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The Globalization of Anti-Corruption Law

Today’s post is from Juliet S. Sorensen (here [1]) a  Clinical Assistant Professor of Law at Northwestern University, where her teaching and research interests include international criminal law and corruption.

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At the annual meeting of the American Bar Association in Toronto last week, the Presidential Showcase Program of the Criminal Justice Section (here [2]) was entitled “The Globalization of Anti-Corruption Law.”  Moderated by T. Markus Funk of Perkins Coie (here [3]), the panel included Andrew S. Boutros (here [4]) of the U.S. Attorney’s Office in Chicago (appearing in his personal capacity); Walter H. White Jr. (here [5])  from the London office of McGuire Woods; Tyler Hodgson (here [6]) of the Canadian firm Border Ladner Gervais; and yours truly.

Audience members who braved a driving rainstorm en route to the Metropolitan Toronto Convention Centre on Sunday morning were privy to a wide range of insights and perspectives on the worldwide proliferation of aggressive anti-corruption laws.  Funk set the scene and introduced both the topic and speakers, Boutros spoke about the latest trends in FCPA and international enforcement, White discussed the implications of the brand-new UK Anti-Bribery Act, Hodgson talked about Canadian anti-bribery actions, and I examined the global impact of international anti-bribery conventions such as the OECD Anti-Bribery Convention.

The consensus among the panelists was that aggressive enforcement of bribery statutes is an international trend not limited to the U.S., although the U.S. remains the undisputed leader in that regard.  Even Canada, which Transparency International has deemed the laggard of the G-7 in its anti-bribery enforcement, has brought a significant indictment in the last year and currently has twenty active investigations into possible violations of the Corruption of Foreign Public Officials Act.

After Funk pointed out that the number of FCPA indictments increased by a power of 10 from 2004 to 2010, Boutros noted that many of the most significant recent U.S. cases were against foreign companies.  This points not only to increased commercial globalization—foreign companies that pass bribes overseas possess a jurisdictional connection to the U.S.—but also to increased international cooperation by law enforcement.  Boutros also pointed out an increased trend in what he termed “carbon copy” prosecutions, a phenomenon where foreign authorities rely on the factual findings emerging out of U.S. enforcement actions to vindicate the local laws of their own jurisdiction—often the site of the bribe payment or bribe receipt.    Indeed, a corporate defendant’s obligation to cooperate not just locally, but internationally is increasingly spelled out in U.S. plea agreements or deferred prosecution agreements.  Given that the Double Jeopardy Clause does not bar foreign-federal prosecutions (see, e.g., U.S. v. Jeong), such a term of agreement may well be cause for concern to defense counsel.

That’s not to say, however, that other countries are equal to the U.S. in terms of number or aggressiveness of prosecutions.  In my own remarks, I reviewed three G-7 “case studies”—France, Germany, and Japan—and found that France is hampered in its own prosecutions of foreign bribery by an excessively short statute of limitations (three years) and a ban on plea agreements, and in its cooperation with others by a sweeping blocking statute.  Germany is vigilant in the enforcement of its own anti-bribery laws, but the OECD has encouraged that country to increase the statutory maximums for its applicable fines and sentences of imprisonment, noting that the sentences imposed in these cases by German courts are too low to act as an effective deterrent.  Of the three, it is the anti-bribery landscape in Japan that is the most barren, with scant prosecutions due to a failure to gather evidence both at home and overseas.  In a searing self-assessment required by the OECD, Japan pointed to an absence of whistleblower support in corporate and popular culture and the limited foreign language skills of Japanese investigators overseas as two significant reasons for its failure to meet the expectations of the OECD.

Walter White was peppered with questions about the impact of the sweeping UK Anti-Bribery Act, including its impact on Rupert Murdoch’s News Corp, accused of making payoffs to high-ranking law enforcement in the UK.  White reminded the audience that the UK Anti-Bribery Act was unlikely to be retroactive, and thus would not apply to the actions of News Corp., although there are other UK statutes as well as the FCPA that could encompass News Corp’s actions.

Another question pointed to the limited scope of the FCPA as compared to the UK law, noting that the payment of a bribe by a U.S. subject to a warlord in Afghanistan or Somalia could not be prosecuted under the FCPA as that warlord is not a public official, but that a similar payment by a U.K. subject was a violation of the Anti-Bribery Act.  True, Funk responded, assuming that a warlord operating as a quasi-official in a lawless state was not enough, but don’t forget the Travel Act, 18 U.S.C. § 1952: the Travel Act prohibits the use of a facility of foreign or interstate commerce (such as email, telephone, or personal travel), with intent to promote or distribute the proceeds of an activity that is a violation of state or federal bribery, extortion or arson laws, or a violation of the federal gambling, narcotics, money-laundering or RICO statutes.  Thus, for example, if a U.S. businessperson is negotiating a private deal in a foreign country and offers by telephone and wires money to a foreign counterpart to influence acceptance of the transaction–and such activity is a violation of the federal or state law where the individual is doing business–the Justice Department may conclude that a violation of the Travel Act has occurred.

Finally, an audience member pointed out that, U.S. anti-bribery culture notwithstanding, bribes and “grease” are expected in the normal course of business in many Eastern European and former Soviet republics.  Does that expectation shield the briber payer?

The panel was unanimous that, unless the payments were in fact legal—not merely expected—in the country in question, the U.S. bribe payer could be in violation of the FCPA.  But that’s ok: “leveling the playing field” for honest businesses is one of the stated purposes of the FCPA, the Anti-Bribery Convention, and the UN Convention against Corruption.  And who doesn’t want to play on a level field?