Graft Buster Enters French Politics

Eva Joly, a Norwegian-born former French magistrate, is running for the French presidency under the Green Party banner.

She became famous across Europe for being a fearless anti-corruption campaigner, even taking on former minister Bernard Tapie and Crédit Lyonnais bank.

Her best-known case involved French oil giant Elf Aquitaine. She uncovered fraud leading to criminal convictions of Elf’s top two executives and to the resignation of Roland Dumas, president of France’s Constitutional Court. She received death threats during the eight-year investigation.

She moved from Norway to France at 18. After working her way through night law school and then practicing law, in 1990 she became an investigating magistrate in Paris.

She's also worked for the Icelandic government, helping it uncover white collar crime that contributed to the country's financial collapse.

Last year, Joly, 66, was elected as a French member of the European Parliament. Now she wants to run for president of France in the 2012 elections.

She told the France24 news site: “I am going into politics because I recognise the limitations of voluntary action … I have a strong desire to improve relations between the developed and developing world. I want to change power structures within society. I am desperate to see a more just and more united society.

*     *     *

Why say it? It's fashionable these days for critics -- we won't name them -- to say there's no evidence the FCPA has reduced bribery. But saying there's no evidence of crimes not committed isn't exactly, you know, conclusive of anything.

Then again, there's plenty of evidence of less bribery because of the FCPA at companies like Siemens, BAE, Daimler, KBR, ABB, Baker Hughes, Willbros, Chevron, and so on. For us, that's the evidence that counts.

*    *   *

In whose interests? Great post today from Kevin LaCroix at the D&O Diary -- Do Defendant Companies Financially Underperform Following Securities Lawsuit Settlements? 

The Enforcement Gap

By Nancy Z. Boswell and Robert N. Walton, Transparency International-USA

Transparency International’s sixth annual report on enforcement of the OECD Anti-Bribery Convention, released last week, paints a mixed picture. On the positive side, it shows active enforcement in seven of the 36 countries evaluated, including the U.S, Germany, Italy and Norway. The U.K. even made the cut, despite the disappointing news last month that it is postponing the implementation of its sweeping new Bribery Act until April 2011. 
 
Far less encouraging is the report’s finding that there is only moderate enforcement in nine countries and little to none in the remaining 20. This latter undistinguished group represents 15% of world trade and includes G8 members Canada, Japan and France.  
 
The numbers speak for themselves, but the underlying question is why, after a dozen years, so many governments that committed to criminalize the use of bribes to get business have failed to live up to that promise. One can only conclude many of them have decided that it is not in their economic interest to do so. Motivations may vary, but these governments may see greater value in promoting the international commercial success of their country’s enterprises. If that means ignoring the Anti-Bribery Convention, so be it.
 
This disheartening conclusion is ominous for the countries where bribes continue to be paid, and for fair competition for those who observe the rule of law. There can be little doubt that inconsistent enforcement will allow bribery to continue unabated and may well undermine support of those countries that have followed their commitments with action. Likewise, it will hinder efforts to ensure that important emerging exporters –- notably China, India and Russia –- agree to and impose foreign bribery constraints on their companies. 
 
Given the serious and damaging consequences of bribery in countries that can least afford it, the OECD, the governments that are complying with the convention, and those of us in the anti-corruption movement need to put more pressure on lagging countries to step up to their commitments and actively enforce the convention. Time is running out.

Nancy Boswell is the President and CEO of Transparency International- USA (TI-USA) and a former member of the Board of Directors of Transparency International (TI). She can be contacted here.

Rob Walton is TI-USA's Senior Policy Director for Private Sector Initiatives. He can be reached here.

A Prince Of Persia

Iran has all the ingredients to be an FCPA minefield. It's big -- 66 million people in an area about the size of Alaska -- and it's the world's 6th largest oil producer. On top of that, it has a corruption problem, ranking near the bottom of the latest Corruption Perception Index -- 168th, tied with Burundi, Equatorial Guinea, Haiti, and Turkmenistan.

But although the country routinely makes world headlines, it's hardly mentioned on the FCPA Blog. Why not?

Iran has been off limits to U.S. companies from around the time the FCPA became law in 1977. The U.S. first imposed sanctions on Iran in 1979. After the takeover of the American embassy in Teheran, President Carter banned  imports of Iranian oil and blocked all transfers of property in the U.S. owned by the Central Bank and Government of Iran. In 1980, he embargoed all U.S. exports to and imports from Iran, and stopped U.S. citizens from traveling or conducting financial transactions there.

