A Dialogue Worth Having
This previous post discussed U.K. plans to introduce U.S.-style corporate plea bargains, including deferred prosecution agreements. Among other things, the post mentioned an October 17th meeting with U.K. prosecutors at Pinset Mason’s London office.
thebriberyact.com summarizes the meeting and nicely frames the issues here and here. The post states as follows. “We think that the need for DPA legislation is obvious. Its absence has often been remarked upon by the Director of the SFO and for very good reason. It is a serious hole in the UK law. Its absence has a chilling effect on the attempts to ensure that ethical attitudes become a permanent feature of corporate life in all companies, be they International, SME or small.”
Others have shared their views on whether the U.K. should adopt U.S. style alternative resolution vehicles and, if so, how.
Thomas Fox at the FCPA Compliance and Ethics Blog (here) believes “that the ability to enter into a DPA is a powerful tool that advances the interests of prosecutors, the judiciary and the public.” Fox states that “the primary reason for both the prosecution and a company which violates the Bribery Act entering into a DPA is certainty.”
Ross Parlane of McGuire Woods writing at The Bribery Library (here) states as follows. “There are a number of benefits to be gained from giving UK prosecutors the power to negotiate DPAs. Certainly the cost and time involved in investigating offences would be significantly reduced, which is good news for the public purse. Further, a well negotiated DPA that gives proper attention to remediation (e.g. through monitoring) as well as to punishment, has the potential to effect a permanent positive change in the culture of an organisation.” Yet Parlane states (and identifies) that “there are a number of tricky issues that need to be resolved before the use of deferred prosecution agreements can be adopted in the the U.K.”
Michael Volkov, writing at thebriberyact.com (here) notes that “for UK policymakers, the balance between judicial review and prosecutorial discretion is one which has to be resolved before any new policy can be enacted.”
Let me contribute to the dialogue by posing this question. Why does a law with an adequate procedures defense require the third option of a deferred prosecution agreement – the first two options being prosecute vs. not prosecute?
If a corporate has adequate procedures, but an isolated act of bribery nevertheless occurs within its organization, the corporate presumably would not face prosecution under the Bribery Act. Seems like a reasonable result. In other words, no need for the third option in such a case.
On the other hand, if a corporate does not have adequate procedures (i.e. has no committment to anti-bribery compliance) and an act of bribery occurs within its organization, it presumably would face prosecution under the Bribery Act. Seems like a reasonable result. Does a third option really need to be created for corporates who do not implement adequate procedures?
Because the FCPA does not have an adequate procedures / compliance defense (at least not yet), the same analysis does not apply.
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In other recent U.K. developments, last week the SFO announced (here) that two former Innospec executives were charged. Dennis Kerrison, the former CEO of Innospec Ltd., was charged with “an allegation of conspiracy to corrupt, in that he gave or agreed to give corrupt payments to public officials and other agents of the Government of Indonesia as inducements to secure, or as rewards for having secured, contracts from the Government of Indonesia.” Paul Jennings, the former CEO of Innospec, is accused of “two allegations of conspiracy to corrupt, in that he gave or agreed to give corrupt payments to public officials and other agents of the Governments of Indonesia and Iraq as inducements to secure, or as rewards for having secured, contracts from those Governments.”
Earlier in the week, the SFO also announced (here) that David Turner, a former business unit director of Innospec Ltd., was charged with “alleged offenses of conspiring to make corrupt payments to public officials in Indonesia and Iraq to secure contracts for Innospec Ltd. for the supply of its products.”
Both Jennings (here for the prior post) and Turner (here for the prior post) previously settled SEC FCPA enforcement actions based on the same core set of conduct.
As with the SFO’s recent case against Victor Dahdaleh (see here for the prior post), the recent Innospec related enforcement actions are not Bribery Act enforcement actions.
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Sure, it’s Halloween and all, but the FCPA reform debate (see here) is getting a little silly don’t you think?
Beyond All Boundaries: The Extraterritorial Grasp Of Anti-Bribery Legislation
Today’s post is from Bruce Bean (here – Michigan State University College of Law)
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“The American Branch of the International Law Association held its Annual Law Weekend in New York City this past weekend. As a member of the ABILA Extraterritoriality Committee, I organized an expert panel to highlight how the UK Bribery Act 2010 takes an even more aggressive view of its jurisdictional scope than the Justice Department’s well documented, extraordinarily expansive view of the global reach of the FCPA. The panel included Visiting Professor Alexander Domrin, Oklahoma City University Law School, Philip Urofsky, former DoJ FCPA prosecutor and partner at Shearman & Sterling, Robert Buehler, partner at Hogan Lovells and former Assistant U.S. Attorney for the Southern District of NY, and Jeremy Carver, President of the UK Branch of the ILA as well as a partner for three decades at Clifford Chance.
