We Really Ought to Pause and Reflect

 This article was reprinted with permission from FCPA Professor

As noted in this prior post, in October 2010 Judge Jackson Kiser (W.D. Va.) sentenced Bobby Elkin Jr.  Elkin (the former Country Manager for tobacco company Dimon International Kyrgyzstan) pleaded guilty to a one count criminal information charging conspiracy to violate the FCPA. (See here for the prior post).  Like many federal court judges before him and after him, Judge Kiser did not see the FCPA conduct at issue in the black and white terms the DOJ often portrays, but rather saw shades of gray.  In rejecting the DOJ's requested 38 month sentence, Kiser sentenced Elkin to probation.  According to media reports, Judge Kiser stated that the CIA routinely bribes Afghan warlords, but the CIA's conduct is not illegal and that this "sort of goes to the morality of the situation."

Yes it does and it took this recent New York Times story "With Bags of Cash, CIA Seeks Influence in Afghanistan" to put our stark double standards in the headlines once again.  (See this tag for numerous double standard posts). The NY article states, in pertinent part, as follows.

For more than a decade, wads of American dollars packed into suitcases, backpacks and, on occasion, plastic shopping bags have been dropped off every month or so at the offices of Afghanistan's president - courtesy of the Central Intelligence Agency.   All told, tens of millions of dollars have flowed from the C.I.A. to the office of President Hamid Karzai, according to current and former advisers to the Afghan leader.  [...] The C.I.A., which declined to comment for this article, has long been known to support some relatives and close aides of Mr. Karzai. But the new accounts of off-the-books cash delivered directly to his office show payments on a vaster scale, and with a far greater impact on everyday governing.  [...] The cash does not appear to be subject to the oversight and restrictions placed on official American aid to the country or even the C.I.A.'s formal assistance programs, like financing Afghan intelligence agencies. [...]

For additional coverage, see videos here and here from NBC and CNN.

As noted in my recent article, in this new era of FCPA enforcement those subject to the FCPA have been frequently reminded that ''we in the United States are in a unique position to spread the gospel of anti-corruption, because there is no country that enforces its anti-bribery laws more vigorously than we do.''  We have been told that "robust FCPA enforcement has become part of the fabric of the Justice Department" and that its "global anti-corruption mission has seeped into the Criminal Division."  We have been told by the DOJ that FCPA enforcement is "our way of ensuring not only that the Justice Department is on the right side of history, but also that it has a hand in advancing that history."

The conduct at issue in the NY Times article of course goes above the DOJ,  but what to think of our "unique position to spread the gospel of anti-corruption" after the NY Times article?

Is the U.S. truly on the "right side of history"?

During this era of FCPA enforcement, enforcement actions frequently include allegations of corporate payments to "foreign officials" for such items as wine, watches, cameras, kitchen appliances, business suits, television sets, laptops, tea sets and office furniture.  Last week's Ralph Lauren enforcement action (here) included allegations related to perfume, dresses and handbags.

This conduct pales in relation to the conduct described in the NY Times article and is made even more egregious given that FCPA enforcement actions invariably involve use of private shareholder/owner funds, whereas the campaign of bribery in Afghan is using public funds.

One of the best statements found in the FCPA's extensive legislative history (see here for my article "The Story of the Foreign Corrupt Practices Act") was from Theodore Sorensen. Sorensen's career included several notable accomplishments and, as President Kennedy's speechwriter, he had a way with words.

As to the basic issue of defining bribery, Sorensen observed as follows: [T]here will be countless situations in which a fair-minded investigator or judge will be hard-put to determine whether a particular payment or practice is a legitimate and permissible business activity or a means of improper influence.  [...] Reasonable men and even angels will differ on the answers to these and similar questions. At the very least such distinctions should make us less sweeping in our judgments and less confident of our solutions."

Sorensen's insight was spot-on when made approximately 35 years ago and still holds true today.

The recent NY Times article concerning government sanctioned bribery using public funds really ought to cause us to pause and reflect on much in the bribery and corruption space.

Read more articles on the FCPA by Mike Koehler at FCPA Professor.

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