Journal of Business Ethics (2009) 88:615–661 DOI 10.

1007/s10551-008-9966-y

Ó Springer 2008

The Foreign Corrupt Practices Act: The Failure of the Self-Regulatory Model of Corporate Governance in the Global Miriam F. Weismann Business Environment

ABSTRACT. The American regulatory model of corporate governance rests on the theory of self-regulation as the most effective and efficient means to achieve corporate self-restraint in the marketplace. However, that model fails to achieve regular compliance with baseline ethical and legal behaviors as evidenced by a century of repeated corporate debacles, the most recent being Enron, WorldCom, and Refco. Seemingly impervious to its domestic failure, Congress imprinted the same selfregulation paradigm on legislation restraining global business behavior, the Foreign Corrupt Practices Act. This anti-bribery initiative prohibits unethical and illegal payments made to foreign public officials in an effort to eradicate bribery as a rational-choice global market entry strategy. However, this paper illustrates, using newly complied statistics from 1977 to 2008, that the FCPA has not had a dramatic impact on U.S. global corporate behavior despite its recent high profile coverage and the tough regulatory rhetoric about corporate compliance. The paper also extends the prior Cragg and Woof FCPA efficiency study and provides current empirical evidence to resolve several unanswered questions raised by that earlier study. KEY WORDS: corporate governance, Foreign Corrupt Practices Act, global ethics, bribery, self-regulation, Rational-choice theory

The Foreign Corrupt Practices Act (FCPA) is a failed regulatory initiative in combating global commercial bribery. Hailed as a seminal event at its inception, the international organization now responsible for monitoring its effectiveness, the Organization for Economic Co-operation and Development (OECD),1 has repeatedly questioned

its impact in the global business community. It is not surprising, however, that the agency who authored it, the Securities and Exchange Commission (SEC), or the agencies responsible for enforcing it, the Department of Justice (DOJ) and the SEC, or the groups who profit from its implementation, the law firms engaged in the cottage industry of crafting corporate compliance plans, claim otherwise. Perhaps, the most that can be said about its effectiveness is the uncanny ability of regulators and law firms to create the public perception in the domestic business community that it is a force to be reckoned with. Like the SEC legislative models that preceded it, the 1933 Securities Act (SA) and the 1934 Securities and Exchange Act (SEA), the FCPA drafters incorporated the self-regulatory model of enforcement: corporate self-policing through mandatory reporting with regulatory oversight. Indeed, the American regulatory model of corporate governance is deeply embedded in the theory of self-regulation as the most effective and efficient means to achieve corporate self-restraint in the marketplace (SEC, 2000). However, experience shows that the self-regulatory model of corporate governance fails to achieve regular compliance with baseline ethical and legal behaviors as evidenced by a century of repeated corporate debacles, the most recent being Enron, WorldCom, and Refco. Seemingly impervious to its domestic failure, Congress and the SEC imprinted the same self-regulation paradigm on legislation restraining global business behavior. This article does more than establish through statistics that the FCPA has not been enforced over the last thirty years since its inception. At this point, even the government would be hard-pressed to

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Miriam F. Weismann Appendix A contributes more complete and definitive statistics upon which to evaluate the actual impact of the act. The article reaches the following conclusions about the impact of the FCPA in the post-OECD era. First, the FCPA does not operate in a regulatory vacuum. Other powerful political, legal, and economic forces have contributed to its inability to decisively control unlawful behavior in foreign venues. Most notably, after the SEC persuaded Congress to enact the FCPA in 1977 as an amendment to the 1934 SEA, the executive branch of government has continued to steadfastly refrain from supporting its enforcement. Second, the tough regulatory rhetoric claiming enforcement and broad application of the FCPA to global transactional conduct is belied both by the non-application of critical accounting and record-keeping statutory provisions to non-issuers and by the nonapplication of the statute to foreign subsidiaries with <51% domestic parent company ownership. Thus, the claim that detection of global bribery is a difficult, if not impossible task, becomes a self-fulfilling prophecy where the statute is neither designed to require non-issuers to keep transactional records nor is it applied to a wide range of foreign operating entities. Third, the illusion of enforcement is backstopped by yet another myth: American business has become a ‘‘culture’’ of corporate compliance plans. That may be true domestically, but international surveys reveal that most plans are often not communicated to foreign subsidiaries or implemented in the foreign venues where the acts of bribery take place (OECD, 2002). As such, there is a demonstrable failure in systemic corporate interfacing (Vaughan, 1982). The expense of corporate compliance plans is little more than a protective measure designed to feign voluntary compliance under the Federal Sentencing Guidelines in the unlikely event that a company gets caught and thus, presents a worthwhile cost of doing business under any cost-benefit analysis. The FCPA has yet to achieve regular compliance with normative ethical behaviors in pursuit of the goal of meaningful global corporate governance. Thus, the combination of the particular legislative self-regulatory model and the political, economic, and business influences that have deflated its enforcement explain why the FCPA has failed

dispute that conclusion. Nor is it simply about the demonstrable lack of focus of implementation and random application, both also easily proven by the statistics (Appendix A). The contribution is threefold. First, the article provides an analysis of the model of corporate self-regulatory governance in the global business environment. It identifies and analyses the reasons that this particular legislative model, aimed at eliminating bribery as a rational-choice global market entry strategy, has failed to yield little more than an additional cost of doing business for American companies. Second, the article builds upon an earlier study performed by Wesley Cragg and William Woof which examined the overall impact and effectiveness of the FCPA, utilizing selected enforcement statistics between 1977 and 1995 (Cragg and Woof, 2002). Their study concluded that the FCPA had not produced a demonstrable impact on global bribery. In 1998, the United States signed the OECD Anti-Bribery Convention. As a salient feature of treaty accession, the U.S. declared that the FCPA legislation would be used to implement the treaty domestically. The Cragg and Woof study did not evaluate the impact of the FCPA post-OECD convention, which was still in its infancy stage at the time. Since the Cragg and Woof study, the OECD has twice evaluated the impact of the FCPA in the global regulatory environment (OECD, 2002, 2005). In 2008, the OECD published further enforcement evaluations and recommendations; marking a decade after the treaty came into effect (OECD, 2008). The SEC has produced some enforcement activity reports. This article seeks to update the Cragg and Woof effectiveness survey with new statistics through 2008 and also to add studied observations about the utility of the governance model which characterizes the later FCPA implementation of the treaty. Finally, the statistical appendix listing prosecuted FCPA cases, Appendix A, is perhaps the most complete and definitive list in the field, covering the period 1978 through early 2008. The statistical compilation was painstakingly derived from numerous sources because of the DOJ’s refusal to provide public data to confirm FCPA enforcement. Unfortunately, no single source of available information proved to be completely accurate. As such,

The Foreign Corrupt Practices Act from its inception to materially impact rationalchoice market entry strategy. In the sections that follow, the article will first address the legal, political, and economic reasons that contributed to the repeated failure of the self-regulation model as an effective tool for global corporate governance. The article will then update current law enforcement statistics through 2008; examine recent global and multilateral initiatives in field, including the OECD Anti-Bribery Convention; and, finally, offer recommendations for achieving real corporate behavioral change and a rational-choice global market entry strategy that does not rely on commercial bribery as a means of doing business. This obviously legalistic approach to corporate reform is arguably a more ‘‘fruitful approach’’ to understanding global corporate governance (La Porta et al., 2000). In the context of the tension between global economic performance goals and corporate self-restraint in the global capital markets, the current domestic legislative boundaries for corporate financial behaviors, as part of the OECD initiative, may provide a useful measure against which to evaluate compliance.

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The ‘‘Watergate’’ connection: the enactment and expanse of the model In 1973, the Office of the Watergate Special Prosecutor uncovered more than a corrupt presidency. The investigation revealed a pattern of conduct involving the use of unaccounted for corporate ‘‘slush’’ funds for questionable foreign payments (SEC Release, 1979). The most famous case involved the criminal prosecution of Gulf Oil and its corporate vice-president, Claude C. Wilde, Jr. in connection with illegal political ‘‘gifts’’ of corporate funds to politicians, including one of $100,000 to President Richard Nixon. SEC investigators found that from 1960 to 1973, Gulf and Wilde spent more than $10 million dollars on illegal political activities and in business transactions abroad. The SEC filed a complaint against Gulf and Wilde charging that the corporate balance sheets violated SEC disclosure rules for failing to include the value of the corporate slush fund as an asset (Time Magazine, 1975). It followed that company filings with the regulator, relied upon by the public in making investment

decisions, were false. Yet, the case triggered a much larger concern for the SEC: how many other companies were engaged in the same conduct? Widespread corruption could easily frustrate the selfregulatory system of corporate accountability which mandated full and accurate disclosure of the use of corporate funds to the investment public through SEC filings. Fearing a crisis in the self-reporting system, the SEC was determined to discover the magnitude of the practice of engaging in bribery by issuers. The only sure way to test the waters was to provide an amnesty program. Issuers were offered the opportunity to self-report their wrongdoing in the company’s Annual Report, form 10K, or on a supplemental form 8K and thus, there could be no claim that the information was merely anecdotal. The results astonished the SEC and Congress. More than 400 companies admitted to making questionable or illegal payments (SEC Report, 1976). The payouts exceeded $300 million in corporate ‘‘slush’’ funds to foreign officials, politicians, and political parties. Over 117 of the companies that self-reported ranked in the top Fortune 500 companies (House Report, 1977). It became immediately apparent that the same reasons for criminalizing domestic bribery existed to eradicate bribery as a global market entry strategy. It was not just that it was unethical; it was also ‘‘bad business.’’ Bribery erodes public confidence in the markets and damages the integrity of the free market system. It distorts the rules of the marketplace by replacing competition with corruption and pressuring otherwise ethical enterprises to either behave corruptly or risk losing business. From the SEC’s point of view, it threatens the self-regulatory system of corporate self-policing and mandatory disclosure, the glue that holds the securities acts together. To combat this threat to stability in the domestic and international market infrastructures, the SEC proposed to Congress the criminalization of foreign bribery payments made to public officials and foreign political parties. The FCPA passed by unanimous vote in 1977.2 The legislation included a permanent amendment to the SEA, designed to more strenuously regulate the conduct of issuers. It is an important starting point of this study to understand the limitations of the FCPA enforcement

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Miriam F. Weismann corporate governance codes are as much ‘‘as a means of guarding against wealth subtraction as the promotion of wealth creation’’ making it difficult to assess the real beneficial impact of corporate governance tied to economic performance indicators in global venues (Clarke, 2007). For that reason, definitional ambiguity in constructing corporate governance models should not be favored in assessing normative ethical behaviors. In the same way that the FCPA does not proscribe all bribe payments, it also does not cover all companies under its prohibitions. While the anti-bribery clause applies to issuers, domestic concerns, and related individuals, the recordkeeping and accounting provisions, best thought of as ‘‘paper-trail’’ clauses or anti-concealment clauses designed to ensure an audit trail for all global expenditures, do not. Instead, the record-keeping and accounting provisions apply only to issuers. Only issuers are required to report, disclose and account for all payments made to foreign officials to the SEC in an effort to curtail and prohibit bribe payments. Non-issuers are not required to make and keep such records. For non-issuers, selfregulation without disclosure is the only touchstone of compliance. The shortcomings of the model become more apparent in this context. Without similar disclosure and accounting requirements for non-issuers, the enhanced ability of U.S. companies to conceal bribe payments becomes the self-fulfilling prophecy that bribery in foreign commerce is difficult to detect and prove. More importantly, without similar record-keeping and accounting provisions, non-issuers fall through the enforcement net and undermine the decisive impact of the FCPA on market entry global behavior. The OECD concluded: ‘‘It is at the level of non-issuer SMEs [small and medium sized enterprises] that the FCPA system may be at its least effective…these companies appear, as it were, to potentially slip through the net. The examiners could not avoid the conclusion that there may be a level of undetected foreign bribery taking place in the international operations of non-issuer SME’s, simply because there are insufficient compliance programs or other systems in place to deter it and insufficient book-keeping, auditing or other control mechanisms in place to detect it’’ (OECD, 2002).

