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Why Does George Soros Invest In So Many FCPA Violators?

George Soros is the chairman of Soros Fund Management LLC  (See here).  He is also the founder and chairman of Open Society Foundations.  In September, Open Society Foundations published Busting Bribery (here).  As noted in this prior post, Busting Bribery was intended to rebut the U.S. Chamber of Commerce’s FCPA amendment proposals (here). 

Busting Bribery asserts as follows.  “… [A]s interpreted and applied by the courts and the DOJ and the SEC, the applicable standards for criminal liability for both corporations and individuals under the FCPA require that the defendant knowingly engage in acts proscribed by the Act with the bad or wrongful purpose and intent that those acts would induce a foreign official to misuse his or her official position. Despite the Chamber’s claims to the contrary, these standards simply do not permit successful prosecution of innocent, mistaken or unknowing persons, whether corporations or individuals, under the FCPA.”  Elsewhere, Busting Bribery asserts as follows.  “Corporate criminal liability requires proof beyond a reasonable doubt that the company acted with actual knowledge and corrupt intent to influence a foreign government to gain an improper business advantage.” 

In other words, Busting Bribery asserts that corporations that resolve FCPA enforcement actions have a “bad or wrongful purpose,” that current standards “simply do not permit successful prosecution of innocent, mistaken or unknowing persons” and that companies involved in an FCPA enforcement action are corrupt. 

For the record, I don’t agree with Busting Bribery on this point, see here for a prior post detailing just how off target Busting Bribery is, or visit the FCPA 101 portion of this site specifically the topic “are companies that resolve FCPA enforcement actions ‘bad’ or ‘unethical’?”  For purposes of this post however, this  is besides the point, what matters is what the George Soros funded Open Society Foundations think about FCPA violators.

This raises the following question.  If the Soros funded Open Society Foundations believe that all corporations involved in an FCPA enforcement action have a “bad or wrongful purpose,” that current standards “simply do not permit successful prosecution of innocent, mistaken or unknowing persons” and that companies involved in an FCPA enforcement action are corrupt, then why does Soros Fund Management LLC invest in so many FCPA violators or companies subject to FCPA scrutiny?

The Fund’s recent 13F filing (in a 13F filing institutional investment managers disclose fund holdings) indicates substantial investments in the following companies that have recently resolved FCPA enforcement actions or are otherwise the subject of current FCPA scrutiny:  Alliance One International, El Paso, Flowserve, Halliburton, Hewlett-Packard, KBR, Motorola Solutions, Parker Drilling, Pfizer, Tidewater, Weatherford International, Tyco International, and Lyondellbasell Industries.

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