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Friday
Dec282018

Here's how to prosecute foreign bribe takers

While it is impossible to know who initiates most bribe situations, the giver or the receiver, one thing is clear: no bribe can take place without both. It is for this reason that international conventions such as the OECD Anti-Bribery Convention and the UN Convention Against Corruption encourage state parties to address both sides of bribery in their national legislation. 

However, U.S. law, in contrast to the national legislation of many countries, criminalizes only active foreign bribery. While companies and individuals subject to the jurisdiction of the FCPA are punished for paying bribes, those who receive these bribes largely escape U.S. punishment. 

As we argue in our recently published article "Two to Tango: Attacking the Demand Side of Bribery," this gap, which hampers U.S. efforts to combat international corruption, could be filled by amending the basic domestic bribe receiving statute, 18 USC 201(b)(2), to cover foreign public officials.  

There are, of course, several possible arguments against such a proposal. For example, some may contend that there is no need to criminalize foreign bribe receiving in U.S. law because other statutes such as wire fraud, mail fraud and money laundering, can be used for the same purpose. However, these statutes all require proof of additional elements (for example, intent to defraud or a laundering transaction) which may not be available in a bribery case, making such prosecutions unnecessarily difficult. 

It may also be argued that such cases are more appropriately prosecuted by the bribe takers' home governments.  While this is undoubtedly true, such cases are rarely brought. The OECD's recent study of prosecutions of foreign bribe takers, Foreign Bribery Enforcement: What Happens to the Public Officials on the Receiving End?, found that public officials were sanctioned in only one fifth of the schemes covered by the survey. 

Prosecuting foreign bribe receiving could also be opposed on the grounds that it would subject the U.S. to political fallout and, possibly, retaliation from foreign governments. However, the U.S. government has already decided to accept this risk. It has been the explicit policy of the Department of Justice under both the Obama and Trump Administrations to attempt to charge foreign government officials who take bribes under other statutes, such as money laundering and wire fraud. 

The Trump Administration recently reaffirmed this policy in its National Security Strategy, which states “the United States will continue to target corrupt foreign officials.” The possibility of political fallout has also not stopped the U.S. government from imposing visa bans and asset freezes on various high ranking foreign government officials.  

In addition to bringing U.S. legislation into line with international best practices, criminalizing foreign passive bribery would serve several other valuable purposes. First, even if the bribe takers are never extradited or prosecuted, a U.S. indictment would make it difficult for them to travel (lest they travel to a country that has an extradition treaty with the U.S.) and to spend their ill-gotten gains. 

Second, the fact of an indictment could be used to support other penalties, such as sanctions under the Global Magnitsky Act which applies to foreign government officials responsible for serious human rights abuses and corruption. 

Third, U.S. charges would put pressure on foreign governments to bring domestic charges against the bribe-takers (something that, as noted above, rarely happens now). 

Finally, it would help honest companies use the FCPA as a shield to resist bribe demands. Or, to put it another way, the argument that “we can’t pay because we could be prosecuted under the FCPA” would be much more powerful if coupled with the statement “and you could be, too.”

The current environment, characterized by heightened awareness of the geopolitical threat of grand corruption and the connections between kleptocracy, human rights abuses and national security may be a propitious time for such a legislative initiative.

A longer version of this article first appeared in The American Interest, a bimonthly magazine focusing primarily on foreign policy, international affairs, global economics, and military matters, and appears on the FCPA Blog with permission.

____

Tom Firestone, pictured above left, is a partner in the Washington D.C. office of Baker McKenzie and is co-chair of the firm’s North America Government Enforcement Practice and a member of the firm's Global Compliance and Investigations Steering Committee.

Maria Piontkovska, above right, is an associate in the Washington, D.C. office of Baker McKenzie.

Reader Comments (3)

"While it is impossible to know who initiates most bribe situations, the giver or the receiver, one thing is clear: no bribe can take place without both."

1) With respect, it is actually possible (and not particularly difficult) to discover the initiator of most bribe situations. Statements like these sweep aside a very fundamental question that must be asked and answered honestly in every bribery scenario. Someone always initiates the transaction. The Big Bang Theory does not apply to bribery.

2) It is true that no bribe can take place without the giver and the receiver. The law of demand and supply applies to most bribery situations: demand invites supply and supply stimulates demand.

3). All US corporations have both the choice and the power to refuse to supply bribes to meet or stimulate demand wherever they do business abroad. I personally know many US corporations doing business in my country (Nigeria) that routinely exercise that choice and that power correctly every single day.

4). The solution to the bribery problem for honest US companies (in the absence of foreign state cooperation) is actually quite simple: Stop. Giving. Bribes.
December 29, 2018 | Unregistered CommenterPaul T. Oki
Thanks great comment.
The foreogn countries has big gap in législation about bribery for many reasons this proposal could help to moderniz
December 29, 2018 | Unregistered Commentermarcel mancilla
Hello Marcel, and thank you for responding to my comment.

The OECD report referenced in the original article highlights the slow pace of prosecutions and formal sanctions against implicated public officers in the foreign countries reviewed - not big gaps in their local anti-corruption legislation. Did you have any specific countries in mind?
December 31, 2018 | Unregistered CommenterPaul T. Oki

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