model passed by Congress. The act does not, and is not intended to outlaw all forms of international bribery. Passed in 1977 and amended again in 19883 and 1998, the FCPA includes two main provisions: the anti-bribery clause and the record-keeping and accounting provisions. The anti-bribery clause prohibits payoffs to foreign public officials or political parties to ‘‘obtain or retain business.’’4 However, payments made merely seeking to obtain ‘‘an improper advantage’’ are not outlawed.5 This statutory definition of proscribed conduct is significant to the financial behavioral analysis which follows about the efficacy of the self-regulatory model for several reasons. A recent study examining global bribery in a four-country context chose to expand the definition of bribery beyond the actual expanse of domestic legal regulation. The study more broadly defined bribery as either money or favors given or promised in order to influence the judgment or conduct of a person in a position of trust (Bernardi et al., 2008). Because the actual boundaries of proscribed conduct do not necessarily mesh with the definition in the study, there is a risk of creating goals of behavioral corporate governance that domestic companies are not required to implement in global venues. While these aspirational goals may be desirable, they may not be the most accurate measure for assessing actual financial behaviors. In the context of applied corporate governance, the actual statutory proscription and its impact on supply and demand of bribes in the global marketplace may be the more accurate benchmark for assessing corporate self-restraint and the applied success as a corporate self-governance model. Likewise, the legalistic approach is more consistent with John Bishop’s normative framework analysis for addressing ethical theory. Bishop focuses directly upon the legal and regulatory structure that any normative ethics principle assumes in application (Bishop, 2000).6 Baseline corporate compliance may best be measured against the actual statutory proscriptions contained in the FCPA, as opposed to aspirational rules, particularly in highly competitive global markets where financial performance may be the equivalent measure of acceptable reform (Shover and Hochstetler, 2006). Finally, this analytical approach also finds support in behavioral finance literature which suggests that

the FCPA does not reach all forms of commercial bribery or all parties engaged in foreign commerce. correlating control with ownership percentage alone may create another persistent source of undetected conduct. Enron placed majority ownership in ‘‘straw person’’ and secretly financed capitalization through the extensive use of loan transactions.S. to the extent reasonable…to cause…[the subsidiary] to devise and maintain a system of internal accounting controls consistent with…’’ the section. This gap in legislative coverage illustrates Clarke’s well-reasoned observation that corporate governance codes are aimed at maximizing wealth potential increasing the difficulty of assessing the correlation between governance and economic performance.The Foreign Corrupt Practices Act In 2005. However. 2005). The 1988 amendments to the act clarified responsibility for subsidiaries not wholly owned by U.S. grease payments may be deductible as ordinary and necessary company business expenses under the Internal Revenue Code if certain conditions are satisfied.7 Not surprisingly. was already fostering economic disadvantage. an issuer holding 50% ownership or less may still exert actual control of a foreign operating entity even though ostensible percentage ownership is held by others parties. Ironically. the dividing line between bribe payments and facilitation payments remains somewhat unclear because with the absence of enforcement also comes the absence of a body of case law interpreting the scope of legislative application. and.’’ Of six new cases filed in 2005. Similarly. The legislative history notes that ‘‘it is unrealistic to expect a minority owner to exert a disproportionate degree of influence…’’ (House Report.’’ are those made to ensure that government functionaries discharge certain ministerial or clerical duties. while outlawed at home. companies quickly came to the conclusion that rational decision-making required maximizing competitiveness in a global marketplace where the waning strength of the dollar. A recent 619 example is the use by Enron of special purpose entities (SPEs) to transfer assets off Enron’s balance sheet to conceal the true nature and extent of its liabilities.S. In this way parent companies may avoid the reach of the FCPA. 1988). the American business outcry which followed the passage of the FCPA was that the inability to pay bribes in the global marketplace created a new trade barrier to market competition. Grease payments. The political fallout: preservation of the ‘‘free’’ market economy ‘‘Free global markets’’ means free competition without artificial trade barriers that distort an otherwise level playing field (House Report. Where the parent-issuer owns 50% or less of voting power. two cases ultimately resulted in the imposition of criminal fines and penalties (Appendix A). U. It is certainly difficult to assess the correlation here. where companies can engage in financial behavioral goals which may include a corporate compliance plan that by its own terms does not proscribe all forms of commercial bribery or even apply to its foreign operating entity. However. the other slippery slope is the limited scope of the application of the FCPA to foreign subsidiaries. one case resulted in the acquittal after trial of the individual defendants. was a business practice followed abroad. 1982). In terms of its expanse. 1977). This void in the legal literature is not only a thorn in the side of corporations legitimately seeking guidance but it is also a persistent criticism by the OECD. neither the parent nor the subsidiary doing business in the foreign venue is covered by the FCPA. again declined to follow OECD recommendations to extend the coverage of the ‘‘paper trail’’ provisions to non-issuers on the theory that current levels of FCPA deterrence were ‘‘generally reasonable’’ (OECD. Bribery. the U. three were resolved by informal corporate non-prosecution agreements. the exclusion of ‘‘grease payments’’ from the act’s coverage was also intentional as indicated by the legislative history (House Report. and one that should be available to American companies to level the playing field in international . Enron was able to do this because under the accounting rules it maintained less than the ownership percentages required by the accounting standards to require it to include the SPE on its balance sheet. parent companies. The issuer is only required to ‘‘proceed in good faith to use its influence. While bribe payments are not deductible items. created by a currency crisis during the Carter administration in late 1978. Additionally. Finally. also referred to as ‘‘facilitating payments. the statistics show that the levels of enforcement in 2005 were less than ‘‘reasonable.

Later. The idea of committing limited resources to a law enforcement initiative which arguably interferes with free market enterprise at the expense of true global competitiveness may be viewed as the antithesis of rational law enforcement behavior. which may be politically sensitive. p. In short. The committee would prefer to have investigations such as these. responded to by 200 companies in the Fortune 1000 category. is political expediency. using the Iran-contra affair as a poignant example. as demonstrated by the example of the Iran-contra affair. particularly when it suits a popular political agenda. In fact. The executive branch urged. Strangely. Brock claimed that the SEC was improperly using the FCPA ‘‘…as a Trojan horse to get an extension of accounting standards to all companies when[sic] they do foreign business at all or not’’ (House Report. a cabinet position in the Regan administration. Since then. Weismann 1977–1980. a species of foreign policy that is ‘‘above the law’’ and necessary to achieve the greater societal good. p. the executive branch has generally followed a policy of non-enforcement across administrations. particularly where the SEC sought to control extraterritorial activities. two-thirds agreed that the FCPA ‘‘had little or no affect on business’’ (House Report. As part of Brock’s testimony. Congress found no credible basis upon which to conclude that the FCPA represented a trade barrier in international commerce. The documentation was based on a report prepared by the Chamber of Commerce. 1982. 2006). among other things. In a sense it can be likened to the legal notion of ‘‘jury nullification’’ where a jury. revealed that government officials actually engaged in bribe payments to foreign institutions to facilitate the covert mission (Cragg and Woof. the FCPA was ignored. supplied by the Department of Commerce. political disunity over the wisdom of the implementation of the act. 253). At the time of the passage of the FCPA and in later hearings before the Senate in 1981. p. The first. p. Both the SEC and Congress had predicted the likelihood of a corporate pushback to the ‘‘new governance’’ embodied in the FCPA. criticized the SEC in testimony before the House oversight committee. conducted by an independent agency responsive to Congress rather than the Executive branch’’ (House Report. 255). However. pointing out that the similar assertions made by the Carter administration of foreign business losses were rejected by the DOJ as ‘‘at best anecdotal’’ and that the claims were contradicted by the ‘‘reality’’ of economic trade figures. p. 116–119). 265). The Cragg and Woof study. the FCPA had become a highly sensitive political issue during the Reagan administration. immediately following the passage of the act (House Report. political actors elevate the rational argument of the greater good of free enterprise over a regulatory initiative that purportedly distorts enterprise economics.620 Miriam F. the corporate community argued that the SEC should not have an enforcement role under the statute at all. showed that America’s share of free world exports had increased during . removal of the SEC from administering the act. pp. There are several factors that may provide incentive to political actors to legitimize a policy of non-enforcement. Congress had earlier recognized the SEC’s ‘‘well deserved reputation for independence in its efforts. as demonstrated by the legislative bickering that preceded and followed enactment. exacerbates a national commitment to enforcement. for example. 6). then U. Labeling otherwise illegal behavior as a measured foreign policy response is a basic illustration of rational-choice theory. the Chamber was later unable to provide support for the conclusions in the report because it had destroyed the underlying documentation (House Report.8 Yet. 1982. William Brock. 256). Those trade figures. The House responded unfavorably to Brock’s testimony. Second. Political support for this position was to come from a change in administrations following the election of Ronald Reagan as president. 1982. 2002. 1982. the continuing political interference created by the executive branch has been an effective detractor.S. the Reagan administration offered documentation ostensibly demonstrating examples of lost trade and increased business costs occasioned by compliance with the FCPA. commerce. Trade Representative. fearing excessive SEC interference in global trade. 1977. Thus. Disunity is defined as the inconsistency of law or enforcement across jurisdictions (Shover and Hochstetler. Beginning with the Reagan administration’s foreign policy practices in the Iran-contra affair. in a 1981 survey conducted by the GAO. The government will simply label its behavior by another name.

