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Monday
Jan122015

Not every princeling job is a ‘thing of value’

In our era of talk shows, sound bytes, and political polarization, we can easily lose sight of a simple truth: the free exchange of ideas can be beautiful. The beauty lies in its potential to evoke ever more considered and disciplined views from the participants. In rare cases, it can even draw both sides toward a carefully formulated resolution that is satisfying to both.
 
Professor Matthew Stephenson at the Global Anticorruption Blog has helped me do this very thing. We have spent several posts supposedly disagreeing with each other, but in the end, I believe we are in essentially the same position.
 
I believe that both he and I would agree with the following proposition: It would be both good anti-corruption policy, and not inconsistent with the prior opinion releases, to treat a job offer to an official’s adult, non-dependent son or daughter as the offer of a thing of value to the official if there exists specific evidence that both the offeror (the employer) and the offeree (the official) believed the job had non-monetary value for the official.
 
I didn’t formulate the position in quite that way until this post, nor had I understood that Prof. Stephenson was amenable to the same. But remarkably, this view is essentially consistent with what Prof. Stephenson and I have been writing all along. Go back and read his posts and mine of the last couple days (if you’re interested); it was right there in front of our noses. We had to challenge each other to see it.  
 
Adopting this position requires me to clarify and amend two of my earlier statements, which I’m quite happy to do. The first is the proposition I had previously drawn from the original opinion releases. I wrote that according to those releases, “hiring the relative of a foreign official does not violate the FCPA if nothing of value passes through the relative to the official.” I continue to believe that this is the plain inference of those releases. But Prof. Stephenson has prompted me to recognize that it would be both good policy and consistent with the rule of law to now formulate the principle as amended in this way: “hiring the relative of a foreign official does not violate the FCPA if nothing of value passes through the relative to the official, absent specific evidence that the offeror and offeree regarded the job as valuable to the official.” While that amendment is not suggested by the earlier releases, neither is it ruled out; thus amending the government’s prior interpretation in light of more recent fact patterns is fully consistent with a common law conception of the rule of law, as well as the opinion release disclaimer.
 
Secondly, I believe this position requires a fairly dramatic reformulation of the U.S. government's understanding of value. The opinion releases at issue seem to contemplate an exclusively monetary theory of value: they ask whether anything of value passed through the hired family member to the official, and do not even consider whether the job to the family member itself had value to the official. As I previously discussed, the Guidance gets us a little further down the road, but not much. The only non-monetary example of value it provides is money to a charitable contribution. As I originally argued, and Prof. Stephenson agrees, this is indeed as close as the Guidance gets. I think that section can be read in either of two ways: broadly, that value need not be monetary, or narrowly, as a kind of qualified veil-piercing analysis in which giving money to an official’s charity is as good as giving money to an official. I still think the narrower interpretation is probably more consistent with the Guidance generally, and that if the Guidance authors were being honest, they’d have to admit they hedged there.
 
Ultimately, if Prof. Stephenson and I still disagree anywhere, it is in how far removed JP Morgan may push the U.S. government beyond the Guidance and opinion releases. He seems to see continuity with incremental steps, while I see giant leaps and new directions. (Admittedly, I no longer see a reversal, as I had originally). But that’s not much of a disagreement at this point.
 
So what does it mean for JP Morgan? Both Prof. Stephenson and I agree that we need specific evidence of subjective valuation of the job (or job offer). An issue he and I have not yet discussed (we’ll save it for another day) is whether the law actually requires evidence of BOTH the offeror and offeree’s subjective valuation. One can imagine fact patterns that press the issue. But in the mean time, he and I clearly agree that the government should not treat the job offer as a thing of value absent specific evidence of subjective valuation.
 
And this realization is, for me, a compelling tribute to the power of the blogosphere. I’m not sure that another forum exists in which this could have occurred. Had we each written a law review article, we’d have only one shot at formulating our views; had we been on a panel, we (or at least I) would not have had the time needed to more fully think this through. It would seem that blogs uniquely facilitate the free exchange of ideas. Even today.

So I’m a believer. Thanks, Global Anticorruption Blog, for bringing your A-game. We’re all better for it.

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Andy Spalding is a Senior Editor of the FCPA Blog and Assistant Professor at the University of Richmond School of Law.