U.S. sends a message by stepping up crackdown on foreign business bribes
Monday, February 8, 2010
Federal authorities want companies to know that the cost of paying bribes to win overseas contracts is growing steeper by the day.
Long a priority of the FBI and the Justice Department, efforts to police corrupt business payments have intensified in recent weeks, with multimillion-dollar corporate settlements and coordinated arrests of individual executives accused of attempting to grease the skids.
On Friday, BAE Systems, the world's second-largest defense contractor, agreed to pay $400 million to resolve decade-old allegations that it misled the Defense and State departments about its efforts to comply with the Foreign Corrupt Practices Act. The law bars companies from bribing government officials to win lucrative contracts and other favorable treatment.
The BAE deal came weeks after the FBI unveiled its first FCPA sting operation, which culminated in the arrests of nearly two dozen businessmen employed in the defense and law enforcement equipment industry. Most of the people arrested were in Las Vegas to attend a trade show. FBI agents and prosecutors in the Justice Department's Fraud Section arranged the takedown to occur at a shooting range after the suspects had checked their personal firearms on the way in the door.
Both cases connect to the Washington area, where the FBI houses the only squad in the nation dedicated to cracking down on corrupt payments. The Washington Field Office operation includes about a dozen agents and analysts, some of whom took part in the 2 1/2 -year sting, a spokeswoman said.
"Foreign Corrupt Practices Act investigations are one of the FBI's highest priorities in the criminal program," said Kevin Perkins, FBI assistant director for criminal investigations. "Work done in this arena helps ensure stability in business dealings internationally, placing all players on a level playing field."
Over the past three years, federal prosecutors have more than doubled the number of criminal cases focused on FCPA violations, according to Justice Department statistics. Even with the looming departure of energetic unit chief Mark Mendelsohn for a job in private law practice, senior officials said the initiative is expected to accelerate in the months ahead.
Assistant Attorney General Lanny A. Breuer, who leads the criminal division, recently told reporters that the department had more than 140 open investigations centering on foreign bribes. In a November speech, Breuer said prosecutors would be taking a closer look at foreign sales by pharmaceutical companies after years of focusing on the defense and oil services industries. He also vowed to continue to charge individual business executives with crimes related to the FCPA.
Prosecutors are backing up the rhetoric with a string of recent courtroom victories.
Last year, government lawyers won FCPA-related convictions against Frederic Bourke, founder of the Dooney & Bourke handbag company; former representative William Jefferson (D-La.); and Gerald and Patricia Green, Hollywood movie industry executives accused of bribing a Thai tourism official to win the rights to run a Bangkok film festival.
The FCPA sprang to life after the Watergate scandal, under prodding from Stanley Sporkin, then an enforcement chief at the U.S. Securities and Exchange Commission. Sporkin, who went on to become a federal judge in the District, launched an investigation to determine the origins of allegedly illicit campaign contributions to reelect President Richard M. Nixon and discovered that millions of dollars in corporate funds also were set aside to pay bribes to foreign officials.
Legal experts say the FCPA generally does not allow prosecutors to bring criminal charges against foreign officials who accept bribes. But Justice Department prosecutors are beginning to explore aggressive new legal theories. Last month, they unveiled a conspiracy indictment against Juthamas Siriwan, the ex-governor of the Tourism Authority of Thailand, who allegedly accepted bribes from the movie-making Greens.
The BAE settlement, which has yet to secure judicial approval, followed big-ticket corporate agreements last year, including $1.6 billion in global penalties in a long-running case against German conglomerate Siemens and $579 million in penalties to resolve an investigation of Halliburton KBR.
More corporate agreements might be waiting in the wings, legal sources said, citing long FCPA investigations of automaker DaimlerChrysler and other major companies that have been inching toward resolution for years. The sources spoke on the condition of anonymity because the work is ongoing.