The provocative title of the panel discussion, “Beyond All Boundaries: The Extraterritorial Grasp of Anti-Bribery Legislation,” attracted an animated crowd. I shared my opinion that a hyper-aggressive DoJ had expanded the reach of the FCPA far beyond the language of the law and the intent of Congress. I pointed out that this overreaching had been exceeded by the egregious extraterritorial grasp of Section 7 of the Bribery Act, which imposes strict criminal liability on a company for failing to prevent a bribe, even a facilitation payment by a non-UK person who is not employed by that company. And the guilty-until-proven-innocent company need not be a UK company, or have a place of business in the UK. The statutory nexus of the Bribery Act is merely that the company once conducted “a part of a business, in any part of the UK.”
Philip Urofsky, the long-time DoJ FCPA prosecutor, began his presentation by announcing that he “strongly disagreed” with everything I had said. In practice, he noted, the commerce clause nexus of the FCPA is met when a dollar wire transfer between two offshore jurisdictions clears through a New York money center bank, even though there was no “intent” by either of the parties involved to have any connection with the U.S.
Bob Buehler pointed out that the jurisdiction of the Southern District’s U.S. Attorney’s office is its statutory jurisdiction which includes Manhattan and its “contiguous waters.” I innocently asked if that extended to the Atlantic Ocean. The response was, perhaps not, but driving over the Verrazano Bridge between two boroughs not within the Southern District can bring jurisdiction to the “Sovereign District.”
Jeremy Carver, now President of Transparency International UK, testified regularly before Parliamentary and other Committees during the ten years of deferral and delay which finally produced the Bribery Act with its seriously aggressive overseas reach. More than once Carver accused the UK government of misleading Parliament about the adequacy of UK laws applicable to overseas bribery. A speech he gave at the Commonwealth Club in February 2007 was entitled “Is the UK Government Serious about Fighting International Corruption?” In later testimony he announced that the “government has done its utmost to undermine the efforts that so many others have been making to combat foreign bribery.”
As finally effective on July 1, 2011, the UK’s Bribery Act has enormous extraterritorial reach. Carver pointed out that it could have been worse. During the reign of Queen Elizabeth I, as Sir Francis Drake roamed the Seven Seas, the suggestion was made that the overwhelming dominance of British Navy meant that the Queen Elizabeth’s jurisdiction should extend over all the oceans. This suggestion was not accepted at the time, although I remain convinced that the UK Bribery Act 2010 is an attempt to do just that.
In whatever ways the Bribery Act evolves, few will forget last weekend’s ABILA panel discussion.”
Mr. Alderman Goes to Washington
[I am pleased to share that FCPA Professor is one of the nominated blogs for the Top 25 Business Law Blogs of 2011 contest sponsored by LexisNexis. LexisNexis invites comments on the nominated blogs so that the field can be narrowed to the Top 25. The link to submit comments is here. To submit a comment, you must register, but registration is free and does not result in any sales contacts. The comment box is at the very bottom of the page and the comment period ends on October 25th.
Since launching FCPA Professor in July 2009, and continuing with the upgrade of the site in July 2001, my mission has remained the same: to inject a much needed scholarly voice into FCPA and related issues; to explore the more analytical “why” questions increasingly present in this current era of aggressive enforcement; and to foster a forum for critical analysis and discussion of the FCPA and related topics among FCPA practitioners, business and compliance professionals, scholars and students, and other interested persons. I hope you value the content and resources found on FCPA Professor and I thank you for your consideration.]
Richard Alderman is the Director of United Kingdom Serious Fraud Office, an agency (here) similar to the U.S. Department of Justice and the primary U.K. enforcer of the Bribery Act (as well as the country’s prior bribery laws). Last week, Alderman gave three speeches in Washington and this post contains excerpts from those speeches. In his remarks Alderman touched upon the following topics: SFO resources, current workload and enforcement priorities; differences between how the UK and US investigate and prosecute bribery actions; WikiLeaks and the Arab Spring; the demand side of bribery; individual prosecutions under the Bribery Act; adequate procedures under the Bribery Act (“let me emphasize this is a complete defense, it is not a matter of mitigation”) and the SFO’s active engagement approach; and merger and acquisition issues (“society benefits if an ethical corporation takes over and sorts out a corporation that has corruption problems”).
