Ex-KBR Boss Remains Free

Albert Jack Stanley (Credit PBS's Frontline)A federal judge in Houston last week postponed sentencing for Albert "Jack" Stanley until September 23, 2010. The former chairman and CEO of KBR pleaded guilty in September 2008 to a two-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and to commit mail and wire fraud. He's free on unsecured bail of $100,000 pending sentencing, which has been rescheduled a half dozen times.

Stanley, 66, admitted that from 1995 to 2004, he helped a joint venture that included KBR and its predecessors funnel $182 million in bribes to government officials in Nigeria. The bribes were paid in exchange for contracts worth $6 billion to build liquefied natural gas facilities. He was sentenced to 84 months in prison and a restitution payment of $10.8 million. The jail term is subject to review based on his cooperation.

KBR pleaded guilty in February 2009 to violating the FCPA. It paid a $402 million criminal fine and, with its former parent company Halliburton, $177 million in disgorgement. Two of KBR's partners in the TSKJ joint venture have set aside money for FCPA-related settlements. French company Technip in February this year disclosed a €245 million reserve, and Italy's ENI said a month later it has a €250 million FCPA-related provision.

Stanley's testimony is likely to be at the center of FCPA enforcement actions against Technip and ENI and two U.K. citizens accused of helping the joint venture bribe Nigerian officials. The DOJ rarely seeks final sentencing against important witnesses in white collar prosecutions until they have finished giving court testimony in related cases.

Jeffrey Tesler, 61, and Wojciech Chodan, 71, were indicted in February 2009 by a federal grand jury in Houston. They were charged with one count of conspiracy to violate and ten counts of violating the FCPA. The indictment also seeks forfeiture from them of more than $132 million, the amount of the bribes U.S. prosecutors say they arranged to pay on behalf of KBR and its partners to Nigerian officials. If convicted on all counts, they each face up to 55 years in prison.

London judges earlier this year said Tesler and Chodan should be extradited to the U.S. to face trial. After all appeals, it could be a year before their extraditions happen.

Under his plea agreement, Stanley can't ask for a reduction in his sentence based on his cooperation or the value of his testimony. But the DOJ can recommend a lighter sentence to the judge if it believes Stanley has fulfilled the conditions of his plea.

His sentencing was first set for November 20, 2008 before Judge Keith P. Ellison in Houston. Since then it has been reset six times, including last week's action.

Download the September 3, 2008 plea agreement in U.S. v. Albert Jackson Stanley here.

Two Sentencing Delays, Two Reasons

Photo by walknbostonSentencing for Gerald and Patricia Green was delayed again. Their next hearing is scheduled for April 1, 2010 at 8:00 am.

And Albert "Jack" Stanley's sentencing was rescheduled until May 26, 2010.

The reasons for the delays?

In the Greens' case, Judge George H. Wu in Los Angeles may be reluctant to adopt the government's view that Gerald Green, 76, should spend 20 or more years in prison. The judge has asked for memoranda analyzing sentences in prior cases. The Greens were convicted by a jury of FCPA and related offenses in September 2009.

After Jack Stanley's guilty plea in September 2008, the former KBR CEO was sentenced to seven years in prison. But the sentence is subject to review based on his cooperation with the government. His plea agreement is here.

Stanley's ex-company, KBR, resolved FCPA offenses in February 2009. And as reported, two other companies involved in the case are now discussing settlement with the DOJ -- Technip and ENI. Stanley's testimony about their roles could be important, so his sentencing isn't likely to happen until their enforcement actions are resolved. 

Stanley admitted he helped the four-party TSKJ consortium bribe Nigerian officials. In addition to KBR, Technip, and ENI, the fourth member was Japan's JGC Corporation (once known as Japan Gasoline Co., Ltd.). It hasn't disclosed any FCPA-related investigation or potential enforcement action resulting from its role in the consortium.

