Recently Dick Roche (a former Irish Minister for European Affairs) published this article titled “How the USA turned the fight against corruption into a goldmine.”
It is certainly not the first article to be written with such a provocative headline as the following articles generally touched upon the same theme: “Cashing in on Corruption” (Washington Post); “The Bribery Racket” (Forbes); “FCPA Inc. and the Business of Bribery” (Wall Street Journal); and “The Anti-Bribery Business” (Economist)
The article begins:
“America Almighty
Perhaps the most striking aspect of the US assertion of exterritorial authority has been the extraordinary willingness of America’s European allies to tolerate it. It seems safe to assume that had any other world power assumed a similar authority the reaction would be less docile.
A surge in extraterritorial action
Since the 1970s, the extraterritorial reach of US law has increased significantly as U.S. policy-makers have pursued a wide range of US policy objectives. The Foreign Corrupt Practices Act (FCPA) is one of many US statutes on which extraterritorial outreach has been built.
[…]
Filling Uncle Sam’s Coffers
The changes made in 1998 gave US agencies wide-ranging powers to investigate where even a remote link with US jurisdiction could be demonstrated. The US Department of Justice [DoJ] and the US Securities and Exchange Commission [SEC] received a virtually open license to operate globally against suspected corrupt activities irrespective of where they took place extending the extraterritorial outreach of US law and creating a virtual goldmine for the US Treasury.”
The problem with Roche’s article is that it is based on a false premise.
The FCPA’s anti-bribery provisions are not extraterritorial as to non-U.S. actors.
Non-U.S. actors can become subject to the FCPA’s anti-bribery provisions under either the dd-1 prong of the FCPA or the dd-3 prong of the FCPA.
The jurisdictional element for the dd-1 prong is to “make use of the mails or any means or instrumentality of interstate commerce” in furtherance of a bribery scheme. True, the FCPA’s anti-bribery provisions were amended in 1998 as alluded to in Roche’s article. However, as is clear from the below statutory text that amendment only applies to U.S. actors.
“(g) Alternative Jurisdiction
(1) It shall also be unlawful for any issuer organized under the laws of the United States, or a State, territory, possession, or commonwealth of the United States or a political subdivision thereof and which has a class of securities registered pursuant to section 12 of this title or which is required to file reports under section 15(d) of this title, or for any United States person that is an officer, director, employee, or agent of such issuer or a stockholder thereof acting on behalf of such issuer, to corruptly do any act outside the United States in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to any of the persons or entities set forth in paragraphs (1), (2), and (3) of this subsection (a) of this section for the purposes set forth therein, irrespective of whether such issuer or such officer, director, employee, agent, or stockholder makes use of the mails or any means or instrumentality of interstate commerce in furtherance of such offer, gift, payment, promise, or authorization.”
The other way in which a non-U.S. actor can become subject to the FCPA’s anti-bribery provisions is under the dd-3 prong of the FCPA which has the following jurisdictional element.
“while in the territory of the United States, corruptly to make use of the mails or any means or instrumentality of interstate commerce or to do any other act in furtherance” of a bribery scheme.
In short, the notion that the FCPA’s anti-bribery provisions are extraterritorial as to non-U.S. actors is simply false. And of course the FCPA’s books and records and internal controls provisions generally only apply to companies with shares traded on a U.S. exchange or those associated with the company.
Indeed, Roche’s article seems to recognize that the FCPA is not extraterritorial as to non-U.S. actors when it states “the changes made in 1998 gave US agencies wide-ranging powers to investigate where even a remote link with US jurisdiction could be demonstrated.”
True, the DOJ does advance expansive jurisdictional theories in FCPA enforcement actions against non-U.S. actors, but expansive jurisdictional theories is different than asserting that the FCPA’s anti-bribery provisions are extraterritorial as to non-U.S. actors.
Roche’s article also asserts as follows:
“Between 2011 and June 2022 total FCPA corporate settlements climbed to $21.2 billion, almost six times greater than the settlement rate in the first 33 years of the FCPA’s application. By the middle of 2022 FCPA ‘settlements’ topped $25 billion.”
These figures are not accurate.
Since 2011, the DOJ and SEC have secured approximately $14 billion in FCPA settlement amounts (see here and here)
To be sure, $14 billion is a hefty sum, but it is not $25 billion and Roche is off by $11 billion.
