I know I said my post last Friday was the conclusion of my series on the Mobile TeleSystems PJSC (MTS) Foreign Corrupt Practices Act (FCPA) settlement but the more I thought about, I had one more important thing to say about this case so today I pen a denouement to last week’s five-part blog post series on the matter. In this post, I want to address why it is incumbent on both the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) to continue to lead the international fight against bribery and corruption. It is leveling the playing field.

There are commentators who say that the US has no business bringing a FCPA enforcement action against a foreign company which engages in bribery and corruption in yet another foreign country. They fail to understand why such bribery and corruption committed in a far-off land facilitates the continuation of such business tactics but also continues to directly and negatively impact US companies which play by the rules and do not engage in such illegal actions. The enforcement actions brought by the US not only work to protect US companies abroad but also work to level the international playing field for US businesses who want to engage in international commerce.

One of the key reasons for the passage of the FCPA back in 1977, was to level the playing field so that US companies could compete on a business basis with companies from other countries. Simply put, US companies can often go “further, faster and higher” than companies from other countries because of technological innovation but more importantly the quality of their products and services.

Writing back in 2001, the US State Department said, “Business thrives on competition. U.S. companies and workers can compete with the best in the global marketplace because of their drive, innovation, and quality products and services. However, their success depends heavily on their ability to compete on a level playing field. Bribery and corruption tilt the playing field and create unfair advantages for those willing to engage in unethical or illegal behavior. Corrupt practices penalize companies that play fair and seek to win contracts through the quality and price of their products and services. In 1977, the United States enacted the Foreign Corrupt Practices Act (FCPA), effectively outlawing offers, promises, and payments by U.S. firms to foreign officials, political parties, party officials and candidates to secure business advantage. Since then, the United States has been trying to level the playing field by encouraging other industrialized countries to take similar steps – and these efforts are finally paying off. There has been real progress in building an international coalition to fight bribery and public corruption so that all businesses may fairly compete in the global market place.”

Dick Cassin, writing in the FCPA Blog in 2008 said that the playing field was continuing to be leveled by the 1998 amendments to the FCPA, which noted that even in 1998, US businesses were losing over $30 billion annually to non-US companies engaged in bribery and corruption. With the increased enforcement of the FCPA in the first decade of this century, Cassin wrote, “The level playing field is still a work in progress, but at least there’s progress to measure.”

Fast forward to 2017, when, in a MLex article, Mark Bocchetti noted that then Attorney General Jeff Sessions, “signaled that he would be more than willing to go after foreign companies that may be issuing bribes to undermine US competitors.” He quotes Sessions for the following, “Our department wants to create an even playing field for law-abiding companies. We will continue to enforce the FCPA and other anti-corruption laws. Companies should succeed because they provide superior products and services, not because they have paid off the right people.” Bocchetti also wrote that Sessions, “returned to the theme of unfair competition again during a question-and-answer period, even asking companies to volunteer ideas for how the Department of Justice could do a better job of ensuring that their competitors are not gaining an advantage.”

While there are multiple other reasons for robust FCPA enforcement, including (1) US security interests; (2) US foreign policy interests; (3) US business interests; (4) US economic interests; and (5) US legal interests as reflected in compliance with the Foreign Corrupt Practices Act (FCPA); leveling the playing field is equally high on the list. There are yet many other reasons for robust FCPA enforcement that relate to the damages to the countries where bribes are paid and the impact of crime and terrorism. Yet it is directly in the interest of the US to prosecute companies such as MTS (and VimpelCom Ltd. and Telia Company AB as well) for their payment of bribes in Uzbekistan. When foreign companies voluntarily subject themselves to US jurisdiction by seeking investment in US capital markets, it is incumbent that US prosecutors and regulators make certain those foreign companies play by the US regulations they agreed to be covered under when they accessed such markets. Of course, if these companies run some, all or indeed any part of their bribery schemes through the US or its banking systems, there is another clear reason to protect US interests; the integrity of the US banking system.

The MTS FCPA enforcement action provides a prime example of how robust enforcement of the FCPA against foreign bribe payors positively impacts law-abiding US businesses. Such continued robust enforcement is clearly in the interest of many players, including law-abiding US businesses.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2019