The Statecraft Of Enforcement

Should the Foreign Corrupt Practices Act be used to punish nations that don't behave the way the United States wants them to? Michael Jacobson (left) from the Washington Institute thinks so. In the September 24 issue of Policy Watch, he proposes targeted enforcement of the FCPA against non-U.S. companies that do business with Iran (U.S. companies aren't allowed there under current law). The purpose is to sanction the country and its leaders on the nuclear issue.

Jacobson's thinking goes like this: Tehran deserves punishment. The U.N. can't do it because China and Russia won't get behind effective sanctions. But the FCPA reaches all foreign companies that have securities registered in the U.S. Some of those foreign companies are doing business with Iran. That country's leaders are corrupt and most deals they do probably violate the FCPA's anti-bribery provisions. Therefore, the Justice Department and Securities and Exchange Commission should target FCPA enforcement against foreign companies doing business with the regime. That will discourage trade with Iran and ultimately inflict real damage on the leadership there. While unilateral U.S. action will work, Jacobson says, the best scenario is for other OECD countries to adopt the same approach under their respective anti-corruption laws.

Is this a serious idea?

Well, the Washington Institute where Michael Jacobson works is a serious think tank. On its board of advisers are five former Secretaries of State -- Warren Christopher, Lawrence Eagleburger, Alexander Haig, Henry Kissinger and George Shultz. Among the other board members are Martin Peretz, editor in chief of the New Republic, Richard Perle, a former Assistant Secretary of Defense, James Woolsey, a former director of the CIA, and Mort Zuckerman, publisher of U.S. News and World Report. That's a lot of horsepower.

Jacobson's bio says he specializes in counterterrorism and intelligence -- particularly "sanctions and financial measures to combat national security threats." Before joining the Washington Institute, he was a senior advisor in the Treasury Department's Office of Terrorism and Financial Intelligence and counsel on the 9-11 Commission. He also worked for the FBI, first as an intelligence analyst, then as assistant general counsel. He holds "a bachelor's degree in psychology from Brandeis University, a master's degree in international relations from Tufts University, and a law degree from Boston College Law School."

So yes, this looks like a serious proposal. But is it a good idea?

We're against corruption and the spread of nuclear weapons. Who isn't? And we know dealing with Iran is frustrating; carrots don't work and there aren't many sticks to reach for. Still, the cost of using the FCPA as a sanction would be high, and it probably wouldn't work.

Today the Foreign Corrupt Practices Act is admired around the world. Called "one of Congress's finer moments" by the Wall Street Journal, it's a hopeful statute that stands for ethics in business and government. Once politicized, however, it'll be just another symbol of heavy-handed and overreaching American diplomacy that's resented overseas. At home, injecting the DOJ and SEC so deep into U.S. foreign policy would compromise their integrity as crime-fighting agencies, with implications far beyond FCPA enforcement.

What's more, using the FCPA to sanction Iran (or any country) is likely to backfire. Targeted enforcement might keep clean money out. But as we heard from Andy Spalding earlier this year, that would open the door for investors from countries "not committed to effectively enforcing anti-bribery measures," like Russia and China, making it even easier for crooked leaders to skim funds from military and civilian projects. End result: more corruption and no less nuclear development.

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RIP William Safire. From Time magazine: "Not for Safire the clodden metaphors, arch constructions, one-sentence paragraphs and dreary wonkery that are the stock in trade of too many modern American columnists. He was of that generation of inky-fingered wretches who remembered that it is not a sin for journalism to entertain — indeed, that one way you can get across a point about which you feel passionately is to make people smile while they are absorbing it."
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Stuck In The Middle

Evan Osnos's latest Letter from China in the New Yorker (here) describes what he calls the gift-imperative -- the constant cultural pressure to give gifts and accept them in business and professional settings. Our most harrowing encounter with the gift-imperative happened not in China but in Southeast Asia. During the festive season one year, a small flatbed drove up to our place in Singapore, loaded with a huge gift basket -- about five feet tall and packed with pricey bottles and tins -- cognac, caviar and other treats you might see in the window at Harrods. A few minutes later, however, the truck left, still carrying the basket.

