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Offensive Use Of The FCPA?


The article “FCPA Ripples” highlights, among other topics, how Foreign Corrupt Practices Act scrutiny and enforcement can impact a company’s business operations and strategy in a variety of ways including “offensive” use of the FCPA by a competitor or adversary to achieve a business objective or to further advance a litigating position.

Amazon, like certain other companies, has fans and detractors as well.

In the later category is the Confederation of All India Traders (CAIT), an organization which represents million of retail stores in India. CAIT has long raised concerns about Amazon’s business operations in India. (See here “CAIT Seeks Ban on Amazon in India” and here “CAIT Fully Geared up to Fight Amazon & Flipkart” for examples).

This prior post highlighted Amazon’s purported FCPA scrutiny in India.

Not surprisingly, CAIT has taken a position on the matter and recently sent a letter to the SEC and DOJ regarding Amazon. The letter states in full:

“1. We would like to request your kind attention to be directed towards the news that broke out regarding the alleged bribing of government officials in India by Amazon Inc. This news story was first report by a reputed and reliable news agency and was titled ‘Amazon whistleblower alleges India lawyers bribed officials’ on 20th September 2021. Through the details mentioned in this news story, we are of an opinion that a grave violation of the Foreign Corrupt Practices Act has taken place and such an action must be immediately investigated. […]

2. Per our understanding of the FCPA, we understand that it has an extra territorial jurisdiction and it is unlawful for any enterprise authorizes the bribing of foreign government officials to obtain or retain business even outside USA i.e. there is an embargo to make corrupt payments.

3. We would like to make a representation that this alleged conduct of Amazon warrants an immediate inquiry from the US Securities and Exchange Commission and Department of Justice to conduct an independent and fair inquiry.

4. We understand that there have been similar situations in the past wherein joint ventures/enterprises which used the resources of their lawyer and other agents to bribe government officials in African countries were penalized under FCPA. Further, payment of bribes by a third party (in this case, allegedly a lawyer) on behalf of the enterprise (Amazon) does not absolve Amazon from civil or criminal liabilities mentioned under the Foreign Corrupt Practices Act.

5. In terms of the precedents set by the SEC, we would also like to bring forth the cases of Beam Suntry Inc. which used third party distributers to make illicit payment to government officials in India, Embraer which paid money to its agent and falsified its accounting records in India and Pride International Inc. which bribed judicial officers to influence customs litigation in India. These cases show that the SEC has taken a proactive approach towards MNCs who have tried to misappropriate funds and violate the provisions of the FCPA. We would like to request a similar level of thorough investigation to be taken up against the alleged malpractices of paying bribes through legal advisors and consultants by Amazon Inc. in India.

6. We would also like to shed light on the Resource Guide to the U.S. Foreign Corrupt Practices Act drafted and circulated by the U.S. Securities and Exchange Commission. This guide mentions that one of the common red flags associated with third party interactions which result in violation of the FCPA includes excessive commission to third party agents or consultants. We would like to highlight that the same news story also cited that one of the independent counsels appointed by Amazon claimed that Amazon was his biggest client that he would receive upwards of Rs. 20 crores (INR 2 billion) from them per year. The complaint made by the whistleblower specifically stated that this money was being funneled under the aegis of legal expenses by Amazon to pay bribes to government officials. This red flag is clearly highlighted in the current case, and we would like to seek your intervention to investigate this Amazon.

7. Furthermore, we would also like to bring to your attention that even though this alleged conduct is being investigated by Amazon, the history of Amazon mistreating whistleblowers makes it tough for a fair enquiry to take place on their behalf. We thereby pray to you to take up a fair and thorough investigation against Amazon for this alleged violation of the provisions of the FCPA and uphold the sanctity of this legislation.”


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