I suggested in an earlier post that a major reason for the increase in foreign anti-bribery prosecutions in other countries since the passage of the OECD Anti-Bribery Convention is increased enforcement of the FCPA against foreign companies by the US government. In this post, I will set out, in a little more depth, one factor that contributed to bringing this effect about, namely a broadened scope for enforcement jurisdiction under §78dd-3 of the FCPA.
An important effect of the entry into force of the OECD Convention was that it provided “cover” for expansive US enforcement of the FCPA. Equally important, though, was the contribution it made in providing the legal means by which the US Department of Justice was actually able to undertake this expansion. Broader enforcement has helped to push standards for anti-bribery enforcement into convergence around the world, and has encouraged other countries to start enforcing their own laws more seriously.
One effect of the OECD Convention was to spur the US Congress to pass the International Anti-Bribery Act of 1998, which, amended the FCPA to bring it in line with the OECD Convention. Specifically, the new section of the FCPA, codified at 15 U.S.C. §78dd-3 and based on Article 4 of the OECD Convention, provides for liability based on territorial links to the United States. This supplemented the existing nationality and issuer-based jurisdictional hooks, and brought conduct undertaken by any person anywhere in the world under the jurisdiction of the US government.
This provision of the law limits its applicability only to acts that are undertaken “while in the territory of the United States.” On its face, this is not a broad grant of jurisdiction; it would not apply to acts of purely foreign bribery. As interpreted by the Department of Justice, however this provision could apply to acts as indirect as making payments through American-incorporated corporations or through the US banking system. This approach can be seen, for example, in the Daimler Russia (paragraph 21), and Siemens Bangladesh cases. The breadth of this interpretation provided jurisdiction that one commentator has called “quasi-universal.”
The Department of Justice’s aggressive enforcement of the FCPA has occasioned significant concern about the enforcement of the Act, both among business groups and in the academic community, and the DOJ appears to have stepped back from some of its more extreme positions in the last two or three years. However, broad jurisdiction was a hallmark of DOJ enforcement strategy during the heyday of anti-bribery enforcement growth at the end of the last decade, and exposure to FCPA liability remains a potential threat to companies around the world.