Hating on the FCPA won't make it go away
Friday, June 8, 2018 at 8:02AM
Richard L. Cassin in Cooperation, Keppel FELS, Och-Ziff, Telia, Top Ten

The lawyer from Europe was quick to tell us what she thinks of the FCPA. "It's really just a weapon against non-U.S. companies," she said. "Very bad."

As evidence she cited the FCPA Blog's Top Ten list. "Eight of the companies are from outside the United States," she said. "That's not fair at all."

So we talked to her (and the others in the room) about why some companies have the biggest FCPA cases.

First, most are from countries that weren't prosecuting foreign bribery.

When BAE landed in the top ten in 2010, the UK Bribery Act didn't exist, and there was no such thing as UK enforcement.

Enforcement in France took a big step forward this week with the SocGen action, and should rev up more under Sapin II. But by 2013, when Total resolved its FCPA enforcement action, and 2014, when Alstom settled its case, France hadn't taken any action against overseas bribery.

Teva Pharmaceuticals landed fourth on our top ten list in 2016. Israel hadn't started bringing corporate enforcement actions against foreign bribery. (Teva is now number six on the list.)

Keppel Offshore made the top ten last year. At the time, Singapore law capped fines for overseas bribery at about $75,000. The DOJ said Keppel Offshore paid $50 million in bribes to Brazilian officials and earned over $350 million from the tainted contracts.

Another common feature of the biggest FCPA cases is systemic corruption involving top management.

At Siemens, some of the management board, country managers, and segment bosses knew about the graft, and in some cases helped plan and pay the bribes, then cover them up.

Sweden's Telia, currently on top of the top ten list, paid $80 million in bribes to the Uzbek president's daughter, Gulnara Karimova. She then used some of the money to "buy" 26 percent of the Telia company that had won a 3G mobile contract for Uzbekistan. Bribes and deals that big couldn't happen without OKs from top management, not local employees.

SocGen paid an intermediary over $90 million, according to its admissions. The C-suite would have noticed.

And at Keppel Offshore, as we've written, the problem wasn't a rogue employee. It was widespread corruption.

Finally, we told the European lawyer, most companies in the top ten didn't cooperate with the DOJ, and that led to bigger criminal fines under U.S. sentencing guidelines.

Just then another European lawyer jumped in and made our point.

"The concept of cooperating with prosecutors doesn't exist in a lot of parts of Europe," he said.

"It's impossible to understand the American way of voluntary confession and cooperation. Our practice is to admit nothing and fight the prosecutors on everything."

BAE stonewalled the DOJ and tried to use political clout. The company landed on the top ten list in 2010 and is still there.

Alstom, currently fourth on the top ten list, failed to voluntarily disclose the FCPA violations even though it knew about related misconduct at a U.S. subsidiary.

(Och-Ziff, one of two American companies in the top ten, also failed to voluntarily disclose its compliance problems. The SEC detected FCPA violations while examining the way Och-Ziff was winning investments from sovereign wealth funds.)

The DOJ said VimpelCom, currently third on the top ten list, didn't receive "more significant mitigation credit" because the Netherlands company failed to voluntarily disclose its misconduct after an internal investigation uncovered wrongdoing.

So culture -- in this case how lawyers and business people view the prosecutor's role -- can have a big impact on the size of FCPA settlements.


Some lawyers in Europe and other places will always resent the FCPA and the way it's enforced. Sovereignty, legislative imperialism, American bullying and all that.

But those lawyers (lawyers everywhere, really) should understand why FCPA enforcement might seem skewed against non-U.S. companies. That could help them keep their clients off the Top Ten list.


Richard L. Cassin is the publisher and editor of the FCPA Blog.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
See website for complete article licensing information.