Foreign Corrupt Practices Act

Y ahora sí, le, la, es una clase maestra en cómo hacerlo en términos modernos con una fuerza armada [risas] y con un departamento de justicia controlado por el mismo partido.

O sea, ha-hay una cosa, de por qué en la primer, el primer mes de la administración, casi la primera semana, suspendieron la implementación de lo que se llama el Foreign Corrupt Practices Act.

Sí.

Que, que sigue en vigencia, pero lo que han suspendido es la implementación de la ley, supuestamente para mejorar la capacidad, la competitividad de empresas norteamericanas.

But when a compliance officer sees something like this, what? should they do? Do they quit? Do they stay? What do you think?

So you really brought up a point I had not thought about, which is what is the impact of this on the compliance function? I was a, at a company that had violated the FCPA.

And I was part of the new management team they brought in to clean things up back then, which was 07.

You did your remediation after the settlement, not like today where you do your remediation contemporaneously with your investigation.

And for Fenton to do this, I think, follows the Department of Justice and their attempts to do so.

So I see it consistent within this administration.

You know, since the original FCPA pilot program back in 2016, we've had credit for self-disclosure and cooperation and extensive remediation.

So it's not new.

This law, which specifically addresses cross-border anti-corruption and does sit within a context of anti-corruption laws in China, which already tackle domestic corruption and commercial corruption, etc.

This is kind of the Chinese FCPA, but it's dangerous to think of it as a one-on-one equivalent because there's some interesting nuances and additions here.

So the draft law looks at, not unexpectedly, both outbound Corruption, that is Chinese businesses and Chinese nationals engaging in corruption outside of China, as well as inbound corruption, and that would be foreign businesses bribing Chinese officials.

And please, let's not forget that state employees of state-owned enterprises are often considered Chinese officials, not just by the FCPA, but also by Chinese law.

But what's interesting here, I think, for companies that may feel that they don't have sufficient Chinese nexus to be too concerned about this, is there's this catch-all third category, which references overseas misconduct, which has a similar effect in China to outbound and inbound corruption, without any discussion at all of what effect might look like.

Now, I'm working off a translation, so maybe it's more clear to Chinese readers or placed in the context of other Chinese law, but I think if you're listening to this podcast and thinking, we don't do that much with China, this is a good time to shut off and take a coffee break.

Let's say you've got a US company that suspects bribery involving a Chinese subsidiary and launches an internal investigation, collecting documents, reviewing transactions, interviewing employees, in essence, just creating the file that you would expect to see.

And then we've got this requirement for disclosure to the authorities at an early stage.

So it's not that we are allowed corruption, but we didn't have enforcement.

And suddenly we start to have and everybody start to became aware and the risk that we're posing individuals and companies, not only in Brazil, but because if you're liable there and your company has business in the US, you're going to have the FCPA here.

Sure.

And we have the UK Bravery Act and so many other international anti-corruption laws.

Siemens pleaded guilty to charges that it had failed to keep adequate internal controls and accurate books.

Subsidiaries in Argentina, Bangladesh, and Venezuela pleaded guilty to conspiracy charges under the Foreign Corrupt Practices Act.

The company agreed to pay about $800 million to American authorities.

and a further sum to prosecutors in Munich.

And, you know, there is, I think, some convincing reporting, including my book, but also by others, including this Michael Isikoff, a legendary Washington, D.C. reporter, that this, you know, came as and appeared to parallel real influence operations that the Chinese were conducting in other parts of the world, including Africa.

It's notable that John, that the guy Patrick Coe, who we talked about, who Hunter Biden referred to as the expletive spy chief of China, like he was charged in the U.S. for violations of the Foreign Corrupt Practices Act that stem from claims.

He was convicted.

He wasn't just charged.

But, Ken, in other words, the law is now like that thing on mattresses, you know, remove this and it's illegal.

Yes, and I think there was a period of time where it was like that and it sort of openly acknowledged that it was like that, and then we had the pendulum swing more towards, you know, more rigorous enforcement.

And that was seen as a correction, but possibly an overcorrection by the Trump folks who are now sort of decriminalizing both, I should say, both the Foreign Agents Registration Act and the Foreign Corrupt Practices Act, another law that's used to sort of regulate U.S. political involvement abroad.

And so, yeah, I think we're back to the Wild West.

The U.S. Attorney for the Western District of Texas put it bluntly this past July, nothing crosses into or out of Mexico without the approval and payment of Mexican drug cartels.

That statement came as the Justice Department prosecuted the Schooler Company, a Nebraska-based agricultural trading firm, under the Foreign Corrupt Practices Act.

Schooler authorized more than $400,000 in bribes to Mexican officials between 2015 and 2019. avoiding roughly $6.5 million in inspection fees.

Some of those proceeds, prosecutors say, ultimately benefited cartel associates.

It's, it, it really does fall into this gray area.

Peter's absolutely right, and I would point out, too, historically, the Foreign Corrupt Practices Act did in fact, uh, inhibit some American businesses from doing business in some places.

But I would also point out that, that, uh, I...

And I don't remember the exact years, but, but maybe three or four decades ago, uh, bribes to foreign companies for, were legal in, in certain countries.

Uh, they were, they were tax deductions on a German business' income tax when they paid German taxes.

All right.

But over time, a- as we pushed the whole Foreign Corrupt Practices Act and, and, and better business practices, some of our European allies who basically looked the other way on their companies bribing foreign businesses, changed their laws and changed their rules and changed their practices.

And so you could argue that in this case, uh, living up to our core values actually was a good business practice because it not only made us a more desirable alternative in some countries in terms of helping the local population, technology transfers, uh, value added, but it also changed the behavior of some of...