The gift-giver, it turned out, was an opposing party in a dispute we were working on. We knew he didn't expect any quid pro quo -- he was trying to show that he understood the dispute was not personal. We also knew that our rejecting the gift would cause him to lose face. But accepting it was impossible. The clash of cultures was awkward, damaging, and typical of the problems Western and local employees face every day in Asia.

Evan Osnos is speaking as a reporter in China but his experience is universal:

The problem comes up all the time: American reporters are trained to avoid hand-outs from the people we’re interviewing. Chinese interviewees are trained to be equally vigilant in extending their hospitality. Thus, when a local propaganda-bureau official insists on taking you out to dinner, you have to fake a trip to the toilet halfway through the entree, just to pay the bill before the official can pay it. I have honed a polite but firm spiel for moments like that: “It’s company policy, I’m sorry…. I will be fired and pilloried if I accept that, I hope you can understand,” and so on. Over the years, it has been effective for deflecting all manner of swag: leather portfolios, pens, briefcases, watches, digital organizers, etc. . . . Once, I was given a folksy sea-shell-encrusted wall-hanging from a Party official in the seaside city of Haikou. (When something is too personal to give back, it ends up with my Chinese colleagues and friends. A driver I know, who works for a foreign news organization, is so well-attired in freebie t-shirts and baseball hats that he looks like a sponsored athlete.)

If not accepting gifts is difficult in Asia, not giving them is even harder. A lack of generosity embarrasses everyone. But the Foreign Corrupt Practices Act is clear. It prohibits the giving of anything of value to a foreign official for the purpose of obtaining or retaining business. So to be safe, most companies that are serious about compliance ban just about all overseas gift-giving to both public and private parties.

That fix sounds easy enough. And at the corporate level it works fine. But on a personal level the collision of the gift-imperative with the compliance requirement is one of the most complex and difficult by-products of the FCPA. Expat and local employees are forced to make choices every day that aren't clear or easy, no matter what the law and their company policies might say. How do we know? There are a string of enforcement actions and ongoing investigations to prove it.

[Editor's note: Evan Osnos's article confuses conflict-of-interest policies with FCPA prohibitions. But his description of the gift-imperative is spot on.]
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Found In Translation

As posted yesterday on the wrageblog here, the Foreign Corrupt Practices Act is now available in Spanish, Russian, Chinese and Arabic. The translations come from the U.S. Department of Commerce through a project headed by Senior Counsel Kathryn Nickerson. As the wrageblog pointed out, "Although the translations are marked 'unofficial' we’re told they’re accurate and that they read well. This is a great service to the compliance community." We agree.

Kudos to Kathryn Nickerson and the DOC.

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Too much love, Jefferson says. Federal Judge Tim Ellis this week denied former Congressman William Jefferson's request for a new trial. A copy of Judge Ellis' order can be downloaded here.

Jefferson argued that the jury should have heard evidence about an intimate relationship between an FBI agent working on Jefferson's case and Lori Mody. She was the government's informant who secretly taped her conversations with Jefferson about bribing Nigeria's vice president. Ellis, however, said disclosure to the jury wasn’t necessary because the government didn’t enter into evidence any of her statements about the contents of meetings that were not secretly recorded by the FBI. Mody herself didn't testify at the trial.

Four days before jury selection began, lead FBI agent Timothy Thibault disclosed that agent John Guandolo, who was the undercover driver for Lori Mody, had been involved in a sexual relationship with her during the FBI's investigation. Judge Ellis ruled that evidence of the relationship was not relevant to any issues at the trial and therefore would not have been admissible.

Presumably Jefferson will raise the issue again on appeal. He's saying evidence of the relationship goes to the credibility of the FBI and witnesses it interviewed. Whatever happens, there was at least the appearance of impropriety . . . .

Separately, some are asking whether Jefferson was convicted of violating the Foreign Corrupt Practices Act or acquitted. It's a good question. Here's what happened:

The jury acquitted him on Count 11 of the indictment -- the only substantive FCPA charge he faced. The jury convicted Jefferson on Count 1 of the indictment. It alleged three separate illegal conspiracies -- to solicit bribes, deprive citizens of honest services, and violate the FCPA. The jury's verdict form did not require it to specify which of the three illegal conspiracies the panel believed he engaged in. So Jefferson's conviction on Count 1 may or may not have included the jury's finding that he conspired to violate the FCPA. There's no way to tell without polling the jury and, as far as we know, that didn't happen.