Trace Forum 2011 (here)
“I shall talk a little later about the Bribery Act but let me tell you first a little more about what the SFO has been doing in order to justify the recognition of the UK as an active enforcer. We are a comparatively small office and we devote a considerable amount of that resource to dealing with anti-corruption. We have about 80 frontline staff dealing with anti-corruption with a resource for this of some $7.5 million. Our resource in the SFO is also a flexible one and we can move additional resource into anti-corruption from other areas depending upon workload. Currently, our anti-corruption workload is dominated by pre-Bribery Act cases. That is likely to remain for some time. We have about 50 corruption cases (whether involving the public sector or private sector) under formal investigation or prosecution and, of course, a number of additional ones that we are looking at to see whether we should open an investigation. Although these figures may look low in terms of the figures of some other authorities, it is important to understand quite what they mean. All of these cases are actually large complex anti-corruption investigations reaching across many countries and many individuals and companies. Under our system, we have to conduct every investigation to the standards required by our Criminal Justice System and with the possibility of a contested trial before Judge and Jury very much in mind. This means that each case is very resource intensive because we have to ensure that all evidence is obtained in the appropriate way and is admissible in court. The resource that goes into these cases is very great and is the source of great concern to me. “
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“Another feature of our cases that you do not have [in the U.S.] is the ability of those under investigation and indeed other parties such as non-governmental organisations to challenge anything that the SFO does. We saw that, for instance, in the BAE case where the decision to terminate the Saudi investigation was challenged by two non-governmental organisations. Any interested party (and that is construed very widely) can go to court and require the SFO to give an explanation to the satisfaction of the court about what we are doing. We need to show that our actions are lawful and proportionate. It is a very important discipline in my jurisdiction and we are at all times very conscious of this.”
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“There are some particularly important issues under [the Bribery Act] for an audience based in the US. Let me talk first about the extended reach of the Bribery Act to foreign corporations that carry on business in the UK. We have received lots of questions about this and about the meaning of those very simple words “carrying on business in the UK. I know that there is the potential for much litigation on this issue. Nevertheless, I tell corporations that it will be very unwise of them to try to rely upon a very technical interpretation of the Bribery Act in order to persuade themselves that it is safe to carry on using bribery. I have said that they might be in for a very unpleasant surprise in a number of years time when our Supreme Court gives its views on this test. I say to corporations that the only safe way of doing business is not to use bribery.”
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The Bribery Act has a new offence aimed at senior officers of corporations who consent to or connive in bribery. I know that there are many who are worried about this offence, particularly if they happen to be Directors or Non-Executive Directors based in the UK and where their companies are high risk. You may find, for example, that some London executive or non-executive directors may be worried about their exposure if US corporations are found to have been involved in corruption. We are actively looking for cases where we can apply this provision. Society expects senior members of a corporation to be responsible for ensuring that there is a true ethical culture. They have a key responsibility here. My view is that if they find that their efforts to do this meet with resistance or no success then they should consider resigning and telling us about their concerns. Expressing doubts about the company’s culture but remaining a highly paid officer would not be sensible because this would seem to be a model case of conniving in bribery for the purposes of the legislation.”
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“Some cases may involve corruption under the old law. You will not be surprised, for example, to hear that we looking through Wikileaks and the other information becoming available as a result of the Arab Spring in order to see what corporations have been doing over a period of years. We are going to be very interested in the sorts of deals that are going to come to light and I am sure that this will be a fruitful source of work for us. The message from me is that if corporations are worrying about this, then they ought to come and talk to us now rather than wait for the dawn raid.”
Anti-Corruption Summit 2011 (here)
“What we have been doing is to encourage corporations to work together and with us and other authorities in order to try to work on the underlying problem. I have been very impressed by what a number of corporations have been doing. They come to me to tell me what they are doing because they are slightly nervous that the SFO will pick this up and may even start making enquiries or investigate. This is not what we want to do. If there is a genuine attempt being made to solve the problem of corruption then I want to let the corporations get on with that so far as possible and indeed to provide any help that I can in the SFO. We have had a number of discussions of this nature. I do not underestimate the difficulties here and the constraints. It appears to me though to be absolutely the right thing to do. This is because in my view one of the likely issues in the coming years is not going to be what we do about the supply side of bribery, but what happens about the demand side of bribery. It is an issue that I am concerned about in the SFO and one where I want us to contribute.”
