Tag Archives: FCPA

Are Less Corrupt Countries More Faithful Enforcers of the OECD Anti-Bribery Convention?

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The failure of many signatories to the OECD Anti-Bribery Convention to enforce their new laws against the bribery of foreign public officials has been widely noted, including on this blog. There is no single factor that explains this lack of enforcement across the 30 or so countries (out of 41 total signatories) that have not yet seriously begun enforcing their anti-bribery laws. However, there is a fair amount of descriptive evidence about the extent to which signatories actually do so: Transparency International (TI) has, for the last nine years, released annual reports on progress, which provide a good deal of information on this level.

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Quid Pro Quo: The Deus Ex Machina of Bribery Law?

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In a recent post Phil spotted an apparent anomaly in U.S. anticorruption laws: these laws make it is easier to get away with bribing an American politician than a non-American one.  As Phil explains, the difference arises from what seems to be the higher burden the prosecution must meet to prove that what is ostensibly a campaign contribution is in reality a bribe when the recipient is an American politician rather than a non-U.S. officeholder.

When the payment is to an American politician, the prosecution must, in the words of McCutcheon v. FEC, the Supreme Court’s most recent decision interpreting the Federal Election Campaign Act, prove “quid pro quo corruption,” which the Court defines as “a direct exchange of an official act for money.” By contrast, when the challenged payment is to a non-American office holder, the Foreign Corrupt Practices Act merely requires that the prosecution establish that the money was “corruptly” given for the purpose of “influencing any act or decision [taken in an official capacity].” Phil takes the absence of an express requirement of a quid pro quo in the FCPA as easing the prosecutor’s burden. But is Phil’s reading of the two laws correct? Continue reading →

The Irrelevance of an FCPA Compliance Defense

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The U.S. Foreign Corrupt Practices Act (FCPA) exposes corporations to criminal (as well as civil) liability for acts committed by the corporation’s employees, pursuant to the standard principle of U.S. law the corporations are liable for the acts of their employees, if those acts were committed in the course of employment and for the benefit of the employer. This principle, in the FCPA context and elsewhere, has familiar advantages and disadvantages. The most straightforward advantage is that this “vicarious liability” gives corporations an incentive to establish robust compliance programs and to monitor their employees. The main disadvantage is that, because no compliance system is perfect, corporations might find themselves faced with substantial liability for acts committed by “rogue employees”. Moreover, precisely because of this concern, corporations might over-invest in anticorruption compliance, or might forgo certain transactions or investments, because of worries about FCPA exposure. This may be bad for society, not just the firm.

In the FCPA context, a range of critics have argued that the FCPA should be amended to add a “compliance defense,” so that a corporate defendant would not face criminal liability for the acts of its employees, so long as the corporation maintained an adequate system for promoting compliance with the FCPA’s restrictions. (The United Kingdom’s 2011 Bribery Act has such a defense.) Advocates of an FCPA compliance defense have suggested a range of possible forms the defense might take; critics have pushed back, arguing that the existence of the defense would undermine the fight against corporate corruption. My take on the debate over the compliance defense is somewhat different: I think the addition of an FCPA compliance defense, under current conditions, would have no significant effect on FCPA enforcement actions. A compliance defense would probably be neither good nor bad, but rather (mostly) irrelevant. Here’s why:

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Rethinking Kiobel: Is there Room for Human Rights in FCPA Enforcement?

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Today is the one-year anniversary of the U.S. Supreme Court’s decision in Kiobel v. Royal Dutch Petroleum Co. In its decision, the Court narrowed the admissibility of Alien Tort Statute (ATS) claims related to extraterritorial human rights abuses, ruling that such claims are not actionable unless the claim has a sufficient nexus to U.S. territory. What kind of nexus is enough for an ATS case arising from exterritorial conduct? For cases involving foreign multinational companies, such as the defendant Royal Dutch Petroleum in Kiobel, a “mere corporate presence” in the U.S. is not enough.

A striking feature of this holding is the clear contrast between how a “mere corporate presence” in the U.S. is not enough for an ATS claim based on extraterritorial conduct, but is sufficient for a Foreign Corrupt Practices Act (FCPA) prosecution. Although Royal Dutch Petroleum’s “mere corporate presence” in the U.S. was not a sufficient basis for an ATS claim, if these human rights abuses were tied to corruption for the retention or solicitation of business in Nigeria (and involved U.S. interstate commerce — a requirement not difficult for the DOJ and SEC to overcome), Royal Dutch Petroleum could be liable for FCPA violations. As a foreign multinational company, Royal Dutch Shell Company lists its shares on the New York Stock Exchange and prepares filings for the SEC. Such activity is sufficient for establishing FCPA jurisdiction.

This suggests a possible strategy for human rights advocates dismayed by the Kiobel decision: Perhaps it might be possible to more aggressively utilize FCPA enforcement for circumstances in which corporate accountability for human rights abuses is tied to bribery. Continue reading →

Can Foreign Anti-Bribery Enforcement Statistics Help Us Measure Corruption Levels Objectively?

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We’ve spent a fair amount of time, in the early days of this blog, talking about the challenges of measuring corruption cross-nationally. The well-known perception measures are useful to a point, but suffer from well-known drawbacks, chief among them concerns about how accurately perceptions capture reality. A recent working paper by Laarni Escresa and Lucio Picci, “A New Cross-National Measure of Corruption,” tries to get around these difficulties. Using data on enforcement of foreign anti-bribery laws like the U.S. Foreign Corrupt Practices Act (FCPA), Escresa and Picci they derive a new index, which they call the Public Administration Corruption Index (PACI), to make more objective cross-country comparisons in corruption levels. The paper is really clever and creative—but in the end I think it doesn’t work. Let me first say what I think is so cool about the idea, and then explain what I think are the biggest flaws. Continue reading →

The OECD Bribery Convention as Cover for US FCPA Enforcement Abroad

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Both Rick and Matthew’s posts earlier this week discussed the effectiveness of the 1997 OECD Anti-Bribery Convention in combating international corruption. Rick emphasizes the Convention’s success in prosecuting supply-side bribery, noting the hundreds of convictions and settlements since the Convention came into force. But as Matthew pointed out, and as the OECD itself has acknowledged, the impressive-sounding aggregate enforcement numbers mask the fact that enforcement is highly unevenly distributed: the majority of the Convention’s 40 member countries still do not enforce their anti-bribery laws effectively (if at all)–and most of the increase in enforcement that Rick highlights comes has come not from the countries that recently adopted extraterritorial anti-bribery laws, but from the United States, which has had such a law – the FCPA – on the books for more than 35 years.

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Do Companies Benefit from Self-Disclosing FCPA Violations?

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At last Month’s Chatham House conference on Combating Global Corruption, much of the discussion focused on how to create incentives for corporations to uncover and voluntarily disclose violations of foreign anti-bribery laws like the U.S. Foreign Corrupt Practices Act (FCPA). This is important, because as I noted in last week’s post, most FCPA violations are revealed because of self-disclosures, rather than government or media investigation. During the conversation, a distinguished lawyer (whom I cannot identify by name, because of the Chatham House Rule) made the following argument: Although the U.S. Department of Justice claims to give corporations credit for self-disclosure of FCPA violations, “a careful examination of the evidence reveals” that self-disclosure does not result (on average) in any reduction in penalties.

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