So a guilty verdict will be recorded for Count 1 of the indictment. That means all three conspiracies alleged are presumed to be proven, including the FCPA-related charge.

Read prior posts about William Jefferson here.
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The Fugitive Files, Part III

When Suleiman A. Nassar was indicted in 1994 for violating the Foreign Corrupt Practices Act, he was a regional vice president of Lockheed International living near Geneva, Switzerland. His territory for Lockheed included Egypt, and in the late 1980s he landed a nice sale there -- three C-130 military cargo planes worth $79 million. But he won the business, the Justice Department said, by bribing a member of the Egyptian parliament with a million dollars. The DOJ indicted him, along with a co-worker and Lockheed itself.

Before issuing the indictment, the Justice Department spoke with Nassar, a Syrian-born, naturalized U.S. citizen. He assured prosecutors he would appear voluntarily in Atlanta, where the case would be filed. They in turn agreed not to have him arrested in Europe, which would have triggered a long extradition process. It was a gentlemanly arrangement but Nassar had other intentions. He never showed up in Atlanta and instead did his best to vanish.

He fled to his birthplace, Syria, a country with no extradition treaty or law-enforcement agreements with the U.S. Prosecutors said later they were "disappointed and frustrated" by Nassar's escape. But they didn't give up.

They tracked him to Damascus after Swiss police noticed that his wife was receiving mail from an address there. But how to get him back? As the prosecutors said, the relationship between America and Syria was, at best, "notoriously tenuous."

One thing the Justice Department could do was make his life difficult. When he sold two condos in Washington, D.C., prosecutors used the Federal Debt Collection Procedures Act ( 28 U.S.C. § 3001, et seq.) to block the international transfer of the sale proceeds. Then they used the ancient All Writs Act (28 U.S.C. § 1651)* to freeze Nassar’s worldwide assets -- including pension payments that eventually amounted to about $750,000. Prosecutors even threatened to freeze an inheritance his wife was about to receive, on the grounds that she might use the money to help her husband evade arrest.

The Syrians, meanwhile, did their part too. They arrested Nassar in late September 1994 under an Interpol warrant circulated by the U.S. They held him in jail until he made bail two months later. Once released, he stayed in Damascus -- the local police had impounded his passport -- and nothing further happened. The Americans couldn't extradite him, the Syrians wouldn't keep him locked up, and everyone assumed the case was stuck. But they were wrong.

In January 1995, Lockheed pleaded guilty to violating the Foreign Corrupt Practices Act. That generated global headlines, leading the Syrian government to take a new interest in their now-notorious FCPA fugitive. In March 1995, DOJ prosecutors were meeting with the Syrian justice minister. He chose that moment to deliver some dramatic news: Nassar had just been arrested "on charges of violating the Foreign Corrupt Practices Act, and that under the doctrine of extraterritoriality, the Syrian Government intended to try him in Damascus." As U.S. prosecutors said later, it wasn't exactly the trial they had in mind.

But by then Nassar was exhausted and scared. The global freeze on his family's assets, two arrests, a looming Syrian criminal trial, the prospect of years in a local prison -- he'd had enough. According to the DOJ's account, in July 1995 their man was "released from Adra Prison in Syria and escorted to the Damascus Airport where he boarded a plane for Frankfurt, Germany. There he was met by Special Agent Chris Amato of the Defense Criminal Investigation Service, taken to Atlanta, and placed under arrest."

Nassar agreed to plead guilty to violating the FCPA. By prior arrangement, he was sentenced to 18 months in prison and fined $125,000, to be paid from his frozen funds before they were released. His co-worker Allen Love pleaded guilty to lying to investigators and was fined $20,000. Lockheed's guilty plea to conspiracy to violate the FCPA's antibribery provisions resulted in penalties of $24.8 million.

A final note: Suleiman A. Nassar -- who almost became the first person to be tried outside the United States for violating the Foreign Corrupt Practices Act -- was the first person ever imprisoned in the U.S. for an FCPA offense.

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This post is adapted in part from an article called "The International Fugitive," by Martin J. Weinstein and Daniel A. Caldwell of the U.S. Attorneys' Office for the Northern District of Georgia. The article appeared in the USA Bulletin for December 1996, Volume 44, Number 6, which can be downloaded here.