1980: 1 case. can be persuaded not to follow a law and convict if to do so would result in an inherently unfair result to the defendant. sources and subsequent processing of allegations of FCPA violations…this may in the long term undermine the efficiency of the working relationship between the agencies’’ (OECD. there is no public case tracking system that monitors the status of cases. 1984: 0 cases. that ‘‘the number of prosecutions and civil enforcement actions for FCPA actions has not been great…’’ (OECD. WilmerHale. 1982: 5 cases. 1985: 2 cases. can be further broken down by year: 1978: 2 cases. Concomitantly. were incomplete in terms of annual case listings and case dispositions. 1979: 3 cases. 6). does not compile public enforcement statistics.S. only twentyone companies and twenty-six individuals were convicted for criminal violations of the FCPA. 1993: 2 cases.N. 1995: 0 cases. Oil for Food Program (OFFP) investigation involving American contractors doing business in Iraq.S. 1996: 1 case. the OECD pointed to this failure to compile statistics as potentially undermining the working relationship between the U. 1989: 3 cases: 1990: 4 cases (5th case dismissed). 1977). or source of complaints. 1997: 1 case. as discussed in greater detail below. and the OECD under the convention: ‘‘Enforcement of the FCPA still appears to be based mainly on informal arrangements. computerized case tracking system that monitors the status of all cases that have been opened as formal investigations (OECD.S. based upon the amnesty figures in the House report (House Report. 1999: 2 cases. A cost-benefit analysis might reveal the incentive to relieve business of strict regulatory compliance in tough economic times in an effort to build political goodwill and solidify future industry and special interest group support. omitting multiple charging and the OFFP cases. The analysis revealed that each of these sources. 4). government in 2002. the collateral consequences of corporate prosecution to the stakeholders becomes of greater concern where economic times are hard. Appendix A lists a total of 106 combined SEC and DOJ cases for the period 1978– 2008. 2002. 2005). 2008. international. 2000: 1 case. The OECD concluded. 8 cases arise out of the U. U. The research also included statistics provided by a recent American Bar Association publication (ABA. 1992: 0 cases. processing of allegations. 2005). Approximately 15 of those cases arise out the same investigation but are charged as separate multiple case enforcement actions and may be used in other data bases to increase case enforcement statistics. As an overview.9 In short. 1981: 0 cases. 71. 2007).S. 2008). Appendix A includes a compilation of statistics reporting enforcement activity from 1978 to 2008. governmental. The DOJ claims that it maintains a non-public. Finally. the OECD continues to maintain that direct correlation between statistics and efficacy of enforcement remains difficult to assess because of the lack of reliable statistics (OECD. 1998: 3 cases. As of this date. A review of thirty years of statistics tells the story. Appendix A combines the sources in an effort to provide the most complete case listing of record as of June 2008. Political popularity is particularly fragile when the national economy is in crisis. Seemingly. 2005. 1987 and 1988: 1 case (Ashland Oil). Indeed. 1994: 2 cases. between 1977 and 2001. based upon the enforcement figures supplied by the U. 2007). and cross-checked with the statistics published by two law firms specializing in the field on their respective websites (Shearman and Sterling. statistics provided by the SEC on its website. 1991: 0 cases. p. p. In 2005. 2001: . rational-choice theory enables political actors to craft a political incentive structure that promotes a decision-making process designed to maximize public approval at the expense of enforcing a controversial act. enforcement in times of economic downturn is less vigorous in an attempt to boost economic growth. 1983: 1 case. 2002. self-reported statistics provided to the OECD in 2002 and 2005 (OECD. without any formal mechanism to review and evaluate the overall FCPA enforcement effort.The Foreign Corrupt Practices Act otherwise obligated to apply the law to the facts of a case. p. 1986. and private law firm publications. or cross-institutional statistics as to the number. 621 Thirty years of statistics (1978–2008): an efficiency assessment The task of compiling actual statistics under the act is formidable because the U. 2006. The remaining 83. The SEC maintains a public website where it lists cases and investigations. Approximately.

2005).N. five member FBI team dedicated to enforcement (New York Times.8 million in 1994 which exceeded the range (OECD. Additionally. 2007).S. The DOJ has announced to the media ‘‘estimates’’ of 60 new cases ‘‘under investigation or prosecution’’ with a new. United States v. Current statistics have yet to produce similar figures showing increased case filings and those cases documented in Appendix A for 2007 show that the filings are generally related to earlier case dispositions and do not necessarily represent new investigations. For at least 10 years.’’ a slap on the wrist. The SEC sought injunctions in only five cases by 2002. the DOJ instituted only 32 criminal prosecutions under the anti-bribery provision of the FCPA.622 Miriam F. Baker Hughes. resolving most by injunction ‘‘against future violations. 2003: 3 cases (3 individual cases dismissed). in terms of case magnitude. 1 dismissed 1991: 0 1992: 0 2003: 3. The statistics do show some increase in case filings in 2007. p. in two instances the cases were dismissed or disposed of without sanctions. or abandoned. the number of investigations commenced.500 to $309. 2008: 2 cases (plus 1 OFFP case resolved by corporate non-prosecution agreement). the largest case. between 2002 and 2005. it is difficult to draw broad conclusions about enforcement. the trend remains in an anecdotal stage. special investigation headed by Paul Volcker10 at least 4 resolved by corporate non-prosecution agreements). 2002. Fines imposed on individuals ranged from $2. as of 2002. 2005: 6 cases (3 corporate non-prosecution agreements). correctly observes: ‘‘Since only some thirty separate alleged bribery schemes have been prosecuted during 25 years under the FCPA. resulted in combined cash penalties of $44 million 5 cases. 21 companies and 26 individuals were convicted for criminal violations. In short. of which 8 were civil and administrative SEC enforcement actions (OECD. 16). p. However. 12 cases involving the criminal and record-keeping and accounting provisions were filed. no one went to jail. with the exception of the Lockheed settlement for 21.500 to $3. 23) Between 1978 and 2001. Chart #1 Summary: cases initiated by DOJ and SEC combined under the FCPA from enactment to present 1978–2008: Total cases: 106 Cases arising out of the same investigation: 15 Cases arising out of OFFP investigation: 8 (Volcker investigation) Remaining 83 cases instituted by year: 1978: 1979: 1980: 1981: 2 3 1 0 1986–1988: 3 (Ashland Oil) 1989: 3 1990: 5. 2007: 13 cases (plus 7 additional OFFP cases arising out of a U. The OECD. 2006: 8 cases. Corporate fines ranged from $1.000. terminated. 24). based on the statistics self-reported by the U. p. In the period following the enactment of the SarbanesOxley Act. 2002. or that might shed light on the reasons which led to the decision not to proceed’’ (OECD. 2004: 5 cases. Weismann actions were brought by the SEC under the accounting and record-keeping provisions (OECD. no . 3 dismissed 2004: 5 Disposition: 2005: 6 2005: 3 non-pros agreements 1999: 2 2006: 8 Disposition: 2000: 1 2007: 13 2007: 4 non-pros agreements 2001: 5 2008: 2 Disposition: 2002: 4. At least for the period 1978–2002.5 million. the SEC collected no fines or penalties in seven of the 13 cases. 2002. Case filings included three cases under the anti-bribery clause and seven cases under accounting and recordkeeping provisions clause. Between 1978 and 1996. 2008: 2 dismissed 1 non-pros agreement 1995: 1996: 1997: 1998: 0 1 1 3 1982: 5 1983: 1 1984: 0 1985: 2 1993: 2 1994: 2 Between 1978 and 2002. the statistics further show that the SEC initiated a total of 13 cases. the FCPA non-enforcement political agenda rendered the act fairly useless as a tool for assessing effective corporate governance. 2002: 4 cases (2 individual cases dismissed). Until 1994. There are no statistics or other information available which would reveal the number of allegations received.

p. consequences are minimal. the reasonable expectation that companies will voluntarily engage in a course of more robust governance where enforcement of baseline ethical requirements is lacking. do not present a higher financial risk than failing to pay bribes to get business. The statutory model of self-governance is only as good as the threat of . Despite its reputation as the largest monetary penalty in the history of FCPA enforcement. may be a justifiable cost of doing business in an otherwise highly competitive global market particularly where enforcement risk is minimal (Shover and Hochstetler. 109). companies may be more inclined to exercise rational-choice market entry strategies favoring bribe payments. This use of informal arrangements in lieu of prosecution has become a trend at the DOJ in dealing with corporate crime (Corporate Crime Reporter. one of the many dispositions by ‘‘informal arrangements’’ in lieu of prosecution. Again. Baker Hughes Services International Inc. Risk aversive behavior. suggesting that corporate compliance codes are as much a means of guarding against wealth subtraction as the promotion of wealth creation (Clarke. Likewise. a more realistic efficiency assessment relies on the numbers. With that premise in mind. pled guilty to the same criminal offenses under the FCPA from which the parent was excused. Those numbers show minimal enforcement of the FCPA by the DOJ and SEC. 2008). The statistics show that the recent increase in case filings in 2007 has also resulted in a similar increase in the use of corporate non-prosecution or deferred prosecution agreements. the efficient capital markets hypothesis (ECMH). The cost-benefit analysis also provides some support for widespread doubt in the institutional investment industry 623 regarding any contribution that improved corporate governance might make to corporate performance (Clarke. it is fair to conclude that the most likely connection to corporate performance is calculated in terms of increased profitability. The common trend of increased informal disposition in both global and domestic prosecutive spheres would seemingly diminish the claim that the difficulty of obtaining evidence in foreign venues is the justification for informal resolution under the act. the notion that the fear of a decrease in wealth may result in higher risktaking by investors otherwise typically risk averse. typically resulting in a fine less than the value of the economic transaction giving rise to the disposition combined with a non-prosecution agreement. that conclusion tends to bolster the similar conclusion in behavioral finance literature. which is also consistent with current DOJ prosecutive policies regarding disposition of non-FCPA cases (Shearman and Sterling. a corporate fine combined with a non-prosecution agreement. (BHSI). the parent corporation received a non-prosecution agreement from the DOJ. Instead. In cases where the act is enforced. market participants will engage in higher risk behavior to avoid a loss of profits or other adverse economic consequences. Where the measure of corporate governance. is not always premised on rational choice. Finder and McConnell.The Foreign Corrupt Practices Act dollars during 2007. the impact of the act can be analyzed in yet a different formulaic construct. However. the OECD is highly skeptical of what it perceives as disposition of global bribery through the use of informal arrangements. Under the ECMH there are two principle measures of corporate performance: one measured by a corporation’s profitability and the other by its market valuation. here the FCPA. highly criticized by the OECD. Concededly. noted above. The resulting correlation between ECMH and increased corporate governance is in part measured by perceived risk and risk aversive behavior (Stout. on balance. 2007). 2005.. there is some support in behavioral finance literature for the claim that more robust governance can result in increased corporate performance (Gompers et al. The OECD observed that establishing an empirical relationship between corporate governance and performance is difficult because of the ‘‘considerable leeway’’ in specifying measures of performance and indicators of corporate governance. 2003). Again. the wholly owned subsidiary. Simply put. is reduced to a mere cost of doing business. 2006). 2006. coupled with the knowledge that the consequences of getting caught under the FCPA. Under a cost-benefit analysis. In an apparent effort to minimize financial damage to the parent. may not be realistic. 2007). such as nonprosecution or deferred prosecution agreements (Appendix A). 2003). DOJ barely mentions the BHSI guilty plea.

N. Despite the strong recommendations of the Max Planck Institute for Foreign and International Criminal Law and the ICC that countries provide a comprehensive legislative approach to combating the prevalence of private sector bribery in commercial transactions. Even the battle of perceptions fails in the area of SMEs and private sector bribery. Until the cost-benefit analysis shifts in favor of a rational choice that it is in the company’s best financial self-interest to avoid the financial and reputational costs of prosecution. Convention Against Corruption and Principle 10 of the U. Other U.N. Perceptions are a major component of behavioral finance theory. the OECD does not prohibit campaign contributions to foreign candidates which are expressly prohibited by the act because the label. Perhaps. complaints that the FCPA created an uneven economic playing field in global markets. have engaged in campaigns of perception intended to influence each other. ‘‘political contribution. it is fair to conclude that the omission of private sector transactional bribery diminishes its efficacy as a tool for global corporate governance. signed the treaty. particularly where the statistics minimize the threat. In assessing the efficacy of the impact of the FCPA on global bribery. As a result. The third round of amendments to the FCPA in 1998 followed in . The International Chamber of Commerce (ICC) reported to the OECD in 2005 that ‘‘private sector corruption…is being neglected despite its growing adverse impact on world trade and economic progress’’ (OECD. Perhaps. Indeed. 11). Global Compact.624 Miriam F. p. which is not outlawed by the FCPA. the OECD monitored signatory compliance under the treaty by auditing FCPA compliance in 2002 and again in 2005. 11). Weismann order to conform the act to the requirements of treaty. 18). This treaty provided that OECD signatory members would prohibit domestic business from engaging in bribe payments in global markets. For example. 2002. The interplay of the FCPA and global initiatives In response to U. the OECD has determined that this culture of corporate compliance plans is lacking because the plans are not communicated to foreign venues where the proscribed acts of bribery occur (OECD. Companies respond in kind through the proliferation of corporate compliance plans. Finally. it is not surprising then that the SEC is so intent on creating a perception of the threat of enforcement under the FCPA. the backdrop of aspirational global pressure. the importance of credible oversight and enforcement of the FCPA becomes apparent. only then will risk aversion couple with robust governance to increase real corporate governance under the FCPA. Here.S. is an optional offense under the United Nations Convention Against Corruption and a mandatory offense under the Council of Europe Convention on Corruption (OECD. the enforcement. the OECD Anti-Bribery Convention of 1997 was opened for signature. bribery is not covered by the act and the statistics are silent. initiatives. The FCPA is the only mandatory corporate governance initiative where U. bribery in the private sector. Against. Nor does the treaty obligate any signatory to enact by domestic regulation accounting and record-keeping standards that otherwise provide the most effective means by which a paper trail evidencing bribery can be discovered and documented. 2008. The results of the OECD studies have been included as part of this efficiency study. 2008.N. there are significant substantive differences between the act and the treaty.S. p.S. However. both sides to the FCPA equation. including the U. As is always the case with treaty accession. It came into force in 1999. have joined the OECD in urging the abandonment of all forms of global bribery. In a sense these international agreements remain aspirational ethical codes as opposed to mandatory ethical codes subject to enforcement. regulators and companies. The SEC is not the only stakeholder committed to somewhat illusionary tactics. p.’’ may provide a useful conduit to pass bribes. compliance is voluntary and there is no global juridical body with independent legal authority to enforce treaty governance principles. The U. The FCPA became the means by which the treaty was to be applied domestically. companies can be punished for failure to conform to normative baseline ethical standards provided by law or treaty.

