Bribery in the United States of America

US Foreign Corrupt Practices Act (FCPA)

The Foreign Corrupt Practices ACT of 1977 (FCPA) of the US is the
highly employed anti-corruption law. This is the first law to introduce
extraterritoriality for corruption-related offenses, responsibilities of 3rd parties,
and corporate liability, which means that individuals and companies can be
held civilly and criminally responsible for the corruption offenses that commit
abroad. The anti-bribery provisions of FCPA are applied widely to 3
categories of entities or persons: ‘domestic concerns’, ‘issuers’, and some
entities and individuals under the ‘territorial jurisdiction’. These provisions
usually prohibit (Earle, 1995).
 Companies that are functioning as per US laws
 US companies and persons (domestic concerns)
 Companies which own their business’ principal place in the US
 Companies that are listed on the US’ stock exchange
 Companies which need to file their regular periodic reports with the
issuers SEC
 Certain foreign businesses and individuals acting inside the US from
doing corrupt payment transactions to foreign officials to retain or
obtain business.
There must be the presence of 3 elements in an act to violate the FCPA
(Earle, 1995):
 Something or payment of value is given, promised, or offered
 For corrupt motives
 To the foreign official
The penalties for violating FCPA are stiff and there is a rising trend of
enforcing these penalties by the US government. Those persons who violate
the anti-bribery provisions of FCPA face penalties of $100,000 for a single
violation and a prison of up to five years per violation.
Legg Mason Charged With Violating the FCPA
According to the order of SEC, between the year 2004 to 2010, Permal Group
Inc., a former asset management subsidiary of Legg Mason, signed a
partnership with a French financial service firm to request business
investment from the financial institutions which are Libyan state-owned (U.S.
Securities and Exchange Commission, 2018). All these entities were part of a
scheme which involves paying bribes to the government officials of Libyan via
a Libyan based middleman to keep investments safe. Due to this corrupt
scheme, the Legg Mason, via its subsidiary Permal, was being awarded a $1
billion investments business for the Libyan financial institutions, having a net
revenues earning of around $31.6 million. The order of SEC identifies that the
1934’s Securities Exchange Act’s provision of internal accounting controls
was violated by Legg Mason (U.S. Securities and Exchange Commission,
2018). For settling the case of SEC, Legg Mason agreed to give up the ill-
gotten profit of around $27.6 million along with $6.9 million in the prejudgment
interest (U.S. Securities and Exchange Commission, 2018). They also agree
to pay $33 million as a penalty for involvement in the Libyan bribery scheme.
Sanofi Charged With FCPA Violations
It was announced by the Securities and Exchange Commission that
Sanofi, a pharmaceutical company which is Paris based, is willing to pay more
than $25 million to settle charges that its Middle East and Kazakhstan
subsidiaries made few corrupt transactions for winning the business (U.S.
Securities and Exchange Commission, 2018). According to the order of SEC,
multiple countries were included in the schemes and comprised bribe
payments being given to the procurement officials of government and
healthcare officials for the sake of rewarded with tenders and to increase the
volume of prescribing their products. In Kazakhstan, as part of the kickback
scheme, distributors were used for generating funds from which some bribes
were given to the officials to guarantee that at the public institutions, tenders
will be given to Sanofi.
It was identified by the SEC’s order that Sanofi violated the records and
books and provision of internal accounting controls as given by the federal
securities laws. Without denying or admitting the findings, Sanofi was willing
to pay the $2.7 million for the prejudgment interest, $5 million as the civil
penalty, and $17.5 million as disgorgement (U.S. Securities and Exchange
Commission, 2018).
Forgery in the United Kingdom
(Forgery and Counterfeiting Act 1981, 1981).
 False Pretenses in the United States of America
In the criminal law, property is achieved via false pretenses when the
possession is achieved through intentional misrepresenting of the existing or
past fact. The US statutes regarding this matter are copied mainly from the
UK statutes, and the courts working there in a general way obey the UK
interpretations. There should be a consultation of each states’ statutes.