Parts I and II of the Fugitive Files can be found here and here.

We're grateful to Cody Worthington, whose outstanding research was the basis for our series on FCPA fugitives.
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*The All Writs Act (28 U.S.C. § 1651) provides: (a) The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law. (b) An alternative writ or rule nisi may be issued by a justice or judge of a court which has jurisdiction.
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The Flesh-And-Blood Bond

The Chinese Communist Party's latest anti-corruption initiative will force officials to declare their assets and those of close family members. The new rules were announced at the close of the annual meeting of the party's watchdog, the Central Commission for Discipline Inspection. Extending disclosure to family members, the state news agency Xinhua said, is aimed at spouses and children who have left China.

Xinhua said "around 4,000 corrupt officials fled the country with at least $50 billion between 1978 and 2003, according to a Ministry of Commerce report." The China Daily (here), which usually reflects government policy, said: "Crooked officials often take bribes through companies run by the family in order to relocate their 'dirty' money." See our post, China's Runaway Bribe-Takers.

The government reported that "more than 880,000 officials were punished for misconduct between July 2003 and December last year." Among them were the former party chief for Shanghai, Chen Liangyu. He was sentenced to 18 years in prison for bribery and abuse of power in 2008. Zheng Xiaoyu, ex-director of the State Food and Drug Administration, was executed in 2007 for taking bribes and dereliction of duty.

The Central Commission said the ongoing corruption problems "damage the Party's flesh-and-blood bond with the people and seriously affect the solidity of the Party's ruling status."
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Dmitry Anatolyevich Has A Dream

The U.K. Guardian reported last week (here) that Russian President Medvedev (left) invoked the memory of Martin Luther King when he announced his intention to clean up corruption. "We are not used to saying 'we have a dream' in my country . . . but this is my political vision." He then told the Guardian's David Hearst and other journalists that corrupt officials are running Russia. "They have the power. Corruption has a systemic nature, deep historic roots. We should squeeze it out. The battle isn't easy but it has to be fought. I don't think we can achieve tangible results in one year or two. If I am a realist we could get good results in 15."

The Guardian noted that Mr. Medvedev hasn't explained how he'll tackle corruption. "Calls for reform have been frequently made before and to little effect," the paper said. "Most commentators seeing the president's performance were deeply skeptical about his ability to deliver."

The Guardian is right -- the country's history of reform isn't encouraging. Eric Hoffer once called Russia "a country that cannot change." Those are bleak assessments to be sure. Still, we're not ready to write off Mr. Medvedev and his dream just yet.

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Something's fishy. Corruption news from Singapore? There isn't much. The country is among the world's cleanest, ranking 4th on the Corruption Perception Index (only Denmark, New Zealand and Sweden are ranked higher, all sharing the top spot).

But the Straits Times reported a bribery story that has lots of local flavor:

SINGAPORE, September 16 -- Top chefs from several popular Chinese restaurants -- including those from five-star hotels here -- have been hauled up in connection with an ongoing corruption probe.

The investigations involve whether the chefs were taking kickbacks to buy seafood products such as shark's fins from a [local] supplier.

Sources told the Straits Times that the Corrupt Practices Investigation Bureau (CPIB) called up more than 20 chefs for interviews earlier this month. . . . Among those called up was one from Four Seasons Hotel. . . .

Industry sources said the supplier at the heart of the investigations . . . deals mainly in abalone and sea cucumber.

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Words we like. From George Orwell's 1946 essay, Politics and the English Language:

I am going to translate a passage of good English into modern English of the worst sort. Here is a well-known verse from Ecclesiastes:

"I returned and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all."

Here it is in modern English:

"Objective considerations of contemporary phenomena compel the conclusion that success or failure in competitive activities exhibits no tendency to be commensurate with innate capacity, but that a considerable element of the unpredictable must invariably be taken into account."

This is a parody, but not a very gross one.
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We Get It

Lawyers are trained to quibble and criminal defense lawyers do it best. After all, their job is to create reasonable doubt. So it's no surprise that when talking about the Foreign Corrupt Practices Act, they say it's complicated, technically challenging and obscure, poorly drafted and badly organized. But don't believe it. There's no evidence in the record that judges or juries have any trouble understanding the FCPA. Just the opposite.