Some of those sanctions were loosened after the U.S. hostages were released. But in 1987, President Reagan imposed a new embargo on Iranian-origin goods and services. And in 1995, after Iran was labelled a sponsor of international terrorism, President Clinton again banned U.S. involvement with Iran's oil and gas development. He later confirmed that "virtually all trade and investment activities with Iran by U.S. persons, wherever located, are prohibited," according to the Treasury Department. With some small adjustments, that's how things stand today.

Criminal penalties for violating the U.S. sanctions are stiff -- fines up to $1,000,000 and prison for up to 20 years, four times harsher than the FCPA's penalties.

Even without America's business, Iran was the focus of an important FCPA case. In 2006 the Norwegian company Statoil was hit with DOJ and SEC enforcement actions for bribery and books and records violations. Statoil in 2002 had paid $5.2 million in bribes to a modern-day prince of Persia -- the son of a former president of Iran, and promised to pay $20 million more for access to the giant Pars oil field. The company eventually self-disclosed the payments and paid $3 million to Norwegian prosecutors and $21 million in penalties and disgorgement to the DOJ and SEC (with credit for the $3 million it paid back home).

That was the first FCPA criminal enforcement action against a foreign company -- Statoil is an "issuer," trading on the NYSE under the symbol STO. Its three-year deferred prosecution agreement with the DOJ expired in November 2009.

We could be hearing more FCPA news involving Iran. Last week the Wall Street Journal said the SEC's enforcement and corporation finance divisions have sent letters to several pharmaceutical and energy companies that work in Iran, as well as in Cuba, Sudan, and Syria -- which all appear on the State Department's list of countries that sponsor terrorism. (Some medicines and medical devices are licensed for export from the U.S. to Iran.) The letters reportedly asked the companies, which haven't been named, what they are doing in the four countries to ensure compliance with the FCPA.

Siemens Announces €1 Billion Reserve

Siemens AG said yesterday that it has reserved €1 billion in fiscal 2008 "in connection with the settlement being sought by the company and with authorities in Germany and the United States." The short statement also said, "This current estimate is based on the status of ongoing discussions being held between the company and authorities in Germany and the U.S. The company will make no further comments on the ongoing proceedings."

The statement is available here.

The amount of the reserve for a possible settlement with U.S. authorities is lower than expected.

Siemens has admitted that its questionable payments around the globe amounted to at least €1.3 billion. In addition to Germany and the U.S., the company faces corruption investigations in Switzerland, Italy, Greece, China, Hungary, Russia, Norway, and Indonesia.

Earlier this year, Siemens said it plans to sue nearly a dozen former executives, including two former chief executives, for failing to prevent the company's corrupt practices. It also agreed last year to pay a fine in German proceedings of €201 million.

Siemens had hoped to settle the U.S. proceedings by late 2007. Its talks then with U.S. authorities were apparently derailed when the company found that the scope of its global corruption was more extensive than originally disclosed.

View our prior posts about Siemens here.

.

Trouble For Siemens In South America

Scandal-plagued Siemens now faces possible charges of public corruption in Argentina. Police in Buenos Aires raided Siemens' office there in connection with a bribery investigation. The United States, Greece, Italy, China, Hungary, Indonesia and Norway are also investigating whether Siemens broke anti-corruption laws.

Here's a dispatch from the August 16, 2008 online edition of Deutsche Welle:

Argentine authorities on Friday searched the Buenos Aires offices of German technology giant Siemens, in an investigation of the payment of bribes during the 1989-99 government of former Argentine president Carlos Menem.

German media reported in recent days, based on court documents, that Menem allegedly received a direct payment from Siemens of $16 million (10.9 million euros). The firm reportedly expected to pay $100 million in bribes to Argentine officials including Menem and the then ministers of finance and interior.

Siemens' Argentine headquarters, located near the historic Plaza de Mayo in central Buenos Aires, were searched in an effort to secure evidence on an order from Judge Ariel Lijo.

Former Siemens officials claimed -- in the context of a broader investigation against the German multinational firm -- that the company paid bribes in Argentina. German courts forwarded the information to authorities in Buenos Aires.

Siemens in the 1990s was seeking a $1.26-billion contract to digitalize Argentine identity documents and other services, the daily Sueddeutsche Zeitung reported. The contract was signed under Menem in 1998 but cancelled in 2001 by his successor, President Fernando de la Rua.

Later, Siemens allegedly paid further bribes until 2004 -- under former Argentine president Nestor Kirchner, husband of current President Cristina Fernandez de Kirchner -- in an effort to have the contract restored.