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Complete Rubbish


There are some things written about the Foreign Corrupt Practices that are so lacking in FCPA knowledge, so lacking in attention to detail, and so lacking in relevant FCPA context – as to be complete rubbish.

This piece (which describes itself as providing original commentary about the financial industry) by Jon Shazar is complete rubbish.

The article is titled “Feel Free To Filter Your Bribes Through Foreign-Government Owned Investment Banks” with the teaser “Bill Barr sees absolutely nothing wrong with that kind of thing” and states:

“The swamp-draining, unemolumented, non-Russian puppet President of the United States of America thinks that the Foreign Corrupt Practices Act, which bars Americans from bribing foreign officials, is a “ridiculous” and “horrible” law that prevents U.S. companies from competing abroad. He’s undoubtedly right about this, as the FCPA does seek to prevent those companies from doing whatever it takes to win business in foreign lands. But it also, you know, makes it as illegal for Americans to, you know, bribe government officials abroad as it is here.

Given his obvious incorruptibility, lack of avarice and immunity to flattery, we’re sure that latter consideration never even entered Donald Trump’s not-at-all addled and deteriorating brain when he issued his learned, considered and constructive criticism of the FCPA.

Likewise, Attorney General William Barr is clearly a dedicated and unbiased public-minded public servant, and not anything like a cheap partisan hack willing to do whatever it takes to appease his boss and ensure his continued personal unchallenged dominion over these dying and crumbling United States of America, so he definitely has tamped down on FCPA enforcement for totally legitimate reasons and not because the president had a hissy fit about it or anything.

However this completely appropriate, justifiable and lawful decision to go easy on Americans handing out bribes abroad to win business came about, one thing is clear: It’s good news for one unnamed U.S. money manager, and any other companies that ask Barr’s permission before offering inducements to overseas officials.”

For starters, describing the FCPA as a law that “seeks to prevent … companies from doing whatever it takes to win business in foreign lands” is legally inaccurate. It’s also laughable. The FCPA’s anti-bribery provisions (passed by Congress) actually has specific elements that must be met for their to be a violation.

Second, the notion that FCPA enforcement during the Trump administration has been “tamped down” is completely false. (See here for a historical comparison of FCPA corporate enforcement, here for DOJ individual enforcement, and here for SEC individual enforcement over time).

As to the recent DOJ opinion procedure release (see here for the prior post), the general issue under consideration was whether providing something of value to a foreign government – as opposed to a foreign official – implicated the FCPA’s anti-bribery provisions.

Did it occur to Shazar to actually read the FCPA? Upon reading it, one quickly learns that in the law Congress passed there is a required “foreign official” element which is defined to mean in pertinent part:

“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.”

Does Shazar know that in the 2012 FCPA Guidance (issued during the Obama administration) the DOJ/SEC correctly stated: “The FCPA prohibits payments to foreign officials, not to foreign governments.” Not surprisingly, this correct statement of law is also included in the recently issued Second Edition of the FCPA Guidance.

Did Shazar read the footnotes in the short 3 page release? If he did he would learn that the issue under consideration was the focus of several other DOJ opinions in 2009, 1997 and 1983. As stated in a footnote:

“U.S. Dept. of Justice, FCPA Op. Release 09-01 (Aug. 3, 2009) (declining to take any enforcement action, in part, because the thing of value would be “provided to the foreign government, as opposed to individual government officials”); U.S. Dept. of Justice FCPA Op. Release 97-02 (Nov. 5, 1997) (declining to take any enforcement action where the donation would “be made directly to a government entity — and not to any foreign government official”); U.S. Dept. of Justice Review Procedure Release 83-01 (May 12, 1983) (declining to take any enforcement action where the payment would be “made directly to the Sudanese corporation, and not to any individual” and there was “no expectation that any individual Sudanese government official w[ould] personally benefit”).”

Rather than throw out the “b” word (bribery) to describe something he may not like (but was the legally correct answer in the opinion release), did Shazar read the following paragraphs in the short release:

“Second, based on the representations of Requestor, there is no indication that Requestor intends or believes the money will be diverted to any individual, and there is no indication that the money will, in fact, be diverted to any individual. The payment is transparent to the Country B Office and its management. Indeed, the Chief Compliance Officer of the Country B Office has certified to Requestor that the payment into the Country B Office’s corporate bank account will only be used for the benefit of the Country B Office, for general corporate purposes of the Country B Office, and will not be forwarded to any other entity. Even though the Country B Office is a wholly owned subsidiary of the foreign investment bank that, in turn, is indirectly majority owned by a foreign government, there are no indicia that Requestor’s payment to the Country B Office is intended to corruptly influence a foreign official. Moreover, the Requestor represents that there have been no corrupt offers, promises, or payments of anything of value, directly or indirectly, to any individual in connection with this transaction.

Finally, Requestor sought and received specific, legitimate services from the Country B Office, and Requestor has represented, and the Chief Compliance Officer of the Country B Office has certified, that the intended payment to the Country B Office is commensurate with the services the Country B Office provided and is commercially reasonable.”

For the reasons stated above, Shazar’s recent article is complete rubbish – just as several other media articles have been (see here for a collection of other examples).

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