Sentencing Watch List

Let's update the list of individuals waiting to be sentenced for violating or conspiring to violate the Foreign Corrupt Practices Act. Since October, Frederic Bourke and William Jefferson have been sentenced and come off the list. Charles Jumet, Paul Novak, and Fernando Maya Basurto have entered guilty pleas are are added to it. Juan Diaz was to be sentenced on November 13 but the court reset his date. A reader also let us know that Si Chan Wooh, the former head of Schnitzer Steel's international subsidiary, who pleaded guilty in June 2007 to conspiracy to violate the FCPA, is scheduled to be sentenced next year in federal court in Oregon. So the list now stands at 18. 

Here they are:

Fernando Maya Basurto -- no date given.

Jim Bob Brown -- January 28, 2010

Joshua Cantor -- no date given.

Mario Covino -- January 25, 2010

Juan Diaz -- January 29, 2010

Thomas Farrell -- no date given.

Gerald and Patricia Green -- December 17, 2009

Charles Paul Edward Jumet -- February 12, 2010

Clayton Lewis -- no date given.

Joseph T. Lukas -- April 6, 2010

Richard Morlok -- January 25, 2010

Paul G. Novak -- February 19, 2010

Antonio Perez -- October 6, 2009. [No sentencing reported and no resetting of the sentencing date shown in the court docket.]

Si Chan Wooh -- April 26, 2010

 Leo Winston Smith -- December 18, 2009

Albert "Jack" Stanley -- February 24, 2010

Jason Edward Steph -- January 28, 2010

Let us know if we're still missing anyone or if other sentencing dates have changed.

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Words we like.  From Abraham Lincoln, October 1858:

It is the eternal struggle between these two principles — right and wrong — throughout the world. They are the two principles that have stood face to face from the beginning of time; and will ever continue to struggle. The one is the common right of humanity, and the other the divine right of kings. It is the same principle in whatever shape it develops itself. It is the same spirit that says, "You toil and work and earn bread, and I'll eat it." No matter in what shape it comes, whether from the mouth of a king who seeks to bestride the people of his own nation and live by the fruit of their labor, or from one race of men as an apology for enslaving another race, it is the same tyrannical principle.

Their Days Are Numbered

We count at least thirteen people waiting to be sentenced for violating or conspiring to violate the Foreign Corrupt Practices Act. Both offenses carry a prison term of up to five years. And for substantive offenses the fine can be up to $250,000 or twice the gross gain produced by the bribes. Those on our list either pleaded guilty or were convicted at trial. Their names (linked to posts describing their guilty pleas or convictions) are followed by current sentencing dates. The dates often slip, so we'll try to stay on top of any changes.

Who are they? A former congressman, a famous entrepreneur, husband-and-wife movie producers, c-level executives and top managers. Real people who are probably going to jail. Yes, the FCPA is serious, and the consequences of not complying with it can be tragic.

Here are the twelve men and one woman and their days of reckoning:

Frederic Bourke -- November 10, 2009.

Jim Bob Brown -- January 28, 2010.

Mario Covino -- January 25, 2010.

Juan Diaz -- November 13, 2009.

Gerald and Patricia Green -- December 17, 2009.

William Jefferson -- November 13, 2009.

Joseph T. Lukas -- April 6, 2010.

Richard Morlok -- January 25, 2010.

Antonio Perez -- October 6, 2009. [No sentencing reported and no resetting of the sentencing date shown in the court docket.]

Leo Winston Smith -- December 18, 2009.

Albert "Jack" Stanley -- February 24, 2010.

Jason Edward Steph -- January 28, 2010.

Let us know if there are others who belong on the list.

Halliburton May Face U.K. Charges

Halliburton disclosed Friday in its latest SEC filing that the U.K.'s Serious Fraud Office (SFO) may bring civil claims or criminal charges against it under various British laws. In February this year, Halliburton and its former subsidiary, Kellogg Brown & Root LLC, admitted paying Nigerian officials at least $182 million in bribes for contracts awarded between 1995 and 2004 to build liquefied natural gas facilities on Bonny Island, Nigeria. The companies agreed with the U.S. Justice Department to pay a $402 million criminal fine, with Halliburton paying $382 million of that amount. Halliburton also agreed with the Securities and Exchange Commission to be jointly liable with KBR to pay $177 million in disgorgement. See our post here.