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“The Bribery Act creates a new offence at the corporate level of failing to prevent bribery. The defence to this is that there are adequate procedures to prevent that bribery. Let me emphasise that this is a complete defence. It is not a matter of mitigation. If an act of bribery occurs somewhere in your worldwide corporation and you had adequate procedures, then no criminal offence has been committed. This is something that has been reassuring to corporations. Of course what this means is that there has been great interest in the meaning of adequate procedures. The guidance from our Ministry of Justice sets out the UK Government’s approach to this in considerable and to my mind, helpful detail. Let me though give you a flavour of what you might expect if you came to us to talk about your adequate procedures. I should add here that many corporations do that. You may find this surprising but we do have a regular succession of corporations coming to the SFO to seek our views on their procedures and what they are doing. We stress that we can give no guarantee and certainly no certificate to the effect that their procedures are adequate but we are able to give them helpful advice. The feedback we get is that these are positive and pragmatic discussions. Some of the themes you will hear from us will be these. First, what is the approach of the most senior management in the corporation? They set the lead. Employees of corporations are very shrewd. They know what really matters to top management. They will know if something matters or does not matter. We will want to know therefore what top management is doing in order to ensure that the importance of good ethical business is known to every member of that company. We hear for example of contracts that corporations do not enter into because they could be secured only by corruption. This is a good practical example of the importance placed upon anti-corruption. There are others as well. We also want to know about risk assessment. This is something that corporations ought to be doing anyway but my own perception is that this has been intensified because of the Bribery Act. How do you assess the risks in your corporation? Is this simply a paper and routine exercise or is it genuine? It certainly ought to be genuine because this could bring down your corporation if you get it wrong and overlook some key risk. We will want therefore to talk through your risk assessment process. We shall of course be particularly interested if you find you have a considerable problem about something that was not flagged up in the risk assessment. This may or may not mean that the risk assessment process was flawed. We want to know what you are doing about this and indeed how you are developing the risk assessment process in future. We will offer any thoughts we have about any risks you should be thinking about but are not. What we will also want to be sure about is this. Please take it from me that simply handing us a large pile of documents with lots of boxes ticked on checklists will not be enough to satisfy us that you have adequate procedures. That is a paper exercise. It is part of what is needed but only part. We shall want to know what lies behind this and what the real issues are. Personally, I believe we are not alone in wanting to know this. When we are talking about corruption with all the reputational issues that are involved here, senior management should actually be asking exactly the same questions that the SFO will be asking in this respect. I have mentioned that corporations come and talk to us about all of these issues. Please feel free to contact us if you would find this helpful in order to talk through what you are doing. It is not a threatening process and please do not worry that if you came to us and expressed a few doubts about whether your procedures are adequate that you would find yourself on the wrong end of a prosecution before you left the SFO building. This simply does not happen. The object of these discussions is to be constructive and supportive. I hope you will find that if you approach us.”
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“I want finally in this overview of what is happening, to talk about mergers and acquisitions. I know how important this subject is. Some time ago we said publicly in the SFO that we were prepared to assist corporations that were in the process of carrying out a merger or acquisition and discovered problems during the course of due diligence. We made this willingness clear about two years ago although I have to say that there was little take up at that stage. That seems to be changing now. I have been struck in recent months by the fact that a number of corporations have been to see us about some sensitive potential acquisitions where they are identifying some real issues about corruption during the course of due diligence. Ultimately, the decision about an acquisition is a commercial one and will involve an analysis of risk and reputation as well as many other issues. The corporation and its advisors though want to try to manage the regulatory risk so far as possible by seeking views from the SFO. We have been ready to engage in this. What we do is to talk to the corporation and its advisors about what they are finding and what they propose to do about it if the acquisition takes place. It is quite clear to me as a result of the discussions that a negative response from the SFO is sufficiently important to put the acquisition in jeopardy. On the other hand, a positive view from us on the basis of what the corporation intends to do could enable the acquisition to go ahead. My view on this, simply stated, is that society benefits if an ethical corporation takes over and sorts out a corporation that has corruption problems. It is something I am keen for the SFO to promote, so far as we legitimately can.
Risk Advisory Dinner (here)
“What we are trying to do with private sector corporations is to work on some real initiatives in particular countries and even particular areas such as ports in order to try to find ways of curbing the demand for these payments. This is not just a question of simply saying “no”; it is also a question of seeing what is the underlying problem (for example, public officials are not paid by the state and so are forced to demand bribes) and what can be done about these underlying causes. It is also a question of how we deal with governments and other authorities about these issues.”
