Money laundering, US Foreign Corrupt Practices Act & Dodd Frank - Written by on Wednesday, November 10, 2010 1:14 - 0 Comments

Letter from America: The Bribery Act, what can the UK learn from the US mistakes?

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By Dick Cassin

A few years ago, I wrote on the FCPA Blog that Britain’s absence from the global war on public corruption was a full-fledged scandal. Nearly ten years after it ratified the OECD’s anti-bribery convention, there hadn’t been a single British prosecution. “As England shirks,” I said then, “its friends are both baffled and alarmed.”

But times change. The U.K. is now on the brink of an enforcement revolution. The new Bribery Act, the Serious Fraud Office version 2.0, and the Proceeds of Crime Act (POCA) are potent weapons. Most important, the nation appears to have the political and judicial will to use them all.

As Britain’s new era of enforcement begins, what’s the most important lesson to learn from the U.S.? Are there mistakes to avoid, and traps to dodge?

America’s Foreign Corrupt Practices Act (FCPA), enacted in late 1977, is a great statute. With its long reach and two-pronged attack against bribery and deceptive accounting, it has set the mark for anti-corruption legislation. But it also has its share of problems.

Even the best FCPA lawyers can’t describe for clients exactly what a permitted “facilitating payment” looks like, or how to use the local-law or promotional expenses defenses.

And the FCPA’s language is growing more cloudy as time passes. The law prohibits corrupt payments to foreign officials to obtain or retain business. That sounds simple enough. But governments everywhere are now highly corporatized; even state-owned enterprises operate for profit. The changes have thrown into doubt who’s a public employee, and what “obtain or retain business” really means.

With all the ambiguity, you’d expect a flood of judicial challenges by FCPA defendants. But there hasn’t been a single courtroom test of the law by a company for more than two decades. Why not? Once an employee is found guilty of an FCPA offense, that guilt is imputed to the employer. No matter how hard the company tried to comply, it’s guilt is automatic.

So when charged with FCPA offenses, companies have to settle. They negotiate their plea deals with prosecutors, and courts and judges are left out of the loop. With no judicial review, doubts about the law keep growing.

The U.S. Justice Department may have a 100% corporate conviction rate. But if nothing changes, will companies continue to work hard to comply with the FCPA? Or will they instead become resigned to prosecutions that will look more and more arbitrary, and based not on legal precedent but prosecutorial discretion?

The lesson for the U.K. is this: Make sure all defendants charged with overseas bribery have access to courts if they want it. Only through regular judicial review will the Bribery Act and POCA stay fresh, relevant, and respected.


Dick Cassin writes the FCPA Blog.

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