In Friday's disclosure, Halliburton said the SFO is focused on M.W. Kellogg Limited (MWKL), a U.K. subsidiary of KBR. The DOJ's criminal information had said KBR tried to shield itself from the FCPA by using MWKL to hold ownership in TSKJ, a four-party joint venture that acted as the main contractor on the Bonny Island project. TSKJ's other members were Technip SA of France, Snamprogetti Netherlands B.V. (a subsidiary of Saipem SpA of Italy), and JGC Corporation of Japan. Each partner held about 25% of the venture.

Halliburton said a finding that it broke British laws could "result in fines, restitution and confiscation of revenues, among other penalties." The amount of final civil or criminal penalties, the company said, will depend on whether MWKL knew about and authorized any of the illegal payments, how much revenue resulted from the bribes, and "the level of cooperation provided to the SFO during the investigations."

The company said its role in the Bonny Island project is also being investigated by France, Nigeria, and Switzerland and could also result in third-party claims.

In February this year, a federal grand jury sitting in Houston indicted Jeffrey Tesler, 60, of London, England, and Wojciech Chodan, 71, of Maidenhead, England, for violating the FCPA. The two U.K. citizens allegedly helped KBR bribe Nigerian officials. The Justice Department unsealed the indictments after Tesler's March 5 arrest by British police acting at the request of U.S. authorities. Chodan hasn't been arrested but faces an outstanding U.S. warrant. The DOJ said it will try to extradite both men to the U.S. to stand trial.

Tesler, a lawyer in London, and Chodan, a former employee and consultant of MWKL, were charged with one count of conspiracy to violate and ten counts of violating the FCPA. They face up to 55 years in prison if convicted on all counts. The indictment also seeks forfeiture from them of more than $132 million -- the amount they allegedly paid to Nigerian officials as bribes. See our post here.

In the U.K., the SFO hasn't indicated whether it plans to take action against Tesler and Chodan or other individuals involved in the case. Tesler was identified in KBR's 2007 annual report. British and French authorities investigated him two years ago but didn't file any charges.

In September 2008, Albert “Jack” Stanley, 65, a former chairman and CEO of KBR, pleaded guilty to a two-count criminal information that charged him him with conspiracy to violate the FCPA and conspiracy to commit mail and wire fraud. He admitted that from 1995 to 2004, he helped TSKJ bribe government officials in Nigeria. Stanley was sentenced to seven years in prison and a restitution payment of $10.8 million. The sentence is subject to review based on his cooperation. See our post here.

Jack Stanley was a senior vice president of Dresser Industries, Inc. when it merged into Halliburton in September 1998. Dresser's wholly-owned construction subsidiary, Kellogg, was combined with Halliburton's construction subsidiary, Brown & Root, Inc., to form KBR. In November 2006, Halliburton spun off KBR, which became a separate publicly-traded company.

Under their agreement for KBR's spin off, Halliburton is obligated to pay most of KBR's fines and other penalties for actual or alleged violations of the FCPA and similar foreign laws committed before November 2006. Halliburton has said it gave the indemnity "[t]o enhance KBR's financial stability and solvency, making possible the separation of KBR . . . ."

KBR, Inc. trades on the NYSE under the symbol KBR.

Halliburton Company trades on the NYSE under the symbol HAL.

Halliburton Company's Form 10-Q filed October 23, 2009 (for the period ending September 30, 2009) can be downloaded here.

Read all our posts about Halliburton here.
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Catching Corrupt Lawyers, Part I

Two professional groups say they'll punish any lawyers involved in KBR's $182 million scheme to bribe Nigerian officials in exchange for contracts worth $6 billion.

