Clean | Green | Sustainable

Senate hearing takes DOJ to task over foreign corruption enforcement

Posted by Matthew Koehler on December 1, 2010

Yesterday in Washington, a hearing was held before a subcommittee of the U.S. Senate’s Judiciary Committee to examine the Department of Justice’s enforcement – or lack of enforcement – of the Foreign Corrupt Practices Act.

You can watch the entire hearing via the C-Span feed.

In a nutshell, the Foreign Corrupt Practices Act (FCPA) makes it unlawful for U.S corporations to bribe foreign government officials to assist in obtaining or retaining business.

I admit that I’m no expert on the in’s and out’s of FCPA and DOJ’s enforcement measures, but my brother Mike is.

Mike’s the business law professor at Butler University (you know, the Indiana school that should have beat Duke in the NCCA basketball finals last April). He also writes the FCPA Professor blog.

Mike had the privilege of testifying during yesterday’s hearing and, boy, did he knock it out of the park! I couldn’t be more proud of my little brother for taking on Big Brother and these corporate thieves!

Here’s a snip from Mike’s oral testimony, which can be viewed at the 42 minute mark:

“The FCPA is a fundamentally sound statute that was passed by Congress in 1977 for a very specific and valid reason and my prepared statement provides a brief overview of the legislative history on that issue. That the FCPA is a fundamentally sound statute does not mean that FCPA enforcement is fundamentally sound. The recent article I wrote in the Georgetown Journal of International Law, ‘The Facade of FCPA Enforcement‘ details several pillars which constitute this current facade environment which exists. One pillar that I would like to talk about today is the pillar, which is very frequent, and that is where seemingly clear-cut cases of corporate bribery – per the DOJ’s own allegations – are not resolved with FCPA anti-bribery charged….This facade pillar undermines the rhetoric that DOJ uses when it describes it’s FCPA enforcement program and and undermines the deterrence that proper FCPA enforcement can achieve.

So despite numerous public statements during this era of the FCPA’s resurgence that the DOJ will vigorously pursue violators and that paying bribes to get foreign contracts will not be tolerated, the undeniable fact is that in the most egregious cases of corporate bribery the DOJ does not charge FCPA anti-bribery violations.

And the Siemens and BAE enforcement actions that have already been alluded here today are perfect examples of those.

Not only is it that these companies were not charged with FCPA anti-bribery violations, but the deterrence message is also undermined when one analyzes the extent of US government business these companies have done in the immediate aftermath of the bribery scandals.

Using recovery.gov one will find that Siemens alone has been awarded numerous federal government contracts with U.S. stimulus dollars in the immediate 12 months after the bribery scandal. And one will also find that BAE, this month alone, not only was BAE not charged with FCPA anti-bribery violations, but this month alone, BAE, according to its website, has secured $50 million in U.S. Government contract. Including in September 2010 securing a $40 million contract from the FBI, the same exact government agency that investigated BAE for its improper conduct.

So deterrence is not achieved when a company that bribes is not charged with FCPA anti-bribery violations. Deterrence is not achieved when a company settles a matter for an amount less than the business that was gained through bribery. Nor is deterrence achieved when the U.S. government continues to award multi-million contacts to the same companies that are engaged in these bribery schemes.

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