A company learns of potential legislation that will negatively affect its business. A company representative reportedly begs a government official (who heads a key committee that will decide the fate of the legislation) to vote in a way that serves the company's interest and the company otherwise spends millions to seek to influence the legislative body. The government official reverses his prior position and votes in a way that serves the company's interest. One month later, the company's CEO and the government official appear at a event in which the company announces it is making a $30 million charitable donation, $11 million of which will benefit schools in the government official's district, the largest gift ever to the city's schools.
Businesses are prohibited from making campaign contributions to a government official. So businesses give money to a foundation set up by the government official's wife months after the official took office. Even though the charity is named and led by the official's wife, the government official is pictured alongside his wife on the corporate solicitation page of the charity's web site and the official's chief fundraiser is listed as the charity's treasurer.
A prudent FCPA practitioner would immediately see the “red flags;” counsel the companies at issue to conduct a lengthy and expensive internal investigation as to the conduct at issue and related conduct; and – mindful of the enforcement agencies guidance and cognizant of the carrots and sticks they posses – likely suggest voluntarily disclosure of the investigative findings.
The government officials in the above real-life scenarios were not “foreign officials” – they were U.S. government officials!
See here for the New York Times story on General Electric's tax exposure and its interactions with Representative Charles Rangel.
See here for the New York Times story on Louisiana governor Bobby Jindal and his wife's charity.
Scrap those internal investigation plans, forget about voluntary disclosure, and slim chance there will be an enforcement action. Nobody said our system was perfect, but that is just how the system works some will say.
But why should corporate interaction with a “foreign official” be subject to greater scrutiny and different standards of enforcement than corporate interaction with a U.S. official? After all, there is a U.S. domestic bribery statute (18 USC 201) with elements very similar to the FCPA.
Why do we reflexively label a “foreign official” who receives “things of value” from private business interests as corrupt, yet generally turn a blind eye when it happens here at home?
Is the FCPA enforced too aggressively or is enforcement of the U.S. domestic bribery statute too lax?
Ought not there be some consistency between these two statutes?
For prior posts on the FCPA's double standard see here, here and here.