to a double standard, but also corporate donations as well. It’s common knowledge in this country that corporate interests donate, either directly or indirectly, to political campaigns, political action groups, or other causes to curry favor with politicians (or shall I say “participate in the political process”).

Yet, if a company makes even a bona fide charitable contribution abroad, they will be subject to FCPA scrutiny. The FCPA enforcement action most “on-point” is the 2004 action against Schering-Plough (see here) involving a donation to a legitimate Polish castle restoration foundation where the founder/president of the foundation was also the director of a government health fund which provided money to hospitals throughout Poland for the purchase of pharmaceutical products.

All interesting issues/questions to ponder in what seems to be another example of how FCPA enforcement has indeed because the unique creature that it is. (See here for a prior post on this issue).

Powered by WordPress. Designed by WooThemes