A past president of the International Bar Association (IBA) visiting Nigeria last week reportedly "threatened to use its internal disciplinary mechanism to punish accordingly any of its members indicted in the scandal," according to a story in the Nigerian press (here). The report said the IBA "vowed that it would wield its big stick against any lawyer practicing in any part of the world found to have been involved or indicted in the Halliburton bribery scandal."

KBR (formerly part of Halliburton) pleaded guilty in February this year to violating the Foreign Corrupt Practices Act and agreed to pay a $579 million in penalties. And in September 2008, its former CEO, Albert "Jack" Stanley, pleaded guilty to FCPA and mail and wire fraud charges. He's cooperating with prosecutors and is scheduled to be sentenced on August 27, 2009.

But does the IBA really have a big stick? Not likely. It was created in 1947 as a sort of U.N. for lawyers. It claims voluntary membership of 30,000 individual lawyers and more than 195 bar associations and law societies around the world. That's impressive, and we know the group does some great work -- helping lawyers stay on top of issues, keeping in touch with each other, and protecting themselves in countries where they're vulnerable to political attacks and intimidation.

But the IBA wouldn't have jurisdiction to punish non-members. And even for members, suspension or expulsion from the organization looks like the only possible sanction.

The Nigerian Bar Association (NBA), on the other hand, is a mandatory organization, meaning anyone admitted to practice law in Nigeria must be a member. Mandatory bar groups are usually self-regulating and allowed to impose several layers of discipline on errant members. So it should have authority to suspend or disbar unethical local lawyers, and perhaps recommend prosecution of those found to have broken the law.

But even the NBA isn't getting far. In a local report, it said it's having "difficulty in moving against any of its members who might be involved in the scandal for now because the Federal Government is allegedly not transparent about the investigation and prosecution of indicted Nigerians in the scam."

Outside Nigeria, at least one lawyer involved with KBR faces prosecution. Jeffrey Tesler, 60, was indicted in February by a Houston grand jury for violating the Foreign Corrupt Practices Act. He was arrested by British police in March at the request of American authorities, who are trying to extradite him to stand trial in the U.S. They say the London lawyer was a middleman who handled or arranged many of the corrupt payments from KBR to Nigerian officials.

In Part II, we'll look at other FCPA enforcement actions involving lawyers accused of being on the wrong side of the law.
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KBR: Nigerians Tell Their Own Story

A new Nigeria-based publication called Next has just posted an article (here) naming some of the officials who took bribes from KBR and its TSKJ joint venture for the $6 billion Bonny Island LNG development project. The story by Dapo Olorunyomi and Mojeed Musiliku names three former presidents among the bribe takers, including Sani Abacha, Abdusalami Abubakar, and Olusegun Obasanjo.

The reporting appears to be based primarily on documents produced during U.S. and French investigations of KBR, TSKJ, Jack Stanley (KBR's former CEO) and Jeffrey Tesler, an alleged London-based KBR middleman. He was indicted earlier this year by U.S. authorities for violating the Foreign Corrupt Practices Act and is being extradited from the U.K.

KBR resolved FCPA charges with the Justice Department and Securities and Exchange Commission in February, agreeing to pay $579 million in penalties and disgorgement. Jack Stanley pleaded guilty last year to violating the FCPA and faces up to 7 years in prison and a fine of about $11 million. He and KBR admitted paying at least $182 million in bribes for contracts for the Bonny Island project.

Among the details in Next's story are these:

Having put the Train 1 and 2 contracts in the can, TSKJ turned its gaze on the Train 3 contract. For this, Stanley flew to Abuja again in the second quarter of 1997, with the sole mission of asking Mr. Abacha to recommend a trusted front man to collect his bribe.

Shortly after [Abacha] died on June 8, 1998, Mr.Tesler promptly erased him from the list of bribe beneficiaries, substituting him with the new helmsman, Abdulsalami Abubakar.

