Recent Developments with the Recent Developments with the Foreign Corrupt Practices ActForeign Corrupt Practices Act
Indiana International and Indiana International and Comparative Law ReviewComparative Law Review
GlobalizingGlobalizingthe FCPAthe FCPA
Elizabeth SpahnElizabeth SpahnNew England Law | BostonNew England Law | Boston
[email protected]@nesl.edu(c) 2012(c) 2012
1. Economics Scholarship1. Economics Scholarship
A. Discredited “Grease the Wheels”A. Discredited “Grease the Wheels”
TIME FRAMESTIME FRAMES
INCREASES REGULATIONSINCREASES REGULATIONS
DECREASES COMPETITIONDECREASES COMPETITION
B. HarmfulB. Harmful
Legitimate Businesses, Defrauded Legitimate Businesses, Defrauded Taxpayers, Consumers, BystandersTaxpayers, Consumers, Bystanders
1 Georgetown Journal of International Law 861 (2010)
Under Enforcement Under Enforcement Building Codes in ChengduBuilding Codes in Chengdu
[Zimbio]
Over 7,000 inadequately engineered schoolrooms
collapsed
2. From Unilateral to Multi-Lateral 2. From Unilateral to Multi-Lateral
A.A. ‘‘Foreign’ Values?Foreign’ Values?
Follow the Money/Consider the SourceFollow the Money/Consider the Source
Elites versus non-ElitesElites versus non-Elites
18 Minnesota Journal of International Law 155 (2009)
2012 Vanderbilt study 2012 Vanderbilt study 67.7% in Guyana do not think bribery is 67.7% in Guyana do not think bribery is
justifiedjustified Bribery by FOREIGNERS even less acceptable Bribery by FOREIGNERS even less acceptable
““Initial analysis Initial analysis reveals that reveals that male, male, wealthy, young wealthy, young and urban and urban citizens are citizens are more likelymore likely to to report that paying report that paying a bribe sometimes a bribe sometimes is is justifiedjustified….”….”
By Juan Camilo PlataBy Juan Camilo [email protected]@vanderbilt.edu2012, Latin American Public2012, Latin American Public
Opinion Project Opinion Project InsightsInsightsSeries Series www.AmericasBarometer.orgwww.AmericasBarometer.org
B. Local (Foreign) LawB. Local (Foreign) Law
The U.S. FCPA provides an exception where: The U.S. FCPA provides an exception where:
““the payment, gift, offer, or promise of the payment, gift, offer, or promise of anything of value that was made, was anything of value that was made, was lawful under the written laws lawful under the written laws and regulationsand regulations of the foreign of the foreign official’s, political party’s, party official’s, political party’s, party official’s or candidate’s country…”official’s or candidate’s country…”
15 U.S. C. §§78dd-2(c) (1), 78dd- 3 (c)(1) 15 U.S. C. §§78dd-2(c) (1), 78dd- 3 (c)(1)
GuidanceGuidance
Foreign Sovereigns determine what is an Foreign Sovereigns determine what is an authorized ‘gift or entertainment’ expense, and authorized ‘gift or entertainment’ expense, and what is defined as a ‘bribe’what is defined as a ‘bribe’
Local Law Provisions Local Law Provisions under the OECD Anti-Bribery Convention under the OECD Anti-Bribery Convention
Syracuse Journal of International Law and Syracuse Journal of International Law and Commerce (May, 2012)Commerce (May, 2012)
(forthcoming Volume 39 Number 2)(forthcoming Volume 39 Number 2)
Rules to Maintain Rules to Maintain Ethics of National Ethics of National
Public Service OfficialPublic Service Official, , Nat’l Public Service Nat’l Public Service
Ethics Board, Ethics Board, http://www.jinji.go.jphttp://www.jinji.go.jp/rinri/eng/index.htm/rinri/eng/index.htm
JapanJapan
Earliest Leader – 1974Earliest Leader – 1974 [Before US FCPA law (1977)][Before US FCPA law (1977)]
Hong Kong has the most advanced Anti-Hong Kong has the most advanced Anti-Corruption CommissionCorruption CommissionNo other country has equivalent highly No other country has equivalent highly developed procedures, and large budget developed procedures, and large budget for anti-corruption workfor anti-corruption work