Under-enforcement of law in LDCs is ‘‘chronic and grave’’ (Carrington. would be merely a euphemism for no regulation at all. However. it is fair to conclude that treaty accession has had a negligible impact on America’s internal enforcement efforts. lack of enforcement. In any case. Later. There have been other regional multilateral attempts to curb bribery. Again. As such. not the measures themselves (Snider. additional empirical research and comparative global data would be required before any valid conclusions can be stated. the Council of Europe’s Criminal Law Convention entered into force. However. whether patterned after the FCPA or as part of voluntary compliance with a global compact. Moreover. these regional initiatives have little relation to the FCPA other than to offer the impression that the global economic playing field is somehow leveled by these agreements. enforcement is virtually nonexistent regardless of cultural context. an obvious and critical component of the model is that both external and internal oversight must be credible. There is good reason to question their efficacy. signatories retain the sovereign right to accept or disregard criticism and recommendations.The Foreign Corrupt Practices Act United States has failed to take any such action (Max Planck Institute and ICC. Enforcement reaffirms the value and importance of . the Organization of African Unity opened a similar treaty for signature. In 2003. even if it was so predisposed. In 1997. An attempt by an LDC. particularly where self-policing fails. The FCPA fits into the categories of both ineffective measures and infrequently used sanctions in the SEC and DOJ enforcement arsenals. Because corruption pervades weak governments in poor nations or LDCs. 2007). 2007). the United States has not amended the act or the implementing regulations in response to either the 2002 and 2005 OECD compliance audits referred to above. The interplay of many factors including corruption. 2004). in 2002. Likewise. corruption provides a substantial impediment to the development of world trade. 2007). limited resources. Nor would it be wild speculation to argue that the impact is similarly wanting in other signatory nation states. particularly where an LDC is rich with natural resources valued by developed nations (Carrington. based upon domestic enforcement statistics. The consequences of failed external and internal oversight on self-regulation Advocates of cooperative models of corporate governance argue that it is corporate power that makes regulatory agencies and remedial measures ineffective. the impact of treaty accession on global bribery remains anecdotal and confined to global perception in some measure. the new regulations merely add to the already considerable arsenal of sanctions that regulators possess but choose not to use (Weismann. reduce the likelihood of selfrestraint and self-regulation in the sometimes desperate competition by LDCs for a share of global resources. to import any form of a self-regulation model. This is true notwithstanding tough DOJ and SEC rhetoric about the damaging consequences of bribery in global capital markets. 625 While the OECD conducts peer review studies of its signatories to determine treaty compliance. there are no empirical studies to date to determine the effect of regional treaties as anti-bribery initiatives particularly in those regions comprising of lesser developed countries (LDCs) (Carrington. and/or cultural acceptance of bribery as an accepted business practice. in many instances. regulation is little more than an exercise in reactive legislation to restore investor confidence in the markets as the result of some major corporate debacle or the failure of corporate ‘‘gatekeepers’’ to perform their roles (Boatright. However. 1990). the interplay between the FCPA and regional global initiatives is seemingly tenuous in the context of adapting the FCPA self-regulation model through treaty accession to an LDC. the Organization of American States (OAS) entered into the InterAmerican Convention Against Corruption which includes reference to domestic obligations to impose criminal sanctions for non-compliance. In most instances. The importance of enforcement in the sphere of corporate governance cannot be minimized. As an illustration. Because the self-regulation model is premised on self-policing with regulatory oversight. A corollary of credible external oversight is enforcement. 2003). 2007).

2002). Where external regulatory scrutiny and compliance (Thornton et al. By influencing beliefs about what regulators will do. the OECD found a palpable disconnect between plans taught and understood in the U. monitoring of their overseas operations than at home. SEC regulation is reactive as opposed to proactive meaning that regulations are typically promulgated in response to a crisis situation. In a real sense. the failure of self-regulation. Law backed by credible enforcement creates the baseline normative ethical principles against which companies may benchmark legal behaviors and consequences of non-compliance. as an effective behavioral tool for self-restraint is apparent.S. p. until faced with the next corporate debacle. It is this same failure of credible oversight that continues to dog corporate governance under the self-regulatory models of the securities acts. 18). Cultural mores in each country provide differing views about the legitimacy of bribery as a market behavior in the first instance. Where enforcement levies a reputational cost. This cycle of reactive crisis governance followed by periods of relaxed supervision. moral constraints lose force as they are applied over greater distances (Smith.12 That aside. 2008). law firms and regulators argue that America has become a culture of compliance by virtue of the internalization of the FCPA legal standards through the implementation of corporate compliance plans. and best practices tend to shrink in latitude and become more restrictive whenever there is a crisis (Cadbury and Millstein 2005. active revision to corporate governance diminishes. p. and the actual implementation of those plans in foreign venues where bribery is most likely to occur. In the context of globalization. 2008). rather than ensuring that governance principles are operating to ensure wealth retention. through the implementation of corporate compliance plans. the absence of political support from the executive branch undermined the enforcement by executive agencies. Such is the case here. the failure of internal oversight in organizational system interfacing becomes apparent when corporate compliance plans. It also found that 52% of the respondents had multilingual versions of compliance plans available and only 19% rated their codes as ‘‘extremely effective’’ (OECD.13 leading practices in corporate governance showed that companies generally performed less. and export regulations. recommendations. Laws. The failure of the self-regulatory model can also be attributed in part to the cyclical nature of regulatory enforcement which characterizes its application. For example. However. Communicating a compliance culture is a commitment by senior management to form part of an overall compliance policy which must also address issues of insider trading. but also offer tax incentives to encourage the behavior. As Adam Smith observed long ago. as companies and their shareholders become more interested in wealth generation. 28). Law firms assiduously follow FCPA proceedings in the hopes of creating sufficient data points to support their claims of increased oversight and prosecution. the history of the FCPA reflects the destabilizing impact of political forces on the success of the self-regulatory model. While there has been some increase in enforcement in 2007. and Refco (Enron Report. several European countries allow tax deductions for bribe payments made in foreign venues to obtain business (Milliet-Einbinder. However. Citing a survey conducted by Transparency International. legal proscriptions play a critical role in determining behavioral outcomes (Cooter. companies are more willing to internalize legal codes of conduct. not more. as evidenced by the corporate failure in Enron. Additionally. 1759). including the DOJ and SEC. regulations. 2005). As previously noted.11 The otherwise simplistic notion that illegal behavior is always unethical becomes more complex in a world where nations maintain different baseline ethical norms and notions of illegality. are considered in the global context. This is particularly true where competing foreign business cultures not only treat bribery as commercially . 2000). designed to implement the FCPA.626 Miriam F. antitrust. undermines the use of the selfregulatory model as a predictive means of achieving normative compliance. It is an exercise. Weismann acceptable. 2002. in the methods used to integrate ethics into strategic management (Mele. Thus. WorldCom. during periods of expansion.. credible oversight and enforcement become even more complicated because the enforcement patterns are not uniform. although not always satisfactory. it is hardly the stuff that ‘‘trends and patterns of enforcement’’ are made of.

This is likewise complicated by research which indicates that differences in levels of ethicality in a dilemma can be affected by the level of corruption in a particular country (Bernardi et al. On the other hand. and recording and processing systems of two or more parts of a single organization or two or more organizations fail to mesh. Second. there is almost a complete absence of external regulatory scrutiny and internal corporate supervision. Compliance plans are practically non-existent and not required. self-regulation through implementation of compliance plans is almost nonexistent. bribery is perceived as a negative choice where managers . Rational-choice theory and normative ethical corporate behaviors: not bribery It is useful at this point to hearken back to management theory and its application to selfregulatory models. corporate compliance plans have become a necessary cost of doing business for issuers operating in foreign venues.The Foreign Corrupt Practices Act internal corporate supervision is high. system interfacing may not occur at all. under circumstances that minimize both external and internal regulatory scrutiny. Research shows that individual attitudes favoring bribe payment is positively affected by perceived necessity of the bribe and approval by upper management. under circumstances where it is almost impossible to detect. The plans merely serve to cushion the blow in the event of regulatory action. self-regulation will be predictably at its lowest level. the perspective of managerial decision-making on the supply side of the bribe transaction impacts the institutional model. the implementation of domestic baseline ethical norms as a self-regulatory restraint is predictably higher. self-regulation in foreign venues where bribery is more likely to occur. corporations will achieve regulatory compliance through an internal system of checks and balances which can be relied upon by the regulators. It is reasonable to surmise that for nonissuers. 2008). the least intrusion by regulators into internal corporate affairs provides the most efficient and effective means of corporate governance and internal control practices (Shover and Hochstetler. In the rational-choice calculus. procedures. 19). detection and credible oversight as to SMEs is practically non-existent (OECD. In short. The result is a failure to facilitate certain behaviors or transactions. specifically in the context of the FCPA. Because the act does not cover foreign operating entities where ownership by the parent is <51%. In the absence of credible internal oversight. the transaction system itself may be the chosen system mechanism for bypassing the system interface problem? The result may be unlawful behavior (Vaughan. becomes little more than a ‘‘nod and a wink’’ in the context of distant global operations. Here. or require immediate exchange of resources. the situation is even more suspect with respect to privately held companies. Rational-choice theory as a basis for predicting corporate behaviors in the marketplace from an institutional perspective relies on two key assumptions. 2006). The corporate compliance plan. business-as-usual in the form of bribe payments to expedite commercial transactions in foreign venues becomes the path of least resistance to bypass organizational interface problems. Should one organization be unwilling or unable to devote resources to a legitimate resolution. This failure of organizations to insure uniformity of policy and practice in all organizational participants has been identified as a failure of ‘‘system interface.. if the plan is communicated at all. rules. First.’’ A system interfacing problem generally arises when the language. The self-regulatory model of corporate governance diminishes in effectiveness as global markets increase organizational distances and decrease external and internal regulatory presence. showcased in domestic operations. 1982). where external regulatory scrutiny is low and internal accounting and record-keeping is not required. However. When combined with the non-application of the accounting and record-keeping provisions of the FCPA to non-issuers. p. However. 2002. 627 The failed synergistic implementation of a corporate compliance plan between both the domestic and foreign members of the larger corporate organization underscores the nature of the system interface problem: a failure to communicate baseline ethical norms across a single organizational corporate culture. in the foreign locale where illegal and unethical conduct most readily occurs.

