In an annual world economy of thirty trillion dollars, bribery--whereby one person influences the behavior of another through financial payment (1)--is a trillion dollar business. (2) Acts of bribery range from the mordidas paid in Mexico (3) to the sums paid to American politicians for political favors. (4)
Recently, American prosecutors have begun targeting a particular subsection of bribery that accounts for much of the world's corruption--corporate bribery of foreign government officials to obtain or retain business. (5) For example, from 1994 to 1999, bribery of foreign officials facilitated the award of 294 contracts valued at approximately $145 billion. (6) In 1998 alone, U.S. businesses collectively lost $37 billion worth of contracts abroad due to foreign bribery. (7)
Although the prohibition of this type of bribery is not new in the United States, (8) its prosecution has recently undergone a renaissance to become one of the most dynamic subsets of white-collar crime. (9) In the United States, these prosecutions often proceed under the Foreign Corrupt Practices Act (FCPA), a post-Watergate law mostly dormant for decades, and have increased dramatically in the wake of corporate misconduct in the last decade. (10)
By many measures, 2010 was a banner year for FCPA investigations. (11) ongoing FCPA investigations implicate numerous Fortune 500 and other well-known companies, including Maxwell Technologies, Sun Microsystems, Morgan Stanley, Avon Products, Bridgestone, Aon, Johnson & Johnson, United Parcel Service, Bristol Myers Squibb Co., Alltel, ABB Ltd., Alcatel Lucent, Xerox, United Defense Industries, Chiquita Brands Int'l, Accenture Ltd., DaimlerChrysler AG (now Daimler AG), Petro-Canada, and Eli Lilly & Co. (12)
Generally, companies encounter FCPA-related issues in various circumstances. Some acquire them through the acquisition of a company with unknown bribery practices. (13) Others do so through their foreign subsidiaries, which, in addition to being managed by foreigners in a different culture, do business in corrupt environments, especially in comparison to Western standards. (14) Still others may be implicated under the FCPA by a single rogue employee. (15) Regardless of the source of FCPA problems, however, all these companies would be potential targets of aggressive government enforcement of the Act.
Commentators have been divided on the benefits of the aggressive prosecution of FCPA cases. Some have suggested that FCPA enforcements counterproductively chill investments in certain markets by discouraging corporate entry into transitioning economies. (16) Others have recognized the benefits to a clean business environment abroad, (17) noting that bribery entangles corporations in "extortionate relationships" (18) and increases transaction costs. (19) Not only is it the corporations that are disadvantaged by a corrupt business environment, but so too are the citizens of that country (20)--societal costs of corruption (21) include compromises to efficiency, (22) fairness, and transparency. (23) In emerging economies, corruption is a particular problem, as it is one of the greatest obstacles to a market's transition to stability. (24)
For many such reasons, the U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC) have recently renewed their commitment to the enforcement of the FCPA. (25) Assistant Attorney General Lanny Breuer of the DOJ's Criminal Division noted that the DOJ Fraud Section has successfully brought thirty-six corporate FCPA enforcement actions since 2005, resulting in the imposition of fines totaling more than $1.5 billion. (26) Additionally, the DOJ charged seventy-seven individuals with FCPA violations. (27)
By the numbers, the United States, a member of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Convention), prosecutes more bribery offenses than most other countries bound by the Convention. …