Case in point: U.S. v. Gerald and Patricia Green. Judge George Wu's final jury instructions show just how simple the FCPA's antibribery provisions really are. His words are neat, clear and concise. All that's missing is the ambiguity lawyers like to talk about. (The instructions refer to "an instrumentality of interstate commerce," a pre-1998 holdover discussed here and here.)

Seeing Judge Wu's complete FCPA instructions should help dispel the idea that the law is shrouded in mystery. It's not. That's one reason why there hasn't been an acquittal in an FCPA trial since 1991. Juries get it. Which means anyone who's completed a typical compliance training program has no excuse for not understanding the FCPA.

Here's what Judge Wu said:
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Foreign Corrupt Practices Act

One of the alleged objects of the conspiracy charged in Count One of the Indictment is a violation of the Foreign Corrupt Practices Act (henceforth "FCPA"). In addition, Counts Two through Ten charge both Defendants with nine separate FCPA violations. See paragraph 26 of the Indictment for a description of each of the FCPA counts.

A FCPA violation is described in 15 U.S.C. § 78dd-2(a) as follows:

It shall be unlawful for any domestic concern . . . or for any officer, director, employee, or agent of such domestic concern . . . , to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to--

(1) any foreign official [or]

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[(3) any person, while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to any foreign official . . .]

for purposes of -

(A)(i) influencing any act or decision of such foreign official in his official capacity, (ii) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper advantage; or

(B) inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality,

in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person . . .

15 U.S.C. § 78dd-2(g) (2)(A) makes it a crime for a person to "willfully violate" Section 78dd-2.

Elements Of A FCPA Violation

To establish that a Defendant violated the FCPA, the Government must prove each of the following seven elements beyond a reasonable doubt:

First, that Defendant was a "domestic concern" or an officer, director, employee or agent of a domestic concern;

Second, the Defendant made use of the mails or any means or instrumentality of interstate commerce;

Third, at which time the Defendant was acting "corruptly";

Fourth, when the Defendant authorized, offered to pay, or made a gift or payment of anything of value to a foreign official or to any person (knowing that all or a part of such gift or payment would be offered or given directly or indirectly to a foreign foreign official);

Fifth, for the purpose of (a) influencing any act or decision of such foreign official in his official capacity, (b) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, or (c) securing any improper advantage;

Sixth, the gift or payment was authorized or made to assist the domestic concern in obtaining or retaining business for or with (or directing business to) any person; and

Seventh, the Defendant acted willfully.

A "domestic concern" means any individual who is a citizen or resident of the United States and / or any corporation, partnership or business entity which is organized under the laws of a State of the United States or which has its principal place of business in the United States.

A "foreign official" means any officer or employee of a foreign government or any department, agency or instrumentality of the foreign government; or any person acting in an official capacity or on behalf of any such foreign government, department or agency.

The term "interstate commerce" means trade, commerce, transportation or communications among the several States of this country, or between any foreign country and any State, or between any State and any location outside of that State. The term also includes the use of a telephone or other interstate means of communication or any other interstate instrumentality, such as fax transmissions, e-mail correspondence and wire transfers of funds between persons in different States or countries.

An act is "corruptly" done if done voluntarily and intentionally, and with a bad purpose or evil motive of accomplishing either an unlawful end or result, or a lawful end or result but by some unlawful method or means. The term "corruptly" in FCPA is intended to connote that the offer, payment, or promise was intended to induce the recipient to misuse his or her official position.

A violation of the FCPA is "willful" if: 1) the Defendant's actions are intentional and not the result of an accident or mistake, and 2) the Defendant knows that his or her actions are in some way unlawful. As to the second point, the Defendant does not have to be aware of the existence of the FCPA itself, but the Defendant must have proceeded with the knowledge that he or she was doing a "bad" act under the general rules of law, doing an act with a bad purpose, or taken the action without any ground to believe that it was lawful.
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Download a copy of the specific jury instructions in U.S. v. Green here.

Download a copy of the March 11, 2009 second superseding indictment in U.S. v. Green here.

