DOJ gives glimpse of bribery cases it decided not to charge

Reuters News
Posted: Nov 14, 2012 10:05 AM

By Aruna Viswanatha

WASHINGTON (Reuters) - The Justice Department has declined to prosecute several dozen foreign bribery schemes it has come across in the past two years, according to a document the department released on Wednesday.

It did not charge violations in instances when the company disclosed the conduct to authorities, fired responsible employees and took steps to improve its compliance program, the document said.

Business groups have longed urged the department to release information about those cases involving Foreign Corrupt Practices Act violations it decides not to charge, a step prosecutors have resisted doing in the past.

Such information, industry lawyers have said, could help explain to companies the benefits of voluntarily informing the DOJ of potential misconduct.

In a new resource guide published by the Justice Department and the U.S. Securities and Exchange Commission about how they enforce the law, which bars U.S.-linked firms from bribing officials of foreign governments, the department provided specific examples of cases it has declined to charge in recent years.

The agencies have stepped up enforcement of the law since the mid-2000s, extracting record penalties from companies, ranging up to hundreds of millions of dollars. The law has tripped up major companies from Avon to Wal-Mart, which are facing investigations into whether they bribed officials in China, Mexico and elsewhere.

Most of the examples in the guide of declined prosecutions involved extensive cooperation with authorities.

In one case a subsidiary of a U.S. public company retained a construction company that paid "relatively small bribes" to foreign building code inspectors.

When the company's compliance department discovered the payments, it ended the conduct, fired the construction company and the law firm that approved the bribes and fired or disciplined the employees involved.

It also conducted a "thorough internal investigation," disclosed the findings to U.S. authorities and reorganized to appoint a new compliance officer focused on anti-corruption, improved its training program and undertook a review of the company's international third-party relationships.

Last year the head of the DOJ's criminal division, Lanny Breuer, announced the department would provide "detailed new guidance" on the law's criminal and civil enforcement provisions, in part an answer to a recommendation from international authorities.

The announcement also helped to delay interest in Congress in amending the statute. Hearings were held after the U.S. Chamber of Commerce and others argued that ambiguity in the 1970s-era law had hurt American businesses.

In what the agencies described as an "unprecedented undertaking," the 120-page guide provides hypothetical examples to address questions about who the law covers, how it considers gifts or travel expenses and issues involving a foreign company later acquired by another one subject to the FCPA.

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Since the law requires a corrupt intent by the entity under investigation, "it is difficult to envision any scenario in which the provision of cups of coffee, taxi fare or company promotional items of nominal value would ever evidence corrupt intent," the agencies said.

Such cabs rides came up at a congressional hearing when industry representatives said companies worried about providing taxi fare to government officials in case it would be considered a violation of the FCPA.

The guide also provided the examples of a company inviting dozens of current and prospective customers out for drinks and covering the bar tab, and a company presenting a moderate crystal vase as a wedding gift to the general manager of a state-owned electricity commission that is a customer of the company.

Both scenarios would not fall under the law, it said. The FCPA "was not designed to prohibit all forms of hospitality to foreign officials," the agencies said.

(Reporting By Aruna Viswanatha; Editing by Kenneth Barry)