Academic journal article Law and Contemporary Problems

The Market for Global Anticorruption Enforcement

Academic journal article Law and Contemporary Problems

The Market for Global Anticorruption Enforcement

Article excerpt

I INTRODUCTION

In a brief couple of decades, America's enforcement of its Foreign Corrupt Practices Act (FCPA)--civilly by the Securities and Exchange Commission (SEC) and criminally by the Department of Justice (DOJ)--has gone from practically nonexistent to one of the largest and busiest fields of corporate crime practice in the world. Corporate enforcement has been a growth area in American law throughout that period. No other area has expanded so rapidly nor so expensively for corporate defendants as enforcement under the umbrella of the FCPA. The broad statute prohibits covered corporations and their employees from offering bribes to foreign officials and political leaders for the purpose of advancing business interests. (1)

The FCPA rested mostly dormant for over two decades before American prosecutors and securities enforcers eagerly embraced the statute at the beginning of the twenty-first century. In the nearly quarter century from the statute's enactment in 1977 through the year 2000, the federal government pursued only fifty-two FCPA enforcement actions. (2) No more than five such actions were brought in a single year, (3) and in four of those years, zero actions were commenced. (4) Then, from 2001 through 2015, the government initiated 379 FCPA cases, reaching an annual high of 56 cases in 2010. (5)

This explosion in FCPA practice, as some have called it, is not limited to numbers of cases and settlements. FCPA prosecutions and enforcement actions include some of the biggest-ticket matters the government brings in the corporate sector. From 1977 through 2000, the government collected approximately $129 million in FCPA sanctions. (6) Since 2000, over $8 billion has flowed into government coffers from FCPA enforcement actions, most of which has been dictated by terms of settlements between SEC or DOJ and corporate defendants. (7)

What has created this surge in FCPA cases? This article explores both supply channels for cases--the international cooperation between law enforcement officials that made more rigorous enforcement of the FCPA politically possible--as well as the demand pressures that generate cases--the incentives and behaviors of U.S. prosecutors and enforcement attorneys.

Of particular note on the supply side has been the government's willingness to bring enforcement actions and prosecutions against foreign firms as well as domestic U.S. enterprises. The FCPA's jurisdictional scope extends, roughly, to firms registering securities, headquartering, or principally doing business in the United States, as well as to any offense by any firm that is committed even in part within U.S. territory. (8) Prosecuting foreign organizations and their employees for violating American laws against business crime--especially if non-FCPA matters such as evasion of economic sanctions or tax laws, and even organized fraud and corruption in international sporting institutions are included--has become normal where once it would have been seen as extraordinary.

Part I discusses the changes in politics, economic thinking, and international law that have made this geographically broad enforcement strategy possible. For almost twenty-five years, the United States was the only country to regulate foreign corruption. Other major exporters, including Germany, Japan, and the United Kingdom viewed foreign corruption as harmless at worst and market enhancing at best. Witout foreign agreement that international bribery should be prosecuted, anticorruption laws were politically difficult to enforce. This article examines how the 1999 Organization for Economic Cooperation and Development (OECD) Anti-Bribery Convention (9) laid the foundation for an American prosecutorial strategy of robust extraterritorial enforcement.

Though it might be too early to say that international business prosecutions are the great wave of the future, it is not too soon to develop theories that might explain the demand side: why U. …

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