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Why Does The Media Have Such Difficulty Accurately Describing The FCPA?

Call me old-fashioned, but when paid journalists write about the Foreign Corrupt Practices Act there is a duty to get things right. A duty to conduct basic research and verify or confirm the truth of the matter asserted.

FCPA Professor has chronicled for years numerous “not so finest FCPA moments” of the media (see here [1]here [2], here [3], here [4] and here [5]) and the latest is courtesy of this Newsweek article [6].

If the definition of fake news includes published material with objectively false information, then portions of the Newsweek article is fake news. This post is particularly timely following DOJ Compliance Counsel Hui Chen recently calling out [7] certain compliance commentary for its lack of precision and intellectual rigor and her call for a #precisionmatters hashtag on social media.

The Newsweek article is primarily about the “Combating Global Corruption Act of 2017,” a bill recently introduced in the Senate that was highlighted on FCPA Professor a few weeks ago (see here [8]). The bill is hardly a “sweeping anti-corruption law” as the Newsweek headline proclaims, but that is an opinion statement and not objectively false.

Like so many other media outlets have, the Newsweek article mentions the incredibly flawed March New Yorker Trump Organization article (see here [9] and here [1] for prior FCPA Professor posts) and states that, under the FCPA, “U.S. companies cannot benefit, even unknowingly, from a foreign partner’s corruption.” This is most certainly not an accurate description of the FCPA’s anti-bribery provisions, but not the most egregious objectively false information in the Newsweek article.

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The most egregious is the following two sentences from the article:

“In 1977, Washington implemented the Foreign Corrupt Practices Act (FCPA), which prevents U.S. citizens and companies working abroad from bribing foreign entities. The first legislation of its kind, the FCPA also prevents foreign companies from doing the same in the United States.”

There are three objectively false statements about the FCPA in these two sentences.

First, the FCPA does not just capture U.S. citizens and companies working abroad. The FCPA’s anti-bribery provisions also apply to foreign companies with shares traded in the U.S. (of which there are many) as well as foreign companies and foreign citizens to the extent certain jurisdictional elements have been met.

Second, the FCPA does not prohibit “bribing foreign entities.” For starters, that depends what the “b” word means, but the FCPA generally prohibits the offer or payment of money or anything of value to a “foreign official” to obtain or retain business. “Foreign official” is defined in the FCPA to mean “any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.”

Third, is the absurd statement the FCPA also “prevents foreign companies from doing the same [bribery presumably] in the United States.” The FCPA’s anti-bribery provisions have nothing to do with “bribery” of U.S. officials, there is a separate law for this, and again (as stated above) the FCPA’s anti-bribery provisions require the existence of a “foreign official” in the alleged bribery scheme.

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And then there is this dandy article [11] from Vox which bills itself as an organization that “explains the news [because] we live in a world of too much information and too little context. Too much noise and too little insight.”

I completely agree and the Vox article is part of the problem.

The article asserts “excessive ties to corrupt foreign governments can be a violation of the Foreign Corrupt Practices Act, but (conveniently) the Trump administration is moving to scale back enforcement of that law across the board.”

For starters, ties (whatever that means) to a foreign government (whether corrupt or not) is not a violation of the FCPA. As stated in even the DOJ/SEC’s FCPA Guidance [12]: “The FCPA prohibits payments to foreign officials, not to foreign government.”

As to the second assertion, I follow the FCPA as closely as humanly possible, but must have missed the fact that the “Trump administration is moving to scale back enforcement of [the FCPA] across the board.”

Everything I’ve heard from Trump administration officials (see here [13] and here [14] for recent DOJ speeches) is contrary to this assertion, but then again I listen with my ears open.

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In short, why does the media have such difficulty accurately describing the FCPA?

It really is not that difficult to conduct some basic research to verify or confirm the truth of the matter asserted.

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