United States: Don’t Let the Words Fool You - U.S. Authorities Prove They Are Not Limited By The Text Of The FCPA Statute

V&E Foreign Corrupt Practices Act Update E-communication, June 11, 2012

Recent convictions in a wide-ranging Foreign Corrupt Practices Act (FCPA) enforcement action punctuate the government's enthusiasm for pursuing broad theories of liability in foreign bribery cases. Moving beyond direct violations and theories dependent on finding a conspiracy to violate the FCPA, the government has shown an increased proclivity for using money laundering and Travel Act charges to expand the scope of FCPA prosecutions. U.S. efforts to expand the scope of FCPA enforcement coincide with the recent enactment of the UK Bribery Act of 2010 (UK Bribery Act), which prohibits a broader range of activity than the FCPA. The combined effect of these developments is an environment of substantially broadened liability for both commercial and public bribery.

Foreign government officials convicted in Haiti Teleco case

The government's intent to punish a wide range of individuals for foreign public corruption was on display in the recent conviction of Jean Rene Duperval, a former official of the Haitian-state owned telephone company, Telecommunications d'Haiti (Haiti Teleco), for conspiracy to launder money paid to him by two Miami-based telecommunications firms.¹ At trial, U.S. prosecutors presented evidence that executives from the two U.S.-based companies bribed Haiti Teleco officials in order to obtain preferential rates and other business advantages. Instructed by the Haitian officials, the U.S.-based companies deposited hundreds of thousands of dollars in shell companies which then made payments to the Haitian officials. Several executives of the U.S. companies have been convicted and sentenced to lengthy prison terms for FCPA violations.²

In the Haiti Teleco case, the U.S. government relied on money laundering and conspiracy charges to target the foreign officials involved in the illicit conduct, thereby expanding the potential range of individuals liable for foreign bribery. Unlike anti-corruption statutes in many other jurisdictions, such as China, the FCPA prohibits U.S. companies from offering bribes to foreign officials, but does not make foreign officials themselves liable for taking bribes. Despite this limitation, the U.S. government in the Haiti Teleco case prosecuted three Haitian officials involved in the foreign bribery scheme by relying on non-FCPA offenses. Duperval was convicted in March of two counts of conspiracy to commit money laundering and 19 counts of money laundering. On May 21, 2012, Duperval was sentenced to nine years in prison and a forfeiture of $497,331.³ Similarly, two other former Haiti Teleco officials, Robert Antoine⁴ and Patrick Joseph,⁵ pleaded guilty to conspiracy to commit money laundering. Antoine, the former international affairs director of Haiti Teleco, was sentenced on June 1, 2010, to four years in prison and was ordered to pay $1,852,209 in restitution and to forfeit $1,580,771.⁶ On May 29, 2012, Antoine's sentence was reduced to 18 months in exchange for substantial assistance he provided to the government in the investigation and prosecution of the case.⁷ Joseph, who pleaded guilty on February 9, 2012, is still awaiting sentencing.

Government punishes commercial bribery using the Travel Act

The Haiti Teleco case is the latest indication that the government will continue to use expansive theories of liability to punish a broader range of conduct than is prohibited under the FCPA. Another example of U.S. authorities' efforts includes the use of the Travel Act in a 2009 case against Control Components Inc. (CCI) to prosecute individuals for commercial bribery abroad. Under the Travel Act, it is a crime to travel across state lines or use interstate commerce with the intent to carry out unlawful activity. Unlawful activity under the Travel Act is defined to include violations of state-level commercial bribery statutes effective in many states, including California, New York, Massachusetts, and Delaware. Unlike its more expansive counterpart in the UK, the FCPA prohibits only foreign public bribery — the bribery of foreign public officials. By relying on the Travel Act, the federal government can punish commercial bribery in addition to the bribery of foreign government officials. CCI paid an $18.2 million criminal fine after pleading guilty to conspiracy to violate the FCPA and the Travel Act and to two substantive counts of violating the FCPA.⁸