http://www.icac.org.hk/en/home/index.htmlhttp://www.icac.org.hk/en/home/index.html
Hong KongHong KongICACICAC
Independent Commission Against Corruption (ICAC)http://www.icac.org.hk/en/about_icac/bh/index.html
http://fcpadatabase.com/brochure
Local Law Local Law DatabaseDatabase
130 130 CountriesCountries
C. United Nations Convention Against C. United Nations Convention Against Corruption (UN CAC) 2005Corruption (UN CAC) 2005
unodc.org/unodc/en/treaties/CAC/ unodc.org/unodc/en/treaties/CAC/
140 Signatories140 Signatories
159 States Parties159 States Parties
OECD Anti-OECD Anti-Bribery Bribery
ConventionConvention19971997
http://www.oecd.org/document/24/0,3746,en_2649_34859_1933144_1_1_1_1,00.htmlhttp://www.oecd.org/document/24/0,3746,en_2649_34859_1933144_1_1_1_1,00.html
http://www.oecd.org/document/44/0,3746,en_2649_34859_44576364_1_1_1_1,00.html
Multi-JurisdictionalMulti-JurisdictionalProsecutionsProsecutions
OECD Anti-Bribery Convention OECD Anti-Bribery Convention
Working GroupWorking Group
PEER REVIEW PROCESSPEER REVIEW PROCESS
PROSECUTORS’ MEETINGS (2007)PROSECUTORS’ MEETINGS (2007)
Multi-Jurisdictional Bribery Law Enforcement: The OECD Multi-Jurisdictional Bribery Law Enforcement: The OECD Anti-Bribery Convention Anti-Bribery Convention (work in progress)(work in progress)
Harmonizing LawsHorizontal Enforcement
Each State Enforces through Domestic Criminal Law System
ELIMINATED FAVORABLE TAX TREATMENT
CRIMINALIZED BRIBERY ABROAD Individual Natural Persons Juridical Persons (Corporations)
Horizontal Enforcement Prosecutors’ Meetings
Tour de Table Reviews
Enforcement Cooperation
Enforcement Competition
EUROJUST model
Cooperative ProsecutionsCooperative Prosecutions Siemens 2008 Siemens 2008
Munich, Germany Public Prosecutors’ Office/Munich, Germany Public Prosecutors’ Office/U.S. Department of JusticeU.S. Department of Justice
Amount of known bribes paid Amount of known bribes paid US$1.4 billionUS$1.4 billion
Bribery as a business modelBribery as a business model
Compliance as Public RelationsCompliance as Public Relations window dressing window dressing
Under-Enforcement/Under-Enforcement/ Enforcement Competition Enforcement Competition
British Aeronautics BAEBritish Aeronautics BAE
estimated estimated $2 billion$2 billion in bribes to some Saudi Princes in bribes to some Saudi Princes plus additional smaller bribes to Hungarian and Czech plus additional smaller bribes to Hungarian and Czech Republic OfficialsRepublic Officials
BLACK MONEYBLACK MONEY
PBS Frontline PBS Frontline pbs.org/wgbh/pages/frontline/blackmoney/view/pbs.org/wgbh/pages/frontline/blackmoney/view/
Saudi Prince Bandar bin Sultan Anthony Charles Lynton Blair
http://www.pbs.org/wgbh/pages/frontline/blackmoney/etc/synopsis.html; http://www.dailymail.co.uk/news/article-558598/Pressure-mounts-Serious-Fraud-Office-open-Saudi-bribes-case.html
Political InterferencePolitical Interference‘National Champion’ Protectionism‘National Champion’ Protectionism
U.K. Serious Fraud Office (SFO)U.K. Serious Fraud Office (SFO)
Then-Prime Minister Tony Blair halts prosecutionThen-Prime Minister Tony Blair halts prosecution
Domestic U.K. Outcry/House of Lords Domestic U.K. Outcry/House of Lords
OECD Anti-Bribery Convention Working Group OECD Anti-Bribery Convention Working Group Report 2007Report 2007
OECD Convention Bars National Champion Protectionism
Article 5 (Enforcement):
“Investigation and prosecution of the bribery of a foreign public official shall be subject to the applicable rules and principles of each Party. They shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved.”
http://www.oecd.org/dataoecd/4/18/38028044.pdf
U.S. FCPA Enforcement Action U.S. FCPA Enforcement Action
U.S. Department of Justice (DOJ)U.S. Department of Justice (DOJ) BAE is an Issuer on New York Stock BAE is an Issuer on New York Stock
ExchangeExchange““Extra”- Territorial ??Extra”- Territorial ??
