There is a common narrative in certain circles that the FCPA was dormant for its first 20-25 years. Five minutes of simple research provides the following examples.
The FCPA was passed in 1977 but “the statute effectively lay dormant for years.”
“For over two decades the FCPA rested mostly dormant.”
Most recently, a guest post on the FCPA Blog states: “[The FCPA] lay nearly dormant for pretty much a quarter of a century before it was picked up, dusted off and used by prosecutors.”
[This post is part of a periodic series regarding “old” FCPA enforcement actions]
This recent post discussed how from a compliance take-away standpoint the large, egregious, no reasonable minds could differ there was bribery, enforcement actions are the least important and least instructive.
Rather, the most instructive and thus important enforcement actions tend to be those that take the Foreign Corrupt Practices Act in a new direction, involve unique interpretations of law (not subjected to any judicial scrutiny of course) and thus pose new compliance challenges for business organizations. The SEC’s 2004 enforcement action against Schering-Plough, based on a bona-fide charitable contribution, certainly fits this mold.
[This post is part of a periodic series regarding “old” FCPA enforcement actions]
In 2004, the SEC brought this administrative cease and desist order against BJ Services (a Houston-based oil field services, products, and equipment company). The conduct at issue focused on the company’s Argentina subsidiary and its relationships with customs officials. As stated in the SEC’s order, there was no indication that anyone employed by BJ Services approved many of the alleged improper payments and the SEC further acknowledged that the improper payments were made in violation of BJ Services’ existing policies prohibiting payments of the kind made to the customs official.
Other interesting aspects of the enforcement include the following: (i) certain of the improper payments were facilitated by the Argentina subsidiary issuing checks “in the name of a lower’level” employee who then “cashed the checks and provided the proceeds to the customs official”; (ii) the SEC seemed to acknowledge that certain of the payments were facilitation payments under the FCPA, but nevertheless improperly booked, and thus still actionable.
[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.”
[This post is part of a periodic series regarding “old” FCPA enforcement actions]
Yesterday’s post highlighted a number of Foreign Corrupt Practices Act enforcement actions in connection with U.S. government aid or assistance programs.
This post goes into more detail regarding the DOJ’s 2002 FCPA enforcement action against Richard Pitchford (the Vice President and Country Manager in Turkmenistan for the Central Asia American Enterprise Fund (CAAEF), an entity wholly funded by a $150 million appropriation from Congress pursuant to the Support for Eastern European Democracy Act of 1989 and the Freedom for Russia and Emerging Eurasian Democracies and Open Market Support Act of 1992).
One of the ironies with this enforcement action (there is another highlighted at the end of the post) is that prior to the enforcement action Pitchford was quoted as saying: “The potential in Central Asia is tremendous, especially in Turkmenistan because of its proximity to Turkey and the Persian Gulf. What’s missing is government political will to do the job. There’s no doubt this is a dictatorship and from top to bottom, it’s corrupt.” A short time later, Pitchford himself would be prosecuted for corruption.
