#11163 - Corruption And Questionable Payments To Foreign Officials - International Law II

Corruption and Questionable Payments to Foreign Officials

1. Foreign Corrupt Practices Act (FCPA)

   1. Background

      1. Enforcement agencies:

         1. Dept. of Justice

         2. Securities and Exchange Commission (for civil enforcement against “issuers”)

      2. Sanctions: § 78ff

         1. criminal and civil fines (corporations)

         2. jail time (employees and officers)

         3. debarment from federal procurement contracting

      3. Private right of action: under RICO and other federal or state laws.

2. FCPA Legal Framework

   1. (1) Who

      1. any individual, firm, officer, director, employee, or agent of a firm and any stockholder acting on behalf of a firm making the payment, authorizing others to make the payment or conspiring with others to make the payment

         1. “Issuers” § 78dd-1 and SEC Act Sec. 30A

         2. “Domestic concerns” § 78dd-2

         3. Foreign companies or persons (in relation to corrupt payment in the US) § 78dd-3

   2. (2) Corrupt Intent

      1. The person making or authorizing the payment must have a corrupt intent, i.e., the payment must be intended to induce the recipient to misuse his official position to:

         1. induce the official to do or omit to do any act in violation of his or her lawful duty,

         2. to obtain any improper advantage, or

         3. to direct business wrongfully to the payer or to any other person.

            1. An act is corruptly done if done voluntarily and intentionally, and with a bad purpose of accomplishing wither an unlawful end or result, or a lawful end or result by some unlawful method or means.

   3. (3) Payment

      1. No need for the bribe to succeed

      2. Payment or promise, or offer of payment are all sanctioned

   4. (4) Recipient

      1. foreign officials

         1. officer or employee of a foreign government, public international organization, or any department or agency thereof, or any person acting in an official capacity

      2. foreign political parties or party officials

      3. candidates for foreign political office

   5. EXCEPTION

      1. Permissible Payments: “facilitating payments” for “routine governmental action”

         1. E.g., obtaining permits, licenses, or other official documents; processing governmental papers, such as visas and work orders; providing police protection, mail pick-up and delivery

   6. AFFIRMATIVE DEFENSES

      1. (1) payment was lawful under the written laws of the foreign country, or

      2. (2) the money was spent as part of demonstrating a product or performing a contractual obligation

   7. ALSO Conscious Avoidance Theory

      1. The defendant must be shown to have decided not to learn the key fact, not merely to have failed to learn through negligence. United States v. Kozeny (CB 733).

         1. A court can properly find willful blindness (i.e., conscious avoidance) only where it can almost be said that the defendant actually knew. United States v. Kozeny (CB 733).

            1. He suspected the fact, he realized its probability, but he refrained from obtaining final confirmation because he wanted in the event to be able to deny knowledge. United States v. Kozeny (CB 733).

            2. The FCPA states that “[w]hen knowledge of the existence of a particular circumstance is required for an offense, such knowledge is established if a person is aware of a high probability of the existence of such circumstance, unless the person actually believes that such circumstance does not exist.” United States v. Kozeny (CB 733).

3. International Conventions

   1. 1996 Inter-American Convention Against Corruption

   2. 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

      1. The convention obligates the Parties to criminalize bribery of foreign public officials, including officials in all branches of government, whether appointed or elected.

      2. This prohibition includes payments to officials of public agencies, public enterprises, and public international organizations.

         1. Only those operating on a purely commercial basis would be exempt.

      3. The parties must apply “effective, proportionate, and dissuasive criminal penalties” to those who bribe foreign public officials.

      4. The Convention requires that parties be able to seize or confiscate both the bribe and the bribe proceeds – the net profits that result from the illegal transaction – or to impose equivalent fines so as to provide a powerful disincentive to bribery.

      5. The Convention has strong provisions to prohibit accounting omissions and falsification, and to provide for mutual legal assistance and extradition.

      6. The Convention will cover business-related bribes to foreign public officials made through political parties, and...