UK Bribery Act includes liability for commercial bribery and bribe-taking

Efforts to expand the scope of bribery-related conduct in the U.S. parallel expansions made under UK anti-corruption law. The UK Bribery Act, which went into effect on July 1, 2011, outlaws both commercial and public bribery, and punishes both the giving and receiving of bribes by individuals and corporations. Under the UK Bribery Act, individuals and corporations can face unlimited fines, and individuals can be jailed for up to ten years for a violation. Because the UK Bribery Act covers entities doing business in the UK, many international corporations are subject to its prohibitions. Although the UK Bribery Act is broader than the FCPA, the use of the money laundering, Travel Act, and conspiracy statutes in FCPA enforcement actions means that there is substantial overlap between the two regimes with regards to foreign corruption. One key area where liability under the UK Bribery Act is broader than liability under U.S. law is that the UK Bribery Act punishes the failure of corporations to prevent bribery. The UK Bribery Act is part of a growing international trend of enhanced anti-corruption laws in countries around the world.

Lessons

The use of additional charges in the Haiti Teleco and CCI cases and the passage of new legislation in the UK and other countries point to expanded liability for commercial and public bribery around the world. U.S. businesses would be mistaken to focus exclusively on the explicit wording of the FCPA statute when crafting their compliance programs, potentially opening themselves to exposure for violations of the Travel Act, money laundering, conspiracy, and the UK Bribery Act, all of which are now actively being used by prosecutors to punish both commercial and public corruption. Compliance and monitoring plans and thorough due diligence routines updated to reflect these new developments are essential to minimize risk in this area.

Footnotes

1 Former Haitian Government Official Sentenced to Nine Years in Prison for Role in Scheme to Launder Bribes, Department of Justice Press Release (May 21, 2012), available a thttp://www.justice.gov/opa/pr/2012/May/12-crm-656.html.

2 See, e.g., Former Controller of a Miami-Dade County Telecommunications Company Sentenced to 24 Months in Prison for His Role in Foreign Bribery Scheme, Department of Justice Press Release (January 21, 2011), available at http://www.justice.gov/opa/pr/2011/January/11-crm-091.html; Executive Sentenced to 15 Years in Prison for Scheme to Bribe Officials at State-Owned Telecommunications Company in Haiti, Department of Justice Press Release (October 25, 2011), available at http://www.justice.gov/opa/pr/2011/October/11-crm-1407.html; Two Telecommunications Executives Convicted by Miami Jury on All Counts for Their Involvement in Scheme to Bribe Officials at State-Owned Telecommunications Company in Haiti, Department of Justice Press Release (August 5, 2011), available at http://www.justice.gov/opa/pr/2011/August/11-crm-1020.html.

3 Former Haitian Government Official Sentenced to Nine Years in Prison for Role in Scheme to Launder Bribes, Department of Justice Press Release (May 21, 2012), available at http://www.justice.gov/opa/pr/2012/May/12-crm-656.html.

4 Former Haitian Government Official Pleads Guilty to Conspiracy to Commit Money Laundering in Foreign Bribery Scheme (March 12, 2010), available at http://www.justice.gov/opa/pr/2010/March/10-crm-260.html.

5 Plea agreement, U.S. v. Patrick Joseph (S.D. Fla. 2012) (No. 09-CR-21010(s)(s)).

6 Former Haitian Government Official Sentenced to Prison for His Role in Money Laundering Conspiracy Related to Foreign Bribery Scheme, Department of Justice Press Release (June 2, 2010) available at http://www.justice.gov/opa/pr/2010/June/10-crm-639.html.

7 Order Granting United States' Motion for Reduction of Sentence Pursuant to Fed. R. Crim. Pro. 35, U.S. v. Robert Antoine, (S.D. Fla. 2012) (No. 09-21010).

8 Control Components Inc. Pleads Guilty to Foreign Bribery Charges and Agrees to Pay $18.2 Million Criminal Fine, Department of Justice Press Release (July 31, 2009), available at http://www.justice.gov/opa/pr/2009/July/09-crm-754.html.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.