U.K. SFO Cooperates with U.S. DOJU.K. SFO Cooperates with U.S. DOJ
Global Enforcement Global Enforcement CooperationCooperation
““The Department of Justice acknowledges and The Department of Justice acknowledges and expresses its appreciation of the significant expresses its appreciation of the significant assistance provided by the U.K.’s Serious Fraud assistance provided by the U.K.’s Serious Fraud Office, and further expresses its gratitude to that Office, and further expresses its gratitude to that office for its ongoing partnership in the fight office for its ongoing partnership in the fight against overseas corruption.” against overseas corruption.”
http://www.justice.gov/opa/pr/2010/March/10-crm-209.htmlhttp://www.justice.gov/opa/pr/2010/March/10-crm-209.html
Inadequate Penalties?Inadequate Penalties? Very Large Fines -US$400 MillionVery Large Fines -US$400 Million
Known Bribe Amounts – US$2 BillionKnown Bribe Amounts – US$2 Billion
““On March 1, 2010, BAE Systems PLC paid On March 1, 2010, BAE Systems PLC paid approximately $400 million in fines for its corrupt approximately $400 million in fines for its corrupt practices abroad. Nevertheless, within a year, BAE won practices abroad. Nevertheless, within a year, BAE won [U.S.] federal contracts in excess of $6 billion.”[U.S.] federal contracts in excess of $6 billion.”
Drury D. Stevenson and Nicolas J. Wagoner, FCPA Drury D. Stevenson and Nicolas J. Wagoner, FCPA Sanctions: To Big to Debar?, 80 Fordham L. Rev. 775, Sanctions: To Big to Debar?, 80 Fordham L. Rev. 775, 779 (2011)779 (2011)
UK Bribery ActUK Bribery ActJuly 1, 2011July 1, 2011
TSKJ CasesTSKJ CasesEnforcement CooperationEnforcement Cooperation
French magistrates Renaud Van Ruymbeke and French magistrates Renaud Van Ruymbeke and Eva Joly discovered evidence during their Eva Joly discovered evidence during their investigation of Elf-Aquitaine, eventually investigation of Elf-Aquitaine, eventually referring the matter to the U.S. referring the matter to the U.S.
Renaud Van Ruymbeke Eva Joly
4 MNCs4 MNCs$6 Billion Contract$6 Billion Contract
Bonny Island, NigeriaBonny Island, Nigeria Technip S.A. (French)
Snamprogetti Netherlands B.V.. (Dutch/Italian)(Dutch/Italian)
Kellogg Brown & Root (Halliburton)Kellogg Brown & Root (Halliburton) (U.S./Dubai, UAE)(U.S./Dubai, UAE)
JGC Corporation (Japan)JGC Corporation (Japan)
12 Jurisdictions 12 Jurisdictions Potentially InvolvedPotentially Involved
U.K. solicitor Jeffery Tessler bribed top level U.K. solicitor Jeffery Tessler bribed top level Nigerian officials Nigerian officials
A fifth MNC, Marubeni Corporation, bribed lower A fifth MNC, Marubeni Corporation, bribed lower level Nigerians level Nigerians
January 17, 2012, TSKJ settlement, the U.S. January 17, 2012, TSKJ settlement, the U.S. Department of Justice noted that “[s]ignificant Department of Justice noted that “[s]ignificant assistance was provided by authorities in France, assistance was provided by authorities in France, Italy, Switzerland and the United Kingdom. Italy, Switzerland and the United Kingdom.
Prison for Executives Prison for Executives and Lawyersand Lawyers
Albert “Jack” Stanley - CEOAlbert “Jack” Stanley - CEO Kellogg, Brown & Root (KBR) HalliburtonKellogg, Brown & Root (KBR) Halliburton 30 Months U.S. prison30 Months U.S. prison
U.K. solicitor Jeffrey TesslerU.K. solicitor Jeffrey Tessler 21 Months U.S. prison21 Months U.S. prison France Sentencing PendingFrance Sentencing Pending
Nigerian ProsecutionNigerian ProsecutionNigeria’s Economic and Financial Crimes Commission Nigeria’s Economic and Financial Crimes Commission
Halliburton agreed to settle the charges with the EFCC Halliburton agreed to settle the charges with the EFCC for a $32.5 million fine the day after the EFCC brought for a $32.5 million fine the day after the EFCC brought charges. In addition, Halliburton agreed to pay to $2.5 charges. In addition, Halliburton agreed to pay to $2.5 million for the attorneys fees of Nigerian government’s million for the attorneys fees of Nigerian government’s and other expenses.and other expenses.