According to the federal law, acquiring property or money via false pretenses
as part of artifice or scheme to defraud, and utilizing ways of interstate
commerce like telephone, is considered illegal according to title 18 USC
section 1343; such crime is generally termed as “Wire Fraud.”
18 U.S. Code § 1343: A Fraud by television, radio, or wire
Whoever, intending to devise or having devised any artifice or scheme
to fraud, or for acquiring property or money by means of fraudulent or false
pretenses, transmits, promises, or representations or tries to transfer via
television communication, radio, or wire in foreign or interstate commerce, any
sounds, pictures, signals, signs, or writings for the motive of executing such
artifice or schemes, shall be penalized as per this titles or imprisoned for max
20 years, or both (Brenner, 2004). If there is an occurrence of violation in
relation to, or comprising any benefit transported, authorized, disbursed,
transferred, transmitted, or paid in relation to a presidentially announced
major emergency or disaster (as all those terms are clearly defined under
section 102 of Robert T. Stafford Disaster Relief and Emergency Assistance
Act (42 U.S.C. 5122) or impact the financial institution, such individual should
be fined approximately $1,000,000 or send to prison for max 30 years, or
sometimes both (Brenner, 2004).
Cleveland V. United States (2000)
The state was authorized by the Louisiana law to award annually
renewable, nontransferable licenses to start the video poker machines. Fred
Goodson in 1992 along with his family initiated the business of video poker,
Truck Stop Gaming, Ltd. (TSG). Goodson gets the assistance of a lawyer,
Carl Cleveland, in developing the poker license applications for TSG, each of
app identified children of Goodson as the sole owners of this partnership.
From the year 1992 to 1995, the license was renewed successfully by TSG. In
1996, Goodson and Cleveland were charged for money laundering according
to the federal law, along with conspiracy and racketeering in relation to the
scheme to bribe the legislators of state to give there vote in favor of this
industry of video poker. Acts that support such charges were taken from the
federal mail fraud charges, which are defined as “ any artifice or scheme to
defraud, or for acquiring … property via fraudulent or false representations.”
The indictment declared that Goodson and Cleveland concealed fraudulently
that both of them were the real owners of company TSG in the applications of
license which they mailed to the state as they had financial and tax issues that
might have sabotage their capability to get the license for video poker. Before
trial, Cleveland tried to dismiss this mail fraud on basis that the declared fraud
is not coming under the State of “property”. This motion was declined by the
District Court with remarks that property was constituted in the licenses even
before their issuance. Cleveland was found guilty by the jury. This was
endorsed by the Court of Appeals.
Lamar, Archer & Cofrin, Llp V. Appling (2018)
The law firm Lamar, Cofrin & Archer, LLP, was hired by R. Scott
Appling to represent his cases in legal matters against the initial owners of his
company. He incurred huge legal fees and told Lamar verbally that he would
be in a position to pay them when he gets back the sizeable refund of tax that
was expected by him. Based on this statement, the law firm represents him all
through the end of the litigation. A tax refund was received by Appling,
although it was less than what he mentioned in his statement to Lamar, and
he then put all refund in growing his business instead of paying the amount he
needs to pay to Lamar. A judgment was obtained by Lamar against Appling,
and subsequently, Appling filed for the bankruptcy. For debt collection, an
adversary proceeding was initiated by Lamar, and it was ruled by the
bankruptcy court that the money was nor releasable pursuant to the section
11 U.S.C. § 523(a)(2)(A) and the reason is that the justifiable reliance of
Lamar was on the fraudulent statements of Appling. This was affirmed by the
District Court.
The 11th Circuit remanded and reversed. It was explained by the court
that as the fraudulent statements of Appling regarding his tax refund were not
present in writing and were regarded as statements “ showing his financial
condition” under the § 523(a)(2)(B), so the debt amount could be discharged.
