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FCPA “Fake News” And False Information Is Rampant

kidding me

I didn’t invent fact-checking, but I occasionally apply it to the Foreign Corrupt Practices Act context.

The reason I do so is for the same reasons others fact-check: to counter false and misleading information in the public domain and to hopefully motivate a greater sense of responsibility and discipline upon those voluntarily publishing FCPA content.

Call me old-fashioned, but if you are presenting yourself as an expert on the Foreign Corrupt Practices Act and/or a paid journalist, or merely using the words “Foreign Corrupt Practices Act” in voluntarily published material you simply have an obligation to engage in basic research on FCPA topics before hitting the publish button and if you are incapable or unwilling to do this, well don’t hit the publish button.

The post contains several recent examples of FCPA “fake news” and false information.

This installment of FCPA “fake news” is courtesy of Fusion GPS founders, the entity behind the Steele dossier, who write in the New York Times that the FCPA “makes it a crime for a U.S. company to act with willful blindness toward the corrupt activities of a foreign business partner.”

This is a false statement of law.

If one reads the law one will quickly discover that the FCPA’s anti-bribery provisions prohibit U.S. companies (and others subject to the law) from, generally speaking, offering or paying money or anything of value,  to a foreign official, to obtain or retain business, with a corrupt intent. The FCPA’s anti-bribery provisions prohibit not only direct payments to “foreign officials” to “obtain or retain business,” but also payments to “any person” “while knowing” (knowing is defined in the statute) that the payments will be provided to a “foreign official.”


This installment of FCPA “fake news” is courtesy of the Wall Street Journal and Stanford University in that the article asserts:

“The U.S. Department of Justice and the U.S. Securities and Exchange Commission filed fewer enforcement actions in the first three months of 2018 than in any first quarter since 2013.”

This is a false statement.

You can compare for yourself Q1 2018 FCPA enforcement statistics (4 core actions) with Q1 2015 FCPA enforcement statistics (3 core actions) and Q1 2014 FCPA enforcement statistics (3 core actions).

In any event, comparing quarterly FCPA enforcement statistics to prior years is close to meaningless.

In this installment of FCPA false information, Rena Steinzor (a Professor at University of Maryland Carey Law School and a member scholar at the Center for Progressive Reform) writes:

“In November 2017, Deputy Attorney General Rod Rosenstein told a group of industry executives that DOJ would not indict companies that voluntarily came forward to report violations of the Foreign Corrupt Practices Act. Although he preserved “a measure of prosecutorial discretion,” his announcement was clearly intended to eliminate an Obama-era policy that required companies to come forward to share information about their employees’ illegal activities without receiving such assurances.”

This is a false statement.

For starters, few if any companies regardless of which administration one wants to talk about, are actually “indicted” for FCPA violations (as opposed to resolving the matters via NPAs, DPAs, or other forms of resolution).

Second, there was no “Obama-era policy that required companies to come forward.” The April 2016 FCPA Pilot Program did not require companies to do this nor does the November 2017 DOJ FCPA Corporate Enforcement Policy (CEP).

Third, the suggestion that the CEP gives companies a pass for disclosed FCPA violations is false. Even if a business organization does all that the DOJ wants it to do under the CEP, there is still a requirement that a “company is required to pay all disgorgement, forfeiture, and/or restitution resulting from the misconduct at issue.” Moreover, even if a business organization discloses FCPA violations, if “aggravating circumstances” are present these may warrant a traditional criminal prosecution.


In this post, Thomas Fox (who often calls himself the “Compliance Evangelist”) asserts in connection with a dismissed FCPA-related securities fraud claim against Embraer and certain individuals (see here for the prior FCPA Professor post) that all plaintiffs had to do to survive the motion to dismiss “was allege facts [that] would tie the bribery and corruption to the failure of internal controls.”

This is a false statement.

To survive a motion to dismiss, a plaintiff in a private securities fraud action (Sec. 10(b) / Rule 10b-5 claim) needs to allege the following:

  • a material misrepresentation or omission;
  • made with scienter;
  • in connection with the purchase or sale of a security;
  • reliance;
  • economic loss; and
  • loss causation

Under the Private Securities Litigation Reform Act (PSLRA), a plaintiff must specify each statement or omission that is allegedly misleading, explain why each statement or omission is deceitful, and provide factual support for the allegations of fraud. Moreover, allegations of scienter are subject to a heightened pleading standard.


More sloppy reporting/commentary from the FCPA Blog. This post appears to link an October 2015 report by a short-seller as being the origin of the 2017 Telia enforcement action.


Here is what the DOJ said about the origins of the enforcement action in the resolution documents.

“In or around September 2012, Swedish public television broadcast a documentary that exposed Telia’s corrupt dealings with the Foreign Official and the Shell Company in Uzbekistan, and caused Telia to initiate an internal investigation. Soon thereafter, the Swedish Prosecution Authority also opened an investigation into Telia’s corrupt dealings in Uzbekistan.”


In closing, and as noted in this recent Wall Street Journal op-ed “the internet broke down barriers by enabling everyone to become a publisher. The unintended consequence was the fake-news epidemic.”

As noted in this recent Wall Street Journal article “It’s Time to Tune Up Your B.S. Detector”

“Do you have a good B.S. detector? You need one in our digital age.

The skill of spotting false information—rubbish, nonsense and, yes, fake news—is so important these days that scientists have begun serious research on it. They’re attempting to quantify when and why people spread it, who is susceptible to it, and how people can confront it.


B.S. is a form of persuasion that aims to impress the listener while employing a blatant disregard for the truth, the researchers explained. It can involve language, statistics and charts and appears everywhere from politics to science. This definition closely adheres to the one presented by the philosopher and Princeton emeritus professor Harry Frankfurt in his now-classic 2005 book “On Bullshit.” Dr. Frankfurt explored how B.S. is different than lying because liars know the truth and push it aside while B.S.ers don’t necessarily care about the truth at all.

Of course this isn’t new. But false information moves faster and farther these days, thanks to social media.


Some people spread false information unknowingly. But others simply don’t care if what they’re posting is untrue, Dr. West says, and pass along the information as a way to signal their views and values to their group. Philosophers call this tribal epistemology.


When do people typically use B.S? Two studies published online together this month in the Journal of Experimental Social Psychology show that people tend to spread it when they feel obligated to have an opinion about something that they know little about—and when they feel they aren’t going to be challenged on it. In one of the studies, students who were asked to write down their views on affirmative action, nuclear weapons and capital punishment admitted that half of what they wrote was B.S. But those who were told beforehand that they would have to defend these beliefs afterward to a sociology professor with an opposite view stuck to the truth.

“If you expect no one to challenge you on your opinion, you can B.S. it up all you like,” says John Petrocelli, a social psychologist and associate professor of psychology at Wake Forest University in Winston-Salem, N.C. “I call this the Ease of Passing Bullshit Hypothesis.”

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