To keep the entire scheme on the rails, Stanley flew back to Abuja on February 28, 1999, asking Mr. Abubakar, to recommend a trusted front man to collect his bribe.

Another Nigeria-based publication, Vangard, last week carried an article (here) by Chudi Offodile, a former member of Nigeria's House of Representatives and Chairman of the House’s Public Petitions Committee from 2003 to 2005, where he was responsible for investigations. After spotting irregularities, he says his committee recommended dropping TSKJ and all its members from the Bonny Island project and other contracts in Nigeria. But, writes Offodile, he was continually stonewalled by high-level politicians.

He tells how his investigation got started and finally ended. He begins this way:

No one would have heard of the Nigeria LNG bribery scandal if not for Georges Krammer, former Director General of the French company, Technip [a TSKJ member]. Krammer was accused of paying 3 million euros in illegal commissions during investigations into Elf-Aquitane operations in Asia and Africa.

Krammer claimed the commissions were legal and in line with company's policy. Technip management disputed his claims and left him to face charges of misappropriating 3 million euros. Angered by this development, Krammer who had worked for Technip for 35 years, squealed. He went before Judge d’ Instruction Renaud Van Ruymbeke and told him how Technip’s commission payment system worked in Indonesia, Thailand and on the LNG Project in Nigeria.

Thus began the French investigation of the Nigeria LNG project with Renaud Van Ruymbeke in charge. The French investigation triggered off other investigations in Switzerland, the United States, and Nigeria. . . .

These two reports are unusual not only because of the details being disclosed. But also because both publications are reporting from inside Nigeria, in some cases about government officials still in power.
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The Case For More Compliance

The pressure these days to comply with the Foreign Corrupt Practices Act and other anti-corruption laws is coming from several directions at once. Last week we mentioned whistleblower hotlines as one example. But there are other reasons why it's harder than ever for companies to cheat and for bride-taking officials to hide their crimes. Here's a quick look at some of what's happening:

The internet. Hundreds of millions of people now have access to uncensored news, chat boards, social sites, blogs, email and short messaging, podcasts and the like. While plenty of the internet's so-called news is gossip, rumor and opinion, there are also some real scoops. Last year in China, for example, someone found a bag on the subway in Shanghai. In it were expense reports from a trip by 23 local officials who'd spent $94,000 of taxpayer money on a three-week USA "study tour. " The receipts showed that the real itinerary included Hawaiian beaches, a sex show in San Francisco, and casinos in Vegas. The finder published them anonymously, a few at a time, on the internet. As reported (here), the details spread "like wildfire across Chinese cyberspace."

The net isn't just for amateur sleuths. Powerful non-traditional news outlets have appeared online, backed by serious money and seasoned professionals. ProPublica is one of them. It's a privately funded, non-profit, independent newsroom led by Paul Steiger, the former managing editor of The Wall Street Journal. Its staff includes some of the best editors and investigative reporters in America. We've featured their work in posts about KBR's Jack Stanley (here) and Siemens (here).

A new virtual newsroom is called The Business of Bribes. It's a ten-week online project from Lowell Bergman and the Investigative Reporting Program at the UC Berkeley Graduate School of Journalism, along with PBS' Frontline. We mentioned Lowell Bergman in a 2007 post (here). He's a Pulitzer Prize-winning former producer of CBS' 60 Minutes. His new online project aims to go deeper into the investigation of international bribery -- how corrupt payments are hidden from sight, how public graft helps destabilize the developing world, and what the U.S. and other countries are doing to combat global corruption.

NGOs and public interest groups. They're able to exert enormous pressure on corporations and governments to be more accountable. Transparency International created the annual Corruption Perception Index, a handy measure of how well countries are doing in the fight against sleaze. You see the CPI everywhere now, and TI's message about it is always clear. Here, for example, is what TI said about crooked courts:

It is difficult to overstate the negative impact of a corrupt judiciary: it erodes the ability of the international community to tackle transnational crime and terrorism; it diminishes trade, economic growth and human development; and most importantly, it denies citizens impartial settlement of disputes with neighbors or the authorities. When the latter occurs, corrupt judiciaries fracture and divide communities by keeping alive the sense of injury created by unjust treatment and mediation.