View prior posts about the Greens here.
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The Bongo System

The New York Times' Adam Nossiter has written a terrific article about kleptocracy and corruption in Gabon (here). Here's how his account begins:

LIBREVILLE, Gabon — In the airport duty-free store, the wine is upward of $400. The service at the fancy French restaurants in the chic Louis district is immaculate, and at the luxury hotel on the sea the call girls dress like fashion models.

The futuristic government palaces on Omar Bongo Triumphal Boulevard, with their flying-saucer and rocket-ship outcroppings, marbled interiors and expanses of plate glass, would make the pedestrian feel humble, if there were any. It is almost as if you could be in a prosperous city in Texas.

But you are in Gabon, and behind the late ruler’s palaces, which line the wide empty boulevard, are shacks and shanties stretching to the horizon, dirt roads and street vendors eking out a living selling cigarettes and imported vegetables. Most live on less than $2 a day in this little Central African country, rich in both oil and poor people. Evidence of the gulf between the haves (Mr. Bongo’s extended clan) and the have-nots (everybody else) is always just around the corner.

This is the late Mr. Bongo’s legacy: Libreville as a pop-up book representation of his regime of “ill-acquired goods,” as the French good-government activists who sued him last year call it.

The “Bongo system,” as people here refer to it — forsaking roads, schools and hospitals for the sake of Mr. Bongo’s 66 bank accounts, 183 cars, 39 luxury properties in France and grandiose government constructions in Libreville — is etched in the streets of this languid seaside capital, where he ruled for 41 years, and also in the minds of its inhabitants. . . .

In June we reported President Bongo's death. He had ruled the country since 1967. When he died of a heart attack at 73, he was the longest-serving head of state on the African continent. A month earlier, our post C'est Magnifique! reported a French investigation into how President Bongo and two other African rulers had managed to buy numerous luxury homes in posh Paris neighborhoods and along the Riviera.

Gabon ranked 96th on the 2008 Corruption Perception Index, tied with Benin, Guatemala, Jamaica, Kiribati and Mali. On the 2008 Freedom of the Press World Ranking, it ranked a dismal 153rd.

In March we reported the civil lawsuit filed against President Bongo in Gabon by Marc Ona Essangui, a 45-year-old Gabonese anti-corruption campaigner. Ona Essangui, who's confined to a wheelchair, claimed damages after being stopped from leaving the country four times last year, once on route to an anti-corruption conference in New York. In December 2008, he was arrested and jailed for ten days, charged with possessing a seditious document. It turned out to be an open letter to President Bongo that accused his government of mismanagement and corruption.
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The Press v. Corruption

In its landmark 2002 study, The right to tell: The role of mass media in economic development (here), the World Bank said a free press contributes to cleaner governments -- and to better education, improved public health, lower infant mortality rates, and higher incomes. "Secrecy is the bedrock of persistent corruption," it said, "which undermines confidence in democratic governments in so much of the world. As the expression goes, sunshine is the strongest antiseptic."

The correlation between press freedom and corruption is not perfect but apparent. Here, for example, are the best-ranked countries on Freedom House's 2008 Freedom of the Press World Ranking. In parentheses are the countries' rankings on the 2008 Corruption Perception Index:

Finland (6)
Iceland (7)
Denmark (1)
Norway (14)
Belgium (18)
Sweden (1)
Luxembourg (11)
Andorra (no CPI rank)
Netherlands (7)
New Zealand (1)

Here are the countries that are worst-ranked for press freedom and their CPI rankings:

Iran (144)
Equatorial Guinea (171)
Zimbabwe (166)
Belarus (151)
Uzbekistan (166)
Cuba (65)
Eritrea (126)
Libya (126)
Turkmenistan (166)
Burma (178)
North Korea (no CPI rank)

Of the 195 countries and territories in Freedom House's latest press-freedom survey, 72 were rated as free, 59 as partly free, and 64 as not free. In terms of population, the survey found that only 18 percent of the world’s people live in countries that enjoy a free press, while 40 percent have a partly free press and 42 percent have a not-free press.
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No Hollywood Ending

An LA jury needed not days but hours to convict the husband-and-wife movie producers of violating the Foreign Corrupt Practices Act. They were also found guilty on related charges, including conspiracy, money laundering, and tax cheating. Gerald Green, 77, and Patricia, 52, are facing at least ten years behind bars and maybe a lot more for bribing a Thai official in exchange for contracts to produce the Bangkok Film Festival.