 Charging a Person Before Criminal Court in the United Arab Emirates
The residents of UAE who are suspected of engaging in small crimes
can expect to receive a telephone call from the police asking them to visit their
nearby police station for investigation. If they commit a major offense, such as
human trafficking, robbery, murder, and rape, it is possible that there will be
the issuance of an arrest warrant and police patrol will be sent for arresting
them. On reaching the police station, the suspected person is needed to give
breath, blood, and urine sample immediately, regardless of the nature of the
charge (Al Tamimi, 2004).
After that police questioning will be started during which the suspect
will be asked questions regarding the committed offense, whether they deny
or admit engagement and also if they have any witnesses who could testify
their case. Based on their answers and extremity of charge, either they will be
taken into police custody or set free (Abdullah, 2015). In minor criminal cases,
the suspect has the chance to apply for the police bail and needs to fulfill
conditions to protect this, generally cash deposit or security passport deposit
of suspect or his close friend. For severe charges, no police bail is available.
Police will get 48 hours after interrogation in which they can send the
suspect toward public prosecution (Abdullah, 2015). The police station based
public prosecutor will then handle this case file, which includes details about
the suspect, offense, witnesses, and victim.
The prosecutor will then set a specific date for interrogating the
suspect. Those suspects who were deprived of police bail now have the
opportunity to go for prosecution bail. For minor crimes, the amount of cash
bail is between Dh500 to Dh100,000 (Abdullah, 2015). The prosecutors will
discuss everything with witnesses and victims and start their own
investigations. During the initial hearing, the suspect will be charged and
given an opportunity to enter a plea. If the suspect is unaware of the Arabic
language, then the court will arrange a translator. During the hearings in court,
suspects can share their defense arguments and in few kinds of crimes -
involving bounced cheques, issuing threats, and assault - can provide a
waiver from the victim to the authorized judge.
Waivers that were given by the notary public, can allow the judge to
banish the case or give a minor sentence. At this hearing stage, the suspect
can apply for the bail again. For minor issues or crimes, the defendant can opt
for hiring a lawyer or can represent themselves (Al Tamimi, 2004). All those
suspects found guilty have around 15 days to file the appeal. Same time is
given to prosecution to do objection and overturn the acquittal or go for a
harsher sentence. Those who are on bailed should renew their bail while
submitting for appeal.
References
Abdullah, H. (2015). An Overview of Criminal Proceedings in Dubai. Retrieved
from https://www.tamimi.com/law-update-articles/an-overview-of-
criminal-proceedings-in-dubai/
Al Tamimi, E. (2004). Practical Guide to Litigation and Arbitration in the United
Arab Emirates: A detailed guide to litigation and arbitration in the
United Arab Emirates based on Federal laws, laws specific to the
individual Emirates, judgments delivered by the Court of Cassation and
International Conventions. BRILL.
Brenner, S. W. (2004). US cybercrime law: Defining offenses. Information
Systems Frontiers, 6(2), 115-132.
Cleveland v. United States, 531 U.S. 12, 121 S. Ct. 365, 148 L. Ed. 2d 221
(2000).
Earle, B. (1995). The United States' Foreign Corrupt Practices Act and the
OECD Anti-Bribery Recommendation: When Moral Suasion Won't
Work, Try the Money Argument. Dick. J. Int'l L., 14, 207.
Forgery and Counterfeiting Act 1981. (1981). legislation.gov.uk. Retrieved
from https://www.legislation.gov.uk/ukpga/1981/45
Lamar, Archer & Cofrin, LLP v. Appling, 138 S. Ct. 1752, 584 U.S., 201 L. Ed.
2d 102 (2018).
U.S. Securities and Exchange Commission. (2018). Legg Mason Charged
With Violating the FCPA. Retrieved from
https://www.sec.gov/news/press-release/2018-168
U.S. Securities and Exchange Commission. (2018). Sanofi Charged With
FCPA Violations. Retrieved from https://www.sec.gov/news/press-
release/2018-174