Halliburton agreed to provide assistance in the FGN’s Halliburton agreed to provide assistance in the FGN’s
effort to recover amounts frozen in a Swiss bank account effort to recover amounts frozen in a Swiss bank account of a former TSKJ agentof a former TSKJ agent
Charges against individual MNC executives were dropped Charges against individual MNC executives were dropped
by Nigeria.by Nigeria.Halliburton Confirms Agreement to Settle with FederalHalliburton Confirms Agreement to Settle with Federal, , Bloomberg L (Dec. 21, 2010).Bloomberg L (Dec. 21, 2010).
Category Percentage of world trade
Countries
Active Enforcement (7)
30% Denmark, Germany, Italy, Norway, Switzerland, United Kingdom, United States
Moderate Enforcement (9)
20% Argentina, Belgium, Finland, France, Japan, Korea (South), Netherlands, Spain, Sweden
Little or No Enforcement (21)
15% Australia, Austria, Brazil, Bulgaria, Canada, Chile, Czech Republic, Estonia, Greece, Hungary, Ireland, Israel, Luxembourg, Mexico, New Zealand, Poland, Portugal, Slovak Republic, Slovenia, South Africa, Turkey
Transparency International TI Progress Report on Enforcement of the OECD Convention
MAY, 2011
http://lawprofessors.typepad.com/files/anti-bribery-chart.pdf
http://lawprofessors.typepad.com/files/anti-bribery-chart.pdf
http://lawprofessors.typepad.com/files/anti-bribery-chart.pdf
3. Can Shifting Normative Values Alter 3. Can Shifting Normative Values Alter Profitable Global Business Models?Profitable Global Business Models?
Analogy Analogy Abolition of Transatlantic Slave TradeAbolition of Transatlantic Slave Trade
Business Model Accepted as Legitimate for Hundreds Business Model Accepted as Legitimate for Hundreds of Yearsof Years
Very Profitable Global TradeVery Profitable Global Trade
Entrenched InterestsEntrenched Interests
Initially UnilateralInitially UnilateralLater Bi-lateral Later Bi-lateral
British Leadership/Pressure; Dutch JoinBritish Leadership/Pressure; Dutch Join Portugal, Spain ReluctantPortugal, Spain Reluctant French ErraticFrench Erratic U.S. & Brazil Very LateU.S. & Brazil Very Late
Naval Enforcement/ Bi-Lateral Hybrid CourtsNaval Enforcement/ Bi-Lateral Hybrid CourtsJenny S. Martinez, Jenny S. Martinez,
Antislavery Courts and the Dawn of International Human Rights Law, 117 Yale L.J. 550 (2008)Antislavery Courts and the Dawn of International Human Rights Law, 117 Yale L.J. 550 (2008)
This group of severely This group of severely emaciated boys and young emaciated boys and young men from East Africa are men from East Africa are
pictured on thepictured on thelower deck of the Royal lower deck of the Royal Naval ship HMS Daphne Naval ship HMS Daphne
18681868
This image is one of the earliest photographs of Africans being rescued from a slave ship by the British Royal This image is one of the earliest photographs of Africans being rescued from a slave ship by the British Royal Navy. Image courtesy of British National Archives, Public Records Office, London.Navy. Image courtesy of British National Archives, Public Records Office, London.
(Image from: (Image from: http://oceanexplorer.noaa.gov/explorations/06trouvadore/background/illegal_slave_trade/media/slave_rescue.htmlhttp://oceanexplorer.noaa.gov/explorations/06trouvadore/background/illegal_slave_trade/media/slave_rescue.html. . 15 January 2012.)15 January 2012.)
Capture of Slave Ship by British Navy, 1824 .Capture of Slave Ship by British Navy, 1824 .
(Le Magasin Pittoresque. 1844. (Le Magasin Pittoresque. 1844. http://hitchcock.itc.virginia.edu/Slavery/details.php?categorynum=5&categoryName=Slave Ships and the Atlantic Crossing (Middle Passage)&theRecord=58&recordCount=78http://hitchcock.itc.virginia.edu/Slavery/details.php?categorynum=5&categoryName=Slave Ships and the Atlantic Crossing (Middle Passage)&theRecord=58&recordCount=78
. 15 January 2012.). 15 January 2012.)