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“I have said publicly that a high priority for us will be to find a foreign corporation with a UK business presence that has got involved in corruption in another country and has undermined a good ethical UK corporation. Those corporations have been within the SFO’s reach since July 1st as a result of the new Bribery Act. An English jury will take the view that there is a very clear UK public interest in bringing such corporations to a criminal court. It is a high priority for us.”
Perhaps The Executives Are Just Being Realistic
It has turned out to be a statistics filled week on this site. If you like statistics, Deloitte’s recent “Anti-Corruption Practices Survey 2011” (here) serves up a buffet of delightful morsels.
Deloitte “surveyed 276 executives to assess how companies are managing their efforts to prevent corrupt practices in their operations around the world and ensure compliance with legislative requirements.” The Survey found that approximately 90% of executives said their company had an anti-corruption policy that covered a wide range of potentially corrupt activities.
Even so, the Survey seems to portray, as its most meaningful statistic, that “only 29% of the 276 executives … were very confident their company’s anti-corruption program would prevent and detect corrupt activities.” According to the Survey, “this low level of confidence indicates that many companies may need to evaluate and upgrade their anti-corruption efforts.”
Perhaps. Or perhaps the 29% figure indicates the stark reality that not even gold standard FCPA compliance policies and procedures can prevent or detect all problematic payments. In other words, perhaps the 71% of executives who were not very confident their company’s anti-corruption program would prevent and detect corrupt activities are just being realistic. As even Assistant Attorney General Lanny Breuer noted earlier this year before a compliance audience – “There will always be rogue employees who decide to take matters into their own hands. They are a fact of life.” (See here). Or as the U.K. Ministry of Justice stated in its Bribery Act guidance (see here) “no policies or procedures are capable of detecting and preventing all bribery.”
The Survey findings on corruption risks also caught my eye. Executives were asked to cite “significant” corruption risks. Use of third parties (not surprisingly) was the top concern and “customs clearance and importation of goods” and “entertainment related to government business/relations” were the 2nd and 3rd highest concerns respectively. These findings confirm my own observations from participating in executive roundtable forums during which I am always struck that business leaders are most worried about issues Congress did not even have on its radar when it passed the FCPA – yet are worrisome issues given the DOJ’s enforcement positions.
For instance, the enacting Congress specifically excluded from the FCPA’s “foreign official” definition any employee of a foreign government “whose duties are essentially ministerial or clerical.” The relevant Senate Report states, in pertinent part, as follows. “The statute does not […] cover so-called ‘grease’ payments such as payments for expediting shipments through customs or placing a transatlantic telephone call, securing required permits, or obtaining adequate police protection, transactions which may involve even the proper performance of duties.” Similarly, the relevant House Report states, in pertinent part, as follows. “The language of the bill is deliberately cast in terms which differentiate between [corrupt payments] and facilitating payments, sometimes called ‘grease payments.’ […] For example, a gratuity paid to a customs official to speed the processing of a customs document would not be reached by this bill. Nor would it reach payments made to secure permits, licenses, or the expeditious performance of similar duties of an essentially ministerial or clerical nature which must of necessity be performed in any event. While payments made to assure or to speed the proper performance of a foreign official’s duties may be reprehensible in the United States, the committee recognizes that they are not necessarily so viewed elsewhere in the world and that it is not feasible for the United States to attempt unilaterally to eradicate all such payments. As a result, the committee has not attempted to reach such payments.”
Yet, as the Survey results suggest, executives are indeed significantly worried about such issues and compliance dollars are disproportionately spent on such issues.
Bribes, the reason Congress passed the FCPA in 1977, was identified as a “significant” risk by only 27% of Survey respondents.
Final statistic of note. On voluntary disclosure, the Survey states as follows.
“Executives were asked whether they thought that if an executive in their industry (not specifically in their own company) uncovered a significant violation of the company’s anti-corruption policy, they would report it to the SEC or the DOJ. Executives were divided on how they thought the typical executive in their industry would respond, with 36 percent saying it was very likely that an executive would report such a violation, 39 percent thinking it was somewhat likely, and 25 percent saying it was not likely. Only 27 percent saw significant benefits in self-reporting violations, while an additional 43 percent saw some benefits.”
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A good weekend to all.
The Globalization of Anti-Corruption Law
Today’s post is from Juliet S. Sorensen (here) 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) was entitled “The Globalization of Anti-Corruption Law.” Moderated by T. Markus Funk of Perkins Coie (here), the panel included Andrew S. Boutros (here) of the U.S. Attorney’s Office in Chicago (appearing in his personal capacity); Walter H. White Jr. (here) from the London office of McGuire Woods; Tyler Hodgson (here) 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?