The trial's tragic outcome shouldn't surprise anyone. There hasn't been an acquittal in an FCPA prosecution since 1991. Not one. That's why comments from Patricia Green's lawyer are hard to understand. Marilyn Bednarski told the LA Times here, "To me it’s a case of circumstantial evidence . . . the people of Thailand were not victimized in any way" because the Greens provided "top notch services." Really?

Gerald Green's lawyer, Jerome Mooney, was more in touch. The DOJ used the case, he said, partly to send a warning to the entertainment industry: clean up the way you deal with "community relations" in foreign countries, or else. "We understand the government taking a shot across the bow of Hollywood," Mooney said. "We just wish the shell hadn't landed on our clients' boat."

From the convictions this year of the Greens, Frederic Bourke and William Jefferson, and those from prior years of David Kay, Douglas Murphy and David Mead, and all the prosecutions and guilty pleas in between, here are some things that every FCPA defendant should keep in mind before their trial starts:

Juries hate graft. FCPA cases are about bribes to corrupt foreign officials. They're about sophisticated and often wealthy people looking for shortcuts, hoping to subvert foreign governments for personal or corporate gain. Wheeling and dealing in exotic places. Flashing cash and pulling strings. Juries lap it up. As we've said before, even if the government's evidence isn't rock solid on all the elements of an FCPA offense, the jury will still get the picture that people stepped over the line of acceptable business behavior. And they'll convict.

There are clouds of witnesses. Forget lone wolves and rogue employees. Foreign bribery is usually a team effort. When the government gets a whiff of the plot, it hauls in everyone -- from those who might have had a hand in it to anyone who could have overheard talk at the water cooler. If it's early in the investigation, the bit players can be persuaded to turn, to become the government's cooperating witnesses or confidential informants. Supporting actors are given immunity or offered the hope of lighter sentences. So they sing about their bosses, colleagues, friends. They have extra incentive if they blame the aforementioned for dragging them into the criminal activity.

Evidence is everywhere. Bribes have to be planned, funded, paid, and covered up. There's always someone on the receiving end, so the complications multiply. It all takes a lot of work and usually leaves behind a trail that's easy to find and follow. Phony contracts and dummy invoices, hot money bouncing from bank to bank, fake agents and distributors, shell companies as fronts, two sets of books, and so on.

Show and tell. These days the government is likely to show up for trial with audio tapes of the accused discussing the bribes or videos showing the actual handover of cash. "Wearing a wire" once meant strapping to your torso an awkward piece of electronic gear the size of a croissant. Not any more. A cell phone on the table can be an open mic. A spy pen in the breast pocket can capture or broadcast sound and pictures. Scary stuff. And once the feds have tapes, they may not even need the cooperating witnesses or informants at the trial.

Related charges a-plenty. In foreign bribery cases, the government might start with FCPA charges. But remember: bribes to foreign officials need to be planned, funded, paid, and covered up. So there's usually a conspiracy, money laundering, traveling to commit the offense, fraud and obstruction in the cover-up, and tax-cheating to boot. What a mess. The government can throw a lot of mud at the wall. If some doesn't stick, so what? Prosecutors can drop weak charges later and plow ahead with the rest.

Examples: Frederic Bourke was convicted of conspiracy to violate the FCPA and a Travel Act offense, but not the FCPA itself. William Jefferson was acquitted of a substantive FCPA charge but found guilty of conspiracy to violate the FCPA, soliciting and taking bribes, depriving citizens of honest services, money laundering and racketeering, and conspiracy to solicit bribes. Gerald Green beat the obstruction rap -- the government ended up dropping the charge -- but he and his wife were convicted of conspiracy to violate the FCPA, eight violations of the FCPA and seven counts of money laundering. Mrs. Green was also found guilty of two counts of falsely subscribing a U.S. tax return.
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Not everyone accused of violating the FCPA is guilty. And certainly those accused and awaiting trial are presumed innocent unless and until found guilty in a court of law. But with no acquittals in an FCPA trial since 1991, defendants and their counsel should have their eyes wide open about their chances in court.

View prior posts about the Greens here.
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