Another NGO working to shine the light on corruption is Global Witness. It concentrates on graft linked to the exploitation of natural resources. In 2003, it was co-nominated for the Nobel Peace Prize for its work on conflict diamonds. Its latest report, Undue Diligence, names some major banks that it says have been complicit with corrupt regimes (Citigroup, Barclays, HSBC, Deutsche Bank). This is from the introduction of the 116-page report:

Now we are going to go on a journey, to the oil-producing countries of the Gulf of Guinea as well as to Central Asia, to witness the corrosive and devastating effects of banks being willing to do business with corrupt regimes. With each story, the effectiveness of the bank’s ethical standards, compliance with due diligence requirements, and regulatory action will be examined, as far as the available evidence permits. Many of the examples in this report raise serious questions about how well a bank really knew its customer, even if it had been able to tick the regulatory box to say it had done its due diligence; and about whether compliance with the letter of regulations that require identification of the customer is sufficient to prevent banks doing business that contributes to corruption.

Brave Officials. Perhaps inspired in part by the openness of the internet and the advocacy of the watchdog groups, younger people in developing countries are rejecting the old ways of bribery of corruption. In Nigeria, for example, Nuhu Ribadu, 49, was exposing government graft until he lost his job last year as head of the country's Economic and Financial Crimes Commission. In Kenya, John Githongo, 43, was permanent secretary for ethics and governance in the office of the president until one of his investigations took him too close to the president and his cronies. Githongo combines several modern anti-corruption roles -- journalist, founder and former head of Transparency International's Kenya office, and next-generation government official. We talked about him here. He and Ribadu are both in the U.K. now for their own safety. But it's a sure bet Africa and the world will be hearing more from them.

Add to the above the zeal of the United States, the OECD and others to enforce the anti-corruption laws, and you have a powerful case why companies everywhere should be improving their compliance efforts. Anyone who hasn't yet made it a priority to obey the letter and the spirit of anti-corruption legislation could well end up in tomorrow's spotlight -- for all the wrong reasons.
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On The Subject Of Resources

We've mentioned before Dan Newcomb's FCPA Digest, calling it the most definitive publicly-available catalog of FCPA prosecutions, enforcement actions and disclosed investigations. So it's great to see the release of the March 2009 version, available here.

This year, Philip Urofsky becomes editor-in-chief. He told us last week, "In this Digest, we entirely scrapped the previous Trends & Patterns, which had largely become a statistical update, and replaced it with a more analytical piece." The T&P section has always been a favorite of ours, and this year's new-and-improved version (available here) didn't disappoint.

About the prosecution of individuals, for example, it said:

More recently, there is a strong trend of actions against individuals being brought separately or even in advance of charges against their employers and then, in all likelihood, following classic prosecutorial strategy of working up the chain of command, using the individuals to build the government’s case against their superiors and eventually the company. In Willbros, the DOJ charged four employees over a two-year period, with two pleading in previous years (Steph and Brown) and an indictment being returned against two others (Tillery and Novak) in February 2008. Finally, in May 2008, Willbros Group and Willbros International agreed to a deferred prosecution agreement. Similarly, the DOJ entered into a plea agreement with the former CEO of KBR, Stanley, in 2008, well in advance of settling the matter with Halliburton/KBR in early 2009.