The Cragg and Woof study observes ‘‘…that what should be clear is that the failure to respect the spirit of the law was not without its cost. and the decision to respect the law was not without its benefits for the companies involved’’ (Cragg and Woof. Lord Cadbury and the International Corporate Governance Network. play in ensuring compliance with ethical principles. observed: ‘‘The proper governance of companies will become as crucial to the world economy as the proper governing of countries. focus on the unethical nature of the act (Powpaka. The choice to bribe is also impacted by demand in the foreign venue. foreign economic and cultural factors also impact the institutional rational choice calculus where institutional agents are acting in response to demand in the foreign venue. p. Conclusion: best practices James Wolfensohn. The theory being that increased regulatory oversight constricts necessary risk-taking behavior by private enterprise and thus. based on a real costbenefit analysis which includes both institutional and individual choice factors. Cultural factors such as high power distance and high masculinity in a country were also likely to be associated with high level of bribe taking (Sanyal. 2005). adversely impacts economic growth (SEC. The failure of credible oversight and political support for increased regulation in the commercial markets is part of a larger and continuing debate about the most effective and efficient means of achieving corporate self-restraint in commercial affairs. Lord Cadbury acknowledges that membership in the global economy by nation states is voluntary and the extent to which each nation complies with uniform standards of corporate governance is a measure of choice and self-restraint. Thus. ICGN. For example. Because rational choice. whether domestic or international. Because self-regulation is often ignored in cyclical periods of growth and systematic corporate interfacing between domestic and foreign subsidiaries has seemingly failed under the act. the regulatory constraints chosen by the United States in the form of the FCPA is the measure for normative corporate compliance in world markets. 2005). emphasizes compliance with the OECD 20 Principles that provide direction to companies in achieving global governance (Cadbury and Millstein. political opposition and the absence of credible oversight diminish the utilitarian application of the FCPA as a normative baseline for ethical behavior and corporate governance. likewise. such changes may not be realistic in a political climate where the executive branch and Congress are not prepared to curtail corporate activity under tightened regulation. Perhaps. does not always result in a ‘‘right’’ or legal decision. While not without merit in the abstract. the need for some measure of regulation is a critical component in the rational choice calculus as well (Garland. much depends on the external forces that ultimately determine the real impact of any regulatory model implemented to affect economic behavior. 133). 2002. 2002). Results indicate that bribe taking was more likely to be prevalent in countries with low per capita income and lower disparities in income distribution. and other third party professionals. it is in the best interest of achieving baseline corporate compliance under the FCPA that respect for the law can be achieved where resolution by informal means is no longer the disposition of choice by the SEC and DOJ. 2000). While legislative revision to the FCPA to expand its coverage to non-issuers and untie stock ownership and control in connection with the coverage of foreign subsidiaries may be appropriate. former President of the World Bank. boards of directors. While the list of best practices is long.628 Miriam F. Lord Cadbury. The SEC remains firmly rooted in the principle of self-regulation as the best means to achieve restraint in a free market economy. In the case of the FCPA. emphasize the role that all stakeholders. managers. 2001). Weismann best governance practices for corporations to follow in the same way that governments are encouraged to avoid public corruption. investors.’’14 There is no shortage of recommendations regarding . Yet. the next best practical solution is increased enforcement. accountants. Stiffer enforcement penalties that incur economic and reputational costs and increased certainty of punishment may revitalize the use of the FCPA as an effective tool of corporate governance in the global regulatory environment.

and Sweden.gov/cgi-bin/txt-srch-sec?section= Entire+Website&text=fcpa&sort=rank#section0 10 See. bribes paid to foreign public officials were only deductible if they were documented business expenses and if they were a customary practice in the country of the recipient.The Foreign Corrupt Practices Act Notes The OECD is an international agency responsible for the promulgation of economic policies aimed at growth and development among the advanced industrial market economies that comprise its membership. Germany. 13 Transparency International is a leading NGO in the fight against global corruption and publishes an annual Bribe Payer Index based upon global surveys to OECD members. Proscribed payments may include favorable tax or customs treatment. 1999. (5) whose interests need to be considered.S.pdf 11 The OECD Observer reported that in Denmark. 1423–24 (1988). Iceland. http://www.html 3 Foreign Corrupt Practices Act Amendments of 1988. the Shearman and Sterling FCPA Digest of Cases does include ‘‘reported open investigations’’ for 2007. 100-418. and Switzerland – bribes to foreign public officials were still as deductible as any other business expense. (4) who normative theory applies to.sec. Luxembourg.seq.C. (2) grounds for accepting those values. An excellent informational source. Belgium. et. Pub. 1418. Norway. Portugal.transparency. ‘‘grease payments’’ which remain legal under the FCPA still qualify for favorable tax domestic treatment.usdoj. (3) a decision principle that businesses who accept the value can use. (c). 6 According to Bishop every normative theory needs to address seven issues. (Cragg and Woof. Austria.C. 38. 2 Foreign Corrupt Practices Act of 1977. the data regarding open investigations should be reviewed with some caution. 2. In other OECD member countries – Australia.’’ that are legal under the local law of a foreign jurisdiction may be deducted for tax purposes. As the report indicates many of the cases labeled as ‘‘investigations’’ are actually matters self-reported by companies. §§ 78 dd-1 to -3 (1977). 5003(a). No. (6) in what context it applies. France.iic-offp. Jan. p. 12 Much of the trend is anecdotal in nature. 15 U. 7. 4 Foreign Corrupt Practices Act of 1977. 99) 9 http://www. http://www. and (7) the legal and regulatory form it assumes.3d 738 (5th Cir. 8 Cragg and Woof cite several similar government research studies and an independent economics study of U. Kay. 2004). Economist. trade in Nigeria which led to the conclusion that 1 629 American Exports were growing faster in markets particularly exposed to corrupt practices than in area in which corruption was less prevalent. Independent Inquiry Committee into the United Nations Oil-For-Food Programme Report (Sept. The ethical principle needs to identify: (1) recommended values.S. United States v. 539 F. Section 162(c) (1) of the Internal Revenue Code disallows deductions for illegal payments to officials or employees of any government. p. L. so-called ‘‘grease payments. 2002. 7 While U. http://www.gov/criminal/ fraud/docs/statute.org/policy_research/ surveys_indices/cpi&sa 14 The World in 1999. 2005). 15 U.S.S. New Zealand. disposed of or instances where charges have been filed. §§ 78dd-1. Because public statistics are not regularly published by the government. Netherlands. However. 5 See. . tax code denies a tax deduction for bribe payments per se. There are two exceptions: facilitation payments. 102 Stat.org/documents/Sept05/ Mgmt_V1. the statistics do not indicate the number of ‘‘investigations’’ closed.

5 million to a Emirate of Qatar. U.S. Weismann 3.S. Katy Industries is an oil production company that bribed Indonesian officials through an off-shore corporation in the amount of $250K. Carver (S.000 and fined $50.D. Carver and Holley consented to permanent injunctions. 4. In order to secure an oil drilling concession. Page consented to a permanent injunction and charges against 6 of its officers were dismissed. 1978) 1978 (SEC) Charges dismissed against individuals Miriam F. v. U. Morocco. The company paid restitution of $337. and permanent injunction against further FCPA violations. whereby Kenny obtained exclusive rights to the promotion. Katy Industries (N. v. Page Airways (D. distribution and sale of Cook Islands postage stamps through the world.D.630 Appendix A Case name 1978 (SEC) Date of prosecution Company name Brief case description Notes 1.5 million in bribes to six Asian and African countries including Gabon. SEC v.D. and Saudi Arabia to sell its aircrafts and products. Kenny Int’l Corp. Two Katy directors were issued permanent injunctions and Katy was required to establish an outside compliance review committee. . the company entered into a settlement agreement with the foreign government. 1978) 2. Ill. Fla. Carver and Holley (officers of Holcar) paid $1. The chairman was permanently enjoined. Kenny paid bribes to Sir Albert Henry and The Cook Islands Party to ensure the renewal of s stamp distribution agreement. The purpose of the bribes was to secure an oil and gas contract in Indonesia.000.C. SEC v. Page sells and services aircrafts and paid $2. 1979) 1979 (DOJ) Holcar Oil Corp. 1979 (DOJ) Kenny Int’l Corp.

512 civil penalty. The Foreign Corrupt Practices Act 8. Eight management persons were charged with conspiracy. The company was issued a permanent injunction and paid $229.000. Crawford Enterprise. CEI made a bribery payment to two sub-directors of Pemex to obtain purchase orders from Pemex for turbine compression systems and related equipment. The company was fined $750.000 civil tax payments.S. SEC v. ISC paid $23 million in bribes to foreign officials in nearly a dozen countries including Saudi Arabia and Iran to secure energy and forestry processing contracts. 9. Applied paid a bribe to the Administrative Secretary of the Chief of Purchasing at Pemex and other Pemex officials in Mexico to obtain a contract from Pemex for compression-related equipment and spare parts. v. 631 . v.000 and two managers were fined 5. and abetting.S.S.APPENDIX continued Date of prosecution 1979 (SEC) ISC is a Del. Process Products Overseas Inc. 1982 (DOJ) Crawford Enterprise. aiding. 1979) 6.000 and was charged with conspiracy. 7. U. International Systems & Controls (D.450. U. Inc. 1980 Tesoro Petroleum Corp. and $5000 prosecution costs. v. aiding. and abetting and paid fines. Ruston made a bribery payment to two sub-directors of Pemex to obtain purchase order from Pemex for turbine compression systems and related equipment for Ruston and CEI. Tesoro made a bribery payment to the worldwide foreign government officials or political leaders to obtain foreign oil and gas concessions from foreign governments. $300. v. and an issuer. Two ISC officers consented to permanent injunctions. Process Products Overseas Inc. The company consented to the entry of a permanent injunction and agreed to appoint a new director to keep accurate books and records. Ruston Gas Turbines Inc.C. 1982 (DOJ) Ruston Gas Turbines Inc. U. Appl. The company was fined $3. SEC v.. Company name Brief case description Notes Case name 5. U.D.S. Gary Bateman 1982 (DOJ & SEC) Appl. Inc. Tesoro Petroleum Corp. Corp.

