Acting Assistant Attorney General Ken Blanco spoke yesterday at FCPA/OECD Anniversary Conference at the NYU School of Law. His remarks made clear not only the importance of enforcement of laws against bribery and corruption but also internationalization of this fight, led by the efforts of the Organization for Economic Cooperation and Development (OECD) and the US government. His remarks, taken together with a speech the previous day by Rod Rosenstein, should make clear to all that no matter how wayward Donald Trump’s misconceptions of the Foreign Corrupt Practices Act (FCPA) might be, the professionals in the US government understand it is in the interest of the United States to continue to not only be a part of this fight but to lead it as well.
The event was held around the 40th birthday of the FCPA and 20th anniversary of the OECD Anti-Bribery Convention. Both acts have become tied together for it was the US that led the initial fight against bribery and corruption by passing the FCPA in 1977 and the US once again facilitated the passage of the Anti-Bribery Convention. Now there are some forty-three nations which are signatories to the Anti-Bribery Convention. Each signatory country has passed laws that criminalize the bribery of foreign officials. Through these “international norms created by the Convention, many other countries have passed similar legislation and more are in the process of doing so. This international approach has dramatically advanced our collective efforts to uncover, punish and deter foreign corruption.”
Blanco and the Department of Justice (DOJ) have increasingly recognized that bribery and corruption are not simply a business issue and the fight has expanded far beyond the place it began when the FCPA was passed in 1977. He stated, “Bribery threatens national security, good governance, sustainable growth and development, and democratic processes. It undermines the rule of law and breeds distrust and instability. It facilitates organized crime and empowers authoritarian rulers and can destabilize entire regions. It corrodes public trust in countries rich and poor, inflicting particular harm on emerging economies. Corruption punishes honest and ethical companies, unfairly and unjustly rewarding those companies willing to break the rules to get ahead, hurting our economy, businesses, investors, the ability of people to advance in life, harming society as a whole.”
American businesses have come to understand that the FCPA protects them as a class from not only unfair competition but also unscrupulous foreign officials or similarly challenged state-owned enterprises. One need only recall Secretary of State Rex Tillerson schooling Trump that Exxon did not engage in bribery and corruption to obtain lease concessions to see what a powerful tool the US had become for US businesses.
Yet the Anti-Bribery Convention also recognizes the power of such anti-corruption laws. Blanco noted, “The commitment of the signatories to the Convention is grounded in the recognition of these harms and a collective desire to stand firm against them, united in our efforts. But what makes the OECD Convention so unique, and so effective, is that it not only requires its signatories to affirm their commitment to fighting transnational corruption, or even that they pass laws to do so, but it also encourages cooperation and a collaborative approach. Each of the signatories to the Convention has agreed to abide by strong provisions for mutual assistance, peer evaluation, and systematic monitoring. In particular, the comprehensive peer review process motivates countries to ensure the highest level of compliance with the Convention and to take concrete action to fight foreign bribery and corruption.”
Blanco went on to provide three concrete examples of this international cooperation. The first was the Odebrecht case. It “paid an unparalleled amount of bribes to high-level officials in a dozen countries to secure billions of dollars’ worth of projects around the globe. The United States, Brazil and Switzerland were able to achieve the largest global fine ever imposed in a corruption case.” Approximately 80 people have been charged in connection with the case so far and the “company pleaded guilty in the United States and is required to cooperate with the respective countries’ ongoing investigations of individuals, as well as to retain an independent compliance monitor for three years.”
Blanco noted that through the countries’ cooperation they not only “assisted one another in gathering evidence and building the case, but made sure to credit the fines and penalties paid to each country, rather than imposing duplicative fines and penalties. This ensures fairness to the companies and provides the right incentives for companies to cooperate fully with the relevant jurisdictions implicated in the case.”
The second matter is Rolls Royce Ltd (RR), which interestingly is still ongoing, even this week. RR “paid about $170 million in U.S. penalties as part of an $800 million global resolution to investigations in three countries – the United States, the United Kingdom and Brazil.” Earlier this week the DOJ announced it had secured four guilty pleas and issued one indictment for individuals involved in the company’s bribery and corruption schemes for one project.
September brought the resolution of the Telia Company FCPA violations. Here the US, Netherlands and Sweden secured another “large-scale global corporate settlement against Stockholm-based telecommunications company Telia. That case followed on the heels of the 2016 settlement against Amsterdam-based Vimpelcom; both of these companies admitted to paying over $440 million in bribes to a corrupt official in Uzbekistan.” Swedish prosecutors have brought individual criminal charges against the former President of the Company as well as the former Country Manager and Regional Vice President (VP).
Yet Blanco also recognized there are new and additional tools which the US and other countries and are beginning to deploy. He specifically mentioned the DOJ’s “Money Laundering and Asset Recovery Section’s Kleptocracy Asset Recovery Initiative, which is specifically designed to target and recover the proceeds of foreign official corruption that have been laundered into or through the United States, has proven to be an incredibly valuable tool to fight corruption.” Blanco called the results of this initiative “outstanding”. He pointed out that “Just this year, additional complaints were filed in that case, bringing the total amount that we are working to recover to well over $1.7 billion.”
Blanco also pointed out that other international partners are on the horizon, ready to pick up the mantle of this international fight against bribery and corruption. He specifically mentioned Argentina which, he commented, he had been “meeting with the highest levels of the Macri government, and with their Chief Justice of the Supreme Court. For the last year, we have been working closely with the Argentines in the areas of corruption, organized crime and money laundering. I am impressed with their strong commitment and the actions they are taking, towards rooting out corruption in all its forms. We share a common commitment to continue working closely together.”
When you couple Blanco’s speech with the remarks of Rod Rosenstein, also made at the same conference, where he tied the intersection of corruption, money-laundering and international investigations to US leadership in prosecutions, you can clearly see that FCPA enforcement is not going away; largely through the efforts of the DOJ and Securities and Exchange Commission (SEC) to foster the OECD Anti-Corruption Initiative and to train other international investigators and prosecutors in anti-corruption prosecutions. These efforts saw significant payoffs last year and will continue to do so in the future.
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© Thomas R. Fox, 2017