And concerning disgorgement, a topic we recently talked about here, it said:

A final trend and pattern worth noting is the SEC’s continued demand for disgorgement of ill-gotten profits in cases in which only books & records violations are charged, such as in the [oil for food] cases. Whether or not a false entry in a company’s books and records (or a failure to implement adequate internal controls) truly results in increased profits is open to question. To date, however, no FCPA defendant has publicly challenged the SEC on whether disgorgement is appropriate when the sole charge is false books and records. Prior to the ABB case in 2004, the SEC had never collected disgorgement in FCPA cases; since then it has sought it in virtually every case with only a few exceptions, such as Dow Chemical, Delta & Pine Land, Lucent, and Conway. In Tyco, the SEC collected $1 in ill-gotten gains (along with $50 million in penalties related to other violations). While this is an isolated example of the SEC seeking such nominal disgorgement, the case does underscore the overall policy of levying disgorgement sanctions in nearly all cases against issuers.

We spend a lot of time in the FCPA Digest. And whenever we turn to it, we're grateful for the hard work and generosity of founding-editor Dan Newcomb, Philip Urofsky and their entire team.
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Compliance Is The New Norm

Raymond Fisman, left, is a professor at the Columbia Business School. In a commentary last week in Forbes titled When Corruption Is The Norm, he had this to say about Morgan Stanley's compliance problems in China: "The . . . head office has taken the view that this was the rogue act of a rogue individual, and an internal investigation revealed that 'questionable activity was isolated to a discrete set of real estate transactions in China.' This is an unfortunate--yet all too common--reaction to revelations of corporate misdeeds."

Professor Fisman says the alleged bribery and corruption by Garth Peterson at Morgan Stanley wasn't deviant business conduct after all. Instead it was business as usual, not just at Morgan Stanley but at global companies everywhere. Siemens, he says, is another example of his thesis. His point is that our collective failure to see corruption as normal prevents us from dealing with it. "As long as the conversation focuses on catching deviants," he says, "we'll never have an open dialog on changing the norms that bear much of the responsibility."

But is he right? Are bribery and corruption everywhere, as Professor Fisman thinks, but kept hidden from view? Was Morgan Stanley's Peterson really a "typical banker put in a situation where bribe-paying was very literally the norm?"

Well, he's partly right. Anyone doing business globally will acknowledge that bribery and corruption are common in lots of countries. Nigeria, Kenya, China, Azerbaijan, Indonesia, Iraq, Kazakhstan, Pakistan, Bulgaria, Romania, Malaysia, Russia, Mexico -- they're well known as red-flag countries. But it doesn't follow that in all companies doing business in those countries, graft and sleaze are the norm. Yesterday over coffee, for example, a friend from the U.K. said, "As far as the FCPA is concerned, the battle for hearts and minds is over. Now everyone is concentrating on the tactics of compliance."

We agree. Most of the business people we know genuinely want to do the right thing. That wasn't always true. Not too long ago, executives and lawyers were still groaning about the uneven global playing field caused by the FCPA, and their view of compliance often ran from indifference to outright cynicism. But these days, company leaders and the rank-and-file usually want to comply. They get it -- graft anywhere is bad for everyone.

Beyond that, most people can see that flouting the FCPA is a fool's choice. Sarbanes Oxley raised the compliance bar. Today's public-company boards of directors have a zero-tolerance, no-excuses attitude toward illegal business tactics. Internal and external auditors are harder to fool -- really. And whistleblower hotlines are getting plenty of use, while FBI agents assigned to enforce the FCPA are always lurking. Even NGOs and the press are keeping a closer eye on overseas business practices.

Sure, enforcement around the world is uneven. Among the biggest economies, the U.K and Japan haven't distinguished themselves, although pressure is building as more OECD members enforce their overseas anti-corruption laws. And yes, graft will never be extinct; there's no shortage of corrupt officials, and some business people will take the crooked path no matter how much compliance training you give them. But companies tolerating bribery and corruption -- like the old Siemens -- can't keep it hidden anymore. And those individuals still passing bribes to foreign officials to land business are simply doomed. Just ask KBR's former star CEO, Jack Stanley.

Corruption may be the norm in plenty of countries. But the reaction we're seeing from companies these days to high levels of corruption isn't denial, as Professor Fisman suggests, but more and better compliance. And there's nothing wrong with that.
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