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Richard L. Cassin Publisher and Editor

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Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

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Monday
Jan052015

From Alstom: Six reasons why non-U.S. companies dominate the FCPA top ten list

The current list of the ten biggest FCPA cases includes only two U.S.-based companies -- KBR at number three and Alcoa at number six. The rest are non-U.S. companies.

France's Alstom is the latest to land in the top ten. Its $772 million settlement with the DOJ shows why non-U.S. companies dominate the biggest FCPA cases:

First, Alstom didn't have an effective anti-bribery compliance program, the DOJ said. That's true of all companies in the top ten. They either ignored compliance or used compliance as window dressing to cover up bribery. Non-U.S. companies are more likely to be FCPA compliance laggards. Their directors sit farther from Washington and have been slower to recognize the risks of FCPA offenses and enforcement.

Second, Alstom's bribery was a way of doing business. Prosecutors could infer lots of bad intentions from that. And Alstom's bribery must have irked its compliant competitors from America and later from Germany. (Whistleblowers can come in all sizes.) Alstom, like most companies in the top ten, ran long-term bribery schemes in multiple locations across several business lines. It was big, showy bribery now associated more with non-U.S. companies.

Third, Alstom and other non-U.S. companies on the FCPA top ten list weren't hard to catch. They thought little about FCPA compliance so there were smoking guns -- explicit emails, phony consulting agreements, doctored invoices, trails of money transfers, travel records, meeting notes, and so on. An employee in a bad company who wants to protect himself can load a million pages onto a thumb drive and walk out the front door. There aren't any corporate secrets anymore.

Fourth, Alstom stonewalled the feds. Bad idea. Most U.S. companies are quick to self report potential overseas bribery and start cooperating. If there was a compliance problem, they want cooperation credit from the DOJ and SEC. The goal is to cut the best deal as fast as possible. If there wasn't overseas bribery, they want to clear their name in a hurry. Some non-U.S. executives, on the other hand, still doubt the FCPA means what it says, no matter what their U.S. lawyers to them. Others think a bloody battle will create leverage for a favorable settlement or buy time for friendly home-country politicians to somehow intervene. The bunker mentality didn't work for Alstom. Has it ever worked in an FCPA case?

Fifth, Alstom is from France, a country with a weak enforcement record. Before the Bribery Act, the U.K. was ambivalent about enforcement. The DOJ used aggressive tactics to get some British attention. It detained two top BAE execs at U.S. airports and copied the contents of their briefcases, computers, and phones. Soon after, BAE started cooperating and settled, landing among the FCPA top ten. When Germany was still hanging back, the United States prosecuted Siemens and Daimler in fairly quick succession. Both made the FCPA top ten. France is still an empty enforcement chair. Now three French companies -- Alstom, Total SA, and Technip -- are among the ten biggest FCPA cases. Ironically, companies from recalcitrant jurisdictions may also feel the most confident their bribery won't be exposed or punished. That's what they've learned at home.

And sixth, a company is more likely to land on the top ten list when senior executives are culpable. That's true for U.S. and non-U.S. companies. Siemens was the template for top management knowing about overseas bribery and covering it up. The company eventually fired them all. KBR's CEO ran a large-scale bribery and kickback scheme. He went to prison. In Alstom's case, the DOJ put it this way: "The breadth of the  . . . misconduct, which spanned many years, occurred in countries around the globe and in several business lines, and involved sophisticated schemes to bribe high-level government officials." Can "sophisticated schemes" happen across the globe for decades without senior executive involvement or knowledge? Not likely.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.