A few months ago, the Wall Street Journal published an interview with Charles Duross, the current Morrison & Foerster partner who up until last February led the U.S. Justice Department’s Foreign Corrupt Practices Act Unit. Among the interview’s most interesting revelations was Duross’s description of how he set enforcement priorities. When asked about likely future priorities Duross provided this response:
To be clear we do prioritize cases, based on the significance of the case. For example how big are the bribes? Are we talking about $100 million or $100? But in terms of saying “I have decided what we’re going to do is look at X industry or everybody that’s going to be dealing with this country or this region, and we’re going to scrub those folks in particular,” I don’t think we do that.
Although Duross may well be correct that DOJ doesn’t target particular countries or regions, there is some evidence that FCPA enforcement does disproportionately involve particular kinds of countries–in particular, poorer countries and countries with poorer governance. A working paper by Stephen Choi and Kevin Davis (which Matthew also discussed in a recent post) found that “aggregate total monetary sanctions related to a particular violation country, controlling for the overall bribe level in that country, is greater for countries with a lower GNI [gross national income] per capita, as well as weaker government effectiveness and rule of law scores.” What to make of this? Is it true that companies are penalized more heavily (controlling for the size of the bribe) when they pay bribes in poorer countries with less effective legal systems? If so, is this desirable?