McLean. The president was fined $10.E.S. The company was fined $20. U. Two managers were charged with conspiracy. C. Wallace Co. Same case . The Companies was charged with CFTRA (fines.S. v.. 1987 (DOJ) Int’l Harvester Co. $500. Tex. U. aiding and abetting.000 and charged with aiding and abetting. U. 1982). Two managers were charged and received probation and community service..632 APPENDIX continued Date of prosecution 1982.000) and SEC action.S. Carpenter Environmental Tectonics Corp Int’l. Company name Brief case description Notes Case name 10.1985.S.S. v. 1983 (DOJ) CE.W. Wallace senior officers allegedly paid $1. Miller Corp. Wallace company paid a $530K fine. and Carpenter Environmental Tectionics Corp. The SEC also brought actions against Wallace and Rodriguez. 1983 (DOJ & SEC) Sam P. Int’l Harvester co. McLean v. (S. 1982. Mexico.D. v. Sam P. Miller Corp. Rodriguez (president of Wallace) received 3 years probation and a $10K fine. Wallace Company is a Texas construction firm. U. Harvester made bribery payment to two officials of Pemex to obtain from Pemex purchase orders for turbine compression systems and related equipment for Solar and CEI.000 and paid $40.391 million in bribes to the Trinidad and Tobago Racing Authority to obtain a contract to build the racetrack’s grandstand. Inc.S.P. Wallace.R. Wallace Co. v.S. to obtain purchase orders from Pemex for turbine compression systems and related equipment for CEMCO and CEI. 1983) 1983 (DOJ & SEC) Wallace Company Cases #12 and #13 arise out of the same investigation 13. Rodriguez (D. Miriam F. Int’l Harvester Co. v. Weismann 12. Kirkpatrick & co. v. U. Marquis King 11. v.000 and suspended s and community services. v. The company was fined $10. W.000 prosecution costs and charged with conspiracy to violate FCPA. U. U. CEMCO paid a bribe to two sub-directors of Pemex.

U. 1985 (DOJ) Silicon Contractors Inc.S.. Carpenter and W.S.000. Goodyear made a bribery payment to an official of the Iraqi Trading Company to influence the Iraqi government to buy its car and truck tires. Harry G. Goodyear Int’l Corp. Ashland Oil.8 million contract from the Nigerian government to furnish equipment for an Aero Medical Center at Kaduna Air Force Base in Nigerian. president of a Florida company.S. Hall 17. The company and the chairman both consented to the entry of a permanent injunction. Gurin was charged with conspiracy to violate FCPA. Alfred G. v. Three officers were permanently enjoined. Listed in SEC SelfReporting Document 18. Duran and Jose Guarsch 1989 (DOJ) No corp. an instrumentality of the government of Oman. Silicon Contractors Inc. Inc.S. V. 1986–1988 Ashland Oil. Silicon made a bribery payment to Mexican officials to obtain the award of a certain contract to manufacture and install radiation and fire-stop penetration seals for a nuclear power plant in Laguna Verde. The company was fined $250.S. Rober Gurin. Howes v. Company name Brief case description Notes Case name 14. Joaquin Pou.APPENDIX continued Date of prosecution 1985 (DOJ) W. SEC v.000 and permanent injunction. Williams v. made a bribery payment to Dominican Republic officials to secure the release of an airplane confiscated for use in drug trafficking. v. U. Inc. Ashland made a bribe to the Omani government official to obtain crude oil contracts with the Oman Refining Company. The Foreign Corrupt Practices Act 16. U. Kirkpatrick. Kirkpatrick. 633 . charged Kirkpatrick made a bribery payment to various Nigerian political and military officials to obtain a $10. Inc. 1989 (DOJ) Goodyear Int’l Corp. Atkins. U.. US.S. v. The company was fined $150. Mexico. Carpenter 15. v. Inc.

634 APPENDIX continued Date of prosecution 1989. Mason Eng’g Inc. The company was fined $75.. The firm received a permanent injunction against future FCPA violations. 1991 (DOJ & SEC) Napco Inc.G. of Greyhound Lines Inc. 1991 (DOJ) Eagle Bus Mfg. U.000 and was charged with conspiracy to violate FCPA.000 and $140. Dornier GbgH (D.S.000 and restituted $160. Liebo 20. Eagle made a bribery payment to two Canadian managers of Saskatchewan Transp. 23. U.000 settlement of civil liability and $75. Company name Brief case description Notes Cases #19 and #20 arise out of the same investigation Case name 19. Harris Corp 1990 (DOJ) Harris Corp. The company was fined $785. Castle et al. Eagle bus.5 years suspended sentence and 600 h community work. Harris made a bribery payment to a Colombian legislator to obtain the telecommunications contracts from the Empress Nacional de Telecommunications via a consultant and a local company. v. . F. v.S. Minn. The company was granted a motion for judgment of acquittal.S.S. v. The president was fined $75. Blondek et al.S. and Grancis G. U. Dornier gave a 5% kickback ($175K) to a Nigerian official in exchange for securing a contract for military aircraft parts and maintenance. 1990. U. U. and Venturian Corp. The company received a permanent injunction for FCPA and one Canadian agent of seller was charged with conspiracy to violate FCPA. v. Mason 1990 (DOJ) F. U. v. to ensure that Eagle’s bide to sell 11 buses to the STC.S. Venturian and Napco made a bribery payment to two officials of the Niger government to obtain certain Foreign Military Service contracts for spare parts and maintenance for C-130 military aircraft from the Niger Ministry of Defense. v. v. Dismissed 22.G. v. Weismann 21. Co. 1990) 1990 (DOJ) Napco Same case Miriam F.. MEI made a bribery payment to an German official to get the business of TSCM equipment.S.. U. U. and Venturian Corp. v. Napco Int’l Inc.000 and charged with conspiracy for FCPA. Mason Eng’g Inc. Morton. Co.S. U.S.000 settlement of civil tax liability and one manager received a 1.

ATC consented to a permanent injunction for future FCPA violations. v. 28. U. The company was fined with $20. U. 1994 (DOJ & SEC) GE and National Airmotive Corp. v.S. 1993) 1993. Lockheed made bribery payment through its Egyptian consultant to get the contract of $79 million for three aircraft.75 million. Herzberg The Foreign Corrupt Practices Act 27. criminal penalties and 1. The company was fined $500.000 in criminal and civil penalties and NA was fined 1. Y & R made a bribery to an advisor of the Jamaica Tourist Board and the Jamaican Minister of Tourism to obtain an advertising account with the Jamaica Tourist Board. U. GE made a bribery payment to an Israelis Air Force officer to get the contract of $300 million via an Israeli attorney. v. Company name Brief case description Notes Case name 24. v.S. mail fraud. GE was fined $69. The company was fined $21.000 from the government contract.. Two managers were sentenced to 1. Nassar 1994 (DOJ & SEC) Lockheed Corp. ML.S. v.S.000 and owner was fined $5. U. v. Steindler et al. Young & Rubicam Inc. v.APPENDIX continued Date of prosecution 1990.5 years imprisonment and fined $20. Vitusa made a bribery payment to a Dominican republic official to collect its outstanding debt of $163. wire fraud. 1993 (DOJ) 26. civil fines. U. Young & Rubicam Inc. respectively. 25. Unspecified amount of bribes to Greek officials to secure a contract for sale of racetrack parts. Abrahams v. Managers of two companies were charged with conspiracy. Md.000.25 million. 1994 (DOJ) Vitusa Corp.S. Love.000 and charged with conspiracy.8 million and paid $ 3 million settlement. 1994 (DOJ) Young & Rubicam Inc.S. U.. U.000.S. Lockheed Corp. Vitusa Corp.S. American Tolalisator (D. v. 635 . RICO violations and 33 alleged racketeering acts. U..

S. Triton made a bribery payment to various officials of the Indonesian government to obtain favorable decisions from tax auditors.S. The company was fined $1500 and the president was fined $50 and sentence to community service. charged 33.A. 1997 Triton Energy Corp. including two gas turbine power units. v. Company name Brief case description Notes Case name 29. The president was fined $15.’ U. Control Systems Specialist Inc. Herbert Tannebaum 1998 (DOJ) Saybolt International (oil refinery company) http://www. v. SEC v. v. v. U. U.S. v.S. v. Saybolt Inc. 1998 32.000 penalty. 30. U. U.000.S.P. The company entered a settlement and agreed to pay a civil penalty of $3. S. Miriam F. .. Saybolt North America Inc. Darrold Richard Cities 1998 (DOJ) Control systems Specialist Inc.S. Z to obtain a contract for the company to sell surplus US military equipment.A.S.S. v.. The company made bribery payment to obtain a contract for sale of a garbage incinerator to the government of Argentina. Frerik Pluimers U.htm Tanner Management Corp. Weismann 31.P. Col. Triton Energy Corp. The company consented to an injunction and paid a $300. David H. com/index.000 and charged with conspiracy to violate FCPA. U. Montedison.S. to the BAC. Montedison made a bribe to Italian politicians through a Rome real estate developer to ensure political backing to either change the terms of a contract or overturn the decision of a judge.000.636 APPENDIX continued Date of prosecution 1996 Montedison..saybolt. no corp. Mead’ U. v. Richard made payment to BAF/Lt. tax refund from the government and receive a favorable decision to revise rates paid under pipeline tariff. The company was charged with committing financial fraud by falsifying documents to inflate artificially the company’s financial statements as well as the corporate reporting.

Inc. ABNH then improperly accounted for this payment on its books an records as a consulting fee.APPENDIX continued Date of prosecution 1999 (DOJ) Company name Brief case description Notes Case name 34. v. (‘‘ABNH’’) authorized ABNH to make a $239. Int’l Material Solutions Corp and Donald K. The company was fined $500 and the president was fined $2. IBM paid a bribe to several directors of Banco de La Nation Argentina to obtain awarding of the systems integration contract to IBM Argentina. and 150 h community service. 1999 (DOJ) Int’l Material Solutions Corp. Former Chairman of the Board and Chief Executive Officer.000.com/ Metcalf and Eddy gave travel advances and accommodation upgrades to Egyptian officials to enhance their bid for a architectural and engineering contract. v.S. The defendants paid $400K in fines and paid $50K toward the costs of the investigation in addition to agreeing to outside monitoring of their compliance. IMS paid $67. Inc. The $239. Qualey 36. American Bank Note Holographics. Cases #37 and #38 arise out of the same investigation 637 . International Business Machine Corp. 2001 American Bank Note Holographics (secure document identification products) http://www. 4 months home confinement. as well as the former president of American Bank Note Holographics. Ma. In the Brazilian Air Force to get the approval of a bid to sell ten forklift trucks. U.000 payment to a foreign bank account for the benefit of one or more officials from a foreign government. abnh.500 and sentenced to 3 years probation.S. 1999) 35. Col. SEC v. The company was charged with violation of the FCPA accounting provisions and fined a civil penalty of $ 300. U. SEC v. Metcalf & Eddy (D. 2000 IBM The Foreign Corrupt Practices Act 37.563 to Lt.000 payment comprised 40% of the contract’s value and constituted an additional payment ABHN made to obtain business with the Saudi government.

Mattson and James W. v. Inc. Harris 42.B. Weismann 41.cfm Cantor paid kickbacks. The managers cases were pending. Two managers’ charges were dismissed on legal grounds.S. KPMG-SSH. OSI officials paid bribery payment to obtain favorable changes to Costa Rican law and regulations. (rice) http:// www. US. Feitz. v. Cantor 39. P. Eric L.S. David Kay 2001–2002 (DOJ & SEC) American Rice. no corp. 2001 (SEC) KPMG SEC v. charged 40. Hernandez Miriam F.000.93 million.S. Daniel Ray Rothrock 2001 (DOJ) Owl Securities and Investment Ltd.638 APPENDIX continued Date of prosecution 2001 (DOJ) ABNH Company name Brief case description Notes Same case Case name 38. no corp. US. com/8-0.S. charged 2001 (DOJ) Allied Products corp. v. U. R. U. In the matter of Baker Hughes Inc. SEC v. The first joint civil injunction action by SEC and DOJ Cases #42 and #43 arise out of the same investigation .F. The officials manipulated false shipping documents reducing the amount of customs duties and sales taxes due to Haitian authorities. Four officers were charged with violation to FCPA or Travel Act and the case is pending. U.. KPMG-SSH was joint civil joint civil injunctive action by the SEC and DOJ.K. A. U. KPMG made a bribe to Indonesian tax official to reduce tax assessment for PT Eastman Christensen (PTEC) for the amount of $2. The vice president paid $100 for special assessment. Daniel paid bribery payment to obtain sales contracts of work-over oil rigs. v. $239..amrice. V. Halford. for Saudi Arabian government officials to obtain the contract to produce holograms for Saudi Arabia. ARI has a Haitian subsidiary engaged in the import of rice to Haiti.

made false entries to cover the bribery payments in business expenditure account. Kay. There were at least 12 $500. (rice) http://www. In conjunction with the SEC action.APPENDIX continued Date of prosecution 2002 American Rice. Note: The bribes were authorized by Mr. Joel Malebranche (customs clearance monitor).amrice. U. Joseph Schwartz (controller for Haiti operations).000 to Haitian officials. In addition.000 in bribery payments to Haitian customs officials to reduce customs and duties taxes owed by the company. and Allen Sturdivant (prepare of shipping documents) were implicated in the improper payment scheme. com/8-0. SEC v. Murphy (S. Cal.D. The purpose of the improper payments and bribes was to reduce the import taxes on ARI’s rice shipments into Haiti. SEC v. Schwartz. Malebranche. and Allen W. 2002) The Foreign Corrupt Practices Act 44. Tex. Sturdivant paid $1. v. the controller for ARI Haiti.5 million in improper payments to illegally reduce ARI’s tax liability. Inc.S. Joel R.cfm Company name Brief case description Notes Two individual cases dismissed Case name 43. Cases #44 and #49 arise out of the same investigation 639 . Douglas A. who was indicted in 2004 in parallel proceedings (see Kay and Murphy brief). the three defendants engaged in at least 12 separate bribe transactions with Haitian officials totaling $500. Syncor agreed to pay a $2 million criminal fine in conjunction with the FCPA violation. Syncor 2002 (DOJ & SEC) Syncor International (medical devices and pharmaceuticals – need to find website or just get annual report from SEC website) American Rice executives made approximately $500.D. Syncor paid $600K in bribes to Taiwanese officials to entice the government officials to retain Syncor’s medical services. Schwartz.000. Joseph A. Syncor (C. Syncor agreed to pay a $500K fine and hire an outside consultant to monitor its compliance programs. 2002).

2002) 2002 (DOJ) Miriam F.640 APPENDIX continued Company name Central Asia American Enterprise Fund (former U. not the anti-bribery provisions. was sentenced to 1 year and 1 day in prison.) 2002 (SEC) Chiquita Brands International. vice-presidential fund) Brief case description Notes Case name Date of prosecution 45. Banadex’s chief administrative officer authorized the payment of the equivalent of approximately $30. which is owned and operated by Banadex. Weismann 47. v. The payments were incorrectly identified and recorded as an $18.(D. Banadex is a subsidiary of Chiquita Brands in Colombia.chiquita..000 to local officials to secure renewal of a license allowing Banadex to hold goods for customs inspection or ‘‘naturalization’’ at its Turbo.D.S.C. In order to maintain Turbo port facility. licensed where goods could be stored pending inspection by custom officials. 200 h community service. U.000 payment paid in two installments for renewal of license. Both defendants pled guilty. were actually at issue in Chiquita. (food company) http:// www. Sengupta and Basu were task managers for World Bank projects. Basu subsequently withdrew his guilty plea in May 2006. Basu (D. U.S.D. Sengupta was sentenced to 2 months in prison and a $6K fine. Both payments were paid from a Banadex account used for discretionary expenses.000 maritime donation for the first payment and as a maritime agreement for the remainder in order to conceal payments. Payments were made without the knowledge or consent of any employees within the United States. SEC v. In the Matter of Chiquita Brands International. Chiquita Brands International. Pitchford also negotiated to allow several foreign nationals to buy Turkmenistanian goods at inflated prices. and forfeiture of $142K and a luxury yacht. v. in 1995 and 1996 Banadex’s chief administrative officer authorized a CEA agent-a Colombian entity licensed by the Colombian government to act as intermediary between corporations and Colombian customs officials – to make a $30.S.C. Note: The FCPA record keeping and accounting provisions. Pitchford (D. Sengupta. Colombia port facility.com/ Pitchford allegedly paid $400K in bribes to Turkmenistan officials to assist in efforts of obtaining CAAEF contracts totaling approximately $6 million.D. 2002) 2002 (DOJ) 46. Inc. a $400K fine. During an internal audit performed by Chiquita’s internal staff management was made aware of a number of instances in which Banadex had not provided documentation required by Chiquita’s internal accounting control procedures regarding discretionary expenses. Inc. They allegedly paid out $127K in bribes to secure three contracts for World bank development projects.C. Pitchford pled guilty. . Inc.

In 1997 BellSouth also acquired 49% ownership interest in Telefonia of Nicaragua with an option to acquire an additional 40%. On 1999 the committee voted to repeal the restriction and BellSouth increased its ownership in Telefonia to 89% in 2000.com/ Brief case description Notes Case name Date of prosecution 48. Bellsouth Corp.500 a month so that she would lobby for repeal of the foreign ownership law. however. Telefonia then retained the wife of the chairman of the Nicaraguan legislative committee and paid her $6. Telcel senior management authorized illegal payments to six offshore companies and in 1998 Telefonia retained the wife of the chairman to of the Nicaraguan legislative committee to lobby for repeal of the foreign ownership law. BellSouth option could not be exercised due a Nicaraguan law that prohibited foreign companies from acquiring a majority interest in Nicaraguan telecommunications companies. computer and contracting services. Between 1997 and 2000 former Telcel senior management authorized improper payments totaling approximately $10. SEC v. 2002) 2002 (SEC) The Foreign Corrupt Practices Act In 1997 BellSouth acquired a majority interest in Telcen of Venezuela and 49% ownership interest in Telefonia of Nicaragua. with an option granted by members of a Nicaraguan family to acquire an additional 40%.D. Ga. Note: The complaint does not mention bribes or kickbacks explicitly.8 million to six offshore companies and recorded the disbursements in its books and records based on fictitious invoices that made it look as if payment had been provided for professional. In connection with the acquisition BellSouth’s wholly owned subsidiary BellSouth International. bellsouth. Inc. (N. obtained operational control of the company. 641 .000 paid to her as consulting services and as a severance payment. Nicaraguan law prevented BellSouth from exercising this option.APPENDIX continued Company name Bellsouth (telephone services) http://www. On May 1999 Telefonia terminated the lobbyist and recorded the total sum of $60.

Williams also had to pay taxes on the $2 million kickback he received.com/ home/default. Williams pled guilty to conspiracy and tax evasion and was sentenced to 46 months in prison and a $25K fine. The two negotiated millions of dollars (in excess of $2 million) in kickbacks for Kazakhstanian officials in conjunction with oil rights.S. resident and former chairman and chief executive officer of Syncor.D. v. 2003) 2003 (DOJ) Mercator (airline services) http://www. through Syncor Taiwan. paid commissions and referral fees to doctors employed by private and public hospitals in Taiwan. Giffen’s new trial date has yet to be set. Syncor Taiwan improperly r ecorded the payments in its accounting books and records as ‘‘Advertising and Promotions’’ expenses.642 APPENDIX continued Company name Syncor International (medical devices and pharmaceuticals – need to find website or just get annual report from SEC website) Same case Brief case description Notes Case name Date of prosecution 49. . These improper payments were made for the purpose of influencing the doctors’ decisions to purchase Syncor products and refer patients to Syncor Taiwan’s medical imaging centers. U.N. was charged in connection with improper payments made between 1985 and 2002.Y. Syncor 2002 (SEC) Miriam F. Weismann 50. Giffen was the chairman of Mercator and Williams was a former executive for Mobile Oil. mercator. yet failed to do so. Fu was Syncor’s founder and at times Syncor’s CEO and Chairman of Syncor’s board of directors. Syncor.S. Fu had the authority to maintain compliance with existing internal controls and to implement additional internal controls to comply with FCPA’s books and records and internal controls provisions. Giffen & Williams (S. The improper payments were made by Synor’s subsidiary in Taiwan (Syncor Taiwan) to physicians employed by state-owned and state-controlled hospitals. a U.aspx Monty Fu.

The purpose of these payments was to obtain a controlling interest the privatization of the SOCAR.N. and lavish trips to Azerbaijan officials. v. The 5 co-conspirators paid out millions in direct bribes. 51–54 arise out of the same investigation Case name 51. The 5 co-conspirators paid out millions in direct bribes. Omega Advisors (S.D.S. promises of profits.D. U. 2003 (DOJ) Oily Rock Group U.N. v.S.Y 2005) 643 . Same case. Omega signed a non-prosecution agreement and agreed to forfeit $500K in profits and continue to cooperate the investigating authorities in the US and abroad. The 5 co-conspirators paid out millions in direct bribes.N.N.N.Y.APPENDIX continued Date of prosecution 2003 (DOJ) Oily Rock Group Company name Brief case description Notes Cases nos. The purpose of these payments was to obtain a controlling interest the privatization of the SOCAR. Bodmer (S. promises of profits. Farrell pled guilty to conspiracy charges and was sentenced in 2004 (no information was given as to the length of his sentence). Clayton Lewis (S. Omega advisers were involved with an Oily Rock subsidiary. Lewis was an executive of an Oily Rock subsidiary. Bodmer did later plead guilty to money laundering. U. The purpose of these payments was to obtain a controlling interest the privatization of the SOCAR. Thomas Farrell (S. and lavish trips to Azerbaijan officials. luxury items. The 5 co-conspirators paid out millions in direct bribes. luxury items. Bodmer’s lawyers prevailed on the motion to dismiss.D. luxury items. 2003) 2003 (DOJ) Oily Rock Group 2003 (DOJ) Oily Rock Group Same case 54. 2003) Bodmer was an executive of an Oily Rock subsidiary and served as legal counsel. Farrell was an executive of an Oily Rock subsidiary. The purpose of these payments was to obtain a controlling interest the privatization of the SOCAR.Y. and lavish trips to Azerbaijan officials.S.D. v. luxury items. 2003) Same case The Foreign Corrupt Practices Act 53. and lavish trips to Azerbaijan officials. Three individual defendants dismissed.D. However. (S.S. 2003) 52. promises of profits. v.Y.Y. promises of profits. U.

Angola.com/ BJ Services Company. Cases #56 and #75 arise out of the same investigation. BJ Services 2004 (SEC) BJ Services (chemical processes and machines) http://www. S. Inc. v. products and equipment to worldwide petroleum producers. and Philippine officials to retain explosive devices sales.D.644 APPENDIX continued Company name Vetco International (oil company) Brief case description Notes Cases #55 and #74 arise out of the same investigation This is one of the few cases involving distributors rather than sales representatives of consultants. . InVision Technologies. (2005) 2004 (SEC and DOJ) InVision Technologies Vetco Gray executives paid $1.1 million in bribes to assist subsidiaries in Nigeria. and these payments improperly recorded in BJSA’s books and records in an effort to conceal them. made illegal or questionable payments to Argentinean customs officials. an Argentinian subsidiary of BJ Services. BJSA had improperly imported products. was charged with making illegal payments to Argentinian customs officials. U.’’ Also. Weismann 57.A. ABB Vetco Gray (S. InVision settled with the SEC to pay $589K in disgorgement and $500K in fines. These payments were improperly recorded in BJSA’s books and records as a debit to the ‘‘Vendor Payable Account. Tex. InVision. v. Miriam F. Vetco agreed to a $10. and the bribery payments were made in an effort to have these customs violations overlooked.9 million in disgorgement and a $10. (BJSA). Chinese. In 2001.S. InVision entered into a nonprosecution agreement with the DOJ and agreed to pay a $800K criminal fine. BJSA negotiated with the customs official through a third party. bjservices. InVision sales agents and distributors allegedly paid more than $95K in bribes to Thai. Non-prosecution agreement Case name Date of prosecution 55.5 million fine in conjunction with the DOJ charges. a Houston company that provides oilfield services. 2004) 2004 (SEC and DOJ) 56. SEC v. and the bribery payments were made by issuing two checks to a lower-level BJSA employee who cashed the checks and gave the proceeds to the official. The SEC settlement involved $5.5 million civil penalty.S. the controller for BJ Services. from 1998 through 2002 other improper payments to customs officials were made. and Kazakhstan to retain business. U.

jsp SEC v.scheringplough. Listed in SEC SelfReporting Document 645 . The purpose of the bribes was to obtain competitor bid information and secure favorable consideration of ABB’s contract. The purpose of the payments was to induce the director of the foundation to buy Schering’s pharmaceutical products.000 to a charity to induce the director of the fund to purchase Schering Plough pharmaceutical products. A Polish subsidiary of Schering Plough allegedly paid $76. One of the ABB executives (Campbell) received $50. The complaint alleges that Schering-Plough also had inadequate internal controls to prevent the fraudulent recording of the transactions. four ABB executives paid the Nigerian state-owned agency responsible for oil exploration approximately $1 million in bribes in the form of cash and gifts. Four former employees of an ABB Ltd. The Schering-Plough Poland subsidiary made improper payments between February 1999 and March 2002 to a charitable organization. Between 1999 and 2001. The Chudow Castle Foundation was run by the Polish government. 2004 (SEC) The Foreign Corrupt Practices Act 59. The ABB executives covered the bribes up by recording them as false consulting invoices (books and recording keeping violation). ABB. SEC v.000 in kickbacks on the oil drilling contract. Schering Plough 2004 (SEC) ABB is a Swiss company that manufacture automation technologies. abb.APPENDIX continued Company name ABB US (automation products) http://www. Ltd. ABB ultimately landed the contract that they sought to secure through the bribes. subsidiary allegedly bribed Nigerian officials in order to secure contracts for an offshore drilling project in Nigeria. Chudow Castle Foundation. com/ schering_plough/ index. Schering Plough (pharmaceutical company) http:// www. which was run by the Polish government.us/ Brief case description Notes Case name Date of prosecution 58.

S. DPC agreed to pay $2. v.5 million in campaign contributions to the presidential campaign of a Benin official. Rwandan.S. U. Amoako 2005 (DOJ & SEC) Subsidiary of Diagnostic Products Corp. Corporate non-prosecution agreement . 2005 (DOJ & SEC) 61.5 million Corporate non-prosecution agreement Miriam F. The combined fines (DOJ and SEC) were the largest in the history of the FCPA at $28. v. Brief case description Notes Case name Date of prosecution 60. The purpose of the bribe was to entice the Indonesian government to repeal a decree.com/webapp/wcs/stores/ servlet/CategoryDisplay$ q_catalogId$e_-111$a_categoryId $e_1009304$a_catTree$ e_100005.1009304$a_langId$ e_-111$a_storeId$e_10001. DPC (Tianjin).D. The SEC case is still pending. Titan pled guilty in 2005 and agreed to a criminal fine of $13 million. Tianjin paid $1. Monsanto. siemens. SEC v. 2005).N. v.6 million in bribes to Chinese officials in exchange for an agreement that DPC would provide products and services to state-owned hospitals. The DOJ eventually dropped the charges. U.com/ Titan officials allegedly made $3. Monsanto reported inconsistencies in their internal audits to the DOJ and SEC including a $50K bribe to Indonesian officials. and Senegalese government in order to secure $11. In the Matter of Diagnostic Products (2005) 2005 (DOJ & SEC) Tianjin is a Chinese subsidiary of DPC. Corp. U.S. v. SEC v. Monsanto entered into a non-prosecution agreement with the DOJ and agreed to pay a $1. The complaint also alleged that Titan had virtually no internal controls. 2005). He also paid a $7.5 million in lucrative telephone contracts. Titan Corp (S. Titan Corp. dtsi.8 million in disgorgement to the SEC and $2 million in fines to the DOJ. Amoako (D. The firm also agreed to a 3rd party compliance monitoring. Monsanto 2005 (DOJ and SEC) Monsanto Corp (agriculture technology) http:// www.htm IXTC Corp.5 million. Cal. U.S.500 fine. Weismann 62. SEC v. Charles Martin.monsanto.5 million fine to the SEC.com/ Amoako was a regional director of IXTC’s African subsidiary and allegedly paid $267K in bribes to the Nigerian. Amoako eventually pled guilty and served 18 months in prison. (medical devices – acquired by Siemens in 2006) http://diagnostics. and a cease and desist order.J. SEC v. Diagnostic Products.646 APPENDIX continued Company name L-3 Titan Group (radio and telephone services) http://www. 63. The civil penalty (disgorgement and civil fine) was $15.

In June 2007. (S. promises of profits. agreed to pay a $450K fine. v. and comply with an internal set of compliance controls. Kozeny was President and CEO of Oily Rock. 2005) 2005 (DOJ) Health South Individual defendants not guilty The Foreign Corrupt Practices Act 66. U.APPENDIX continued Date of prosecution 2005 (DOJ) Micrus Endovascular (medical devices) http://www. micrusendovascular.S.S. Bourke and Pinkerton had their charges dismissed along with their co-conspirator Kozeny. Micrus entered into a non-prosecution agreement with the DOJ. U. Kozeny was charged and was expedited to the US.S. Kozeny et al. Micrus 65. Thompson. and lavish trips to Azerbaijan officials.D. Al.D. v. and Germany in order to bribe them to buy Micrus products.Y. Same case (nos. et al (N. The 5 co-conspirators paid out millions in direct bribes. Turkey. Spain. U. 2005) 2005 (DOJ) Oily Rock Group (associated with AIG?) need to check SEC website Micrus employees paid $105K to state-run hospitals in France.5 million in bribes to the Saudi Government to secure a contract for staffing services for a state-owned hospital. v. Thompson was the former COO of Health South and Reilly was the former VP of Health South’s legal services department. com/ Corporate non-prosecution agreement Company name Brief case description Notes Case name 64.N. luxury items. The implicated officials have agreed to cooperate with the DOJ investigation. Thompson and Reilly were found not guilty at a jury trial in May 2005. The purpose of these payments was to obtain a controlling interest the privatization of the SOCAR. 51–54) 647 . Health South paid $2.

2006). Statoil (S. His sentencing hearing is set for Jan. Head pled guilty and was sentenced to 6 months in prison in 2007 and a $5. statoilhydro. 2006) 2006 (DOJ) Titan Corp. aspx Statoil is Norway’s largest gas and oil company and allegedly agreed to pay Iranian officials $5. Or. Corporate deferred prosecution agreement Cases #68 and #82 arise out of the same investigation Miriam F.5 million disgorgement settlement to the SEC and a compliance monitor. 2008.D. Steven Lynwood Head was the manager of business activities in Benin and later became the CEO for Africa. U. In the Matter of Schnitzer Steel Industries Statoil also paid a $3. 2006).S. 2006 (DOJ & SEC) Willbros U.7 million in disgorgement and retain a compliance monitor for 3 years. Tex. Brown Cases #69 and #86 arise out of the same investigation 70. Company name Brief case description Notes Case name 67.28 million in profits from steel contracts.D. In the Matter of Statoil USA 68.’’ Statoil agreed to a 3-year deferred prosecution agreement and agreed to a $10. The Korean subsidiary allegedly paid $204K to foreign officials in South Korea and China in exchange for $6.4 million in revenue for oil and gas pipeline construction contracts. Weismann 69. Cal.8 million in bribes to Nigerian and Equadorian officials to secure $243.S. As part of the SEC settlement. . v.045 fine to the Norway National Authority for Investigation and Prosecution of Economic Crime.648 APPENDIX continued Date of prosecution 2006 (DOJ & SEC) Statoil Hydro (oil company) http://www. The SEC was granted a motion to stay proceedings until the resolution of the DOJ matter.S.5 million penalty.000 fine.5 million penalty. v. Lynwood Head (S.2 million to obtain ‘‘millions of dollars in profits. SSI agreed to pay a $7. Statoil also agreed to pay an additional $10. Brown pled guilty in 2006 and is cooperating with the US gov’t. 2006 (DOJ & SEC) Wholly owned South Korean subsidiary of Schnitzer Steel.Y 2006). SSI International Far East (D.com/ en/Pages/default. v. Schnitzer Steel agreed to pay $7.S. Brown (S. v.D. U. He allegedly paid $2 million in bribes to Benin officials in an effort to secure a wireless service contract.N. Brown worked for a wholly owned Willbros subsidiary in Panama and allegedly paid $1. SEC v. U.

Sapsizian pled guilty in Mar. 2007 and was sentenced to 3 years in prison and 2 years supervised release.C. Samson. Whelan (D.D. 2006) 2006 (DOJ) 73. He made a $60K bribe to an Iraqi official to try to get $1 million in business by selling armored vests to the Iraqi police.3 million in fraudulent products. 2006) 2006 (SEC) InVision Technologies Sapsizian was the VP for Latin America. 55 and 85) 75. Acosta was the manger of the Costa Rican subsidiary. Novak pled guilty in 2006 and was scheduled to be sentenced in 2007.D. Whelan was the VP of Sales for the parent company Vetco Gray. Samson was the former West Africa sales manager of the Nigerian subsidiary. both officials paid roughly $2. The purpose of the payments was to obtain $2. Pillor (N. Novak (E. He allegedly bribed officials at the National Commission on Higher Education in Liberia ($30K–$70K). v.Lucent (telecommunications) Company name Brief case description Notes Case name 71. U. v. Novak was involved in ‘‘diploma mill’’ universities in Ghana.S. U. SEC v. Campbell. 2007 and faces $250K in fines and up to 10 years in prison. Pillor agreed to pay the SEC a $65K civil penalty and submit to a permanent injunction. U.56 million in bribes to Costa Rican officials to secure $250 million in business. v.D. He pled guilty in Feb. This action is related to the DOJ action for InVision. Together. and the US.Same case (#56) 649 . Salam was a translator working for US contractors in Iraq. Liberia.S.S. Pillor authorized a $95K bribe to retain business for InVision.C. 2006) 2006 (DOJ) The Foreign Corrupt Practices Act 74. Acosta is still at large (fugitive status). Each defendant agreed to a civil penalty of approximately $50K and Samson was additionally ordered to disgorge $64K. 2006) Salam was not acting on behalf of a company (similar to the Green case) Same case (nos. Salam (D. 2006 (SEC) Vetco International (oil company) SEC v. Cal. Munro.D. Sapsizian & Acosta (S. 2006) 72. Vetco paid $1 million in bribes to Nigerian officials an oil contract worth $180 million. Munro was the VP of operations for the UK.APPENDIX continued Date of prosecution 2006 (DOJ) Alcatel.D. Campbell was VP of Finance for the UK. Fla. Wash.

Oil States agreed to a cease and desist order with the SEC. U. Indian. U. Rwandan. Corporate nonprosecution agreement Cases #80 and #81 arise out of the same investigation 80.S. In the Matter of Oil States International 2006 (SEC) 77. Egyptian. SEC v. Ott 2007 (DOJ & SEC) IXTC. Ott was the Executive VP of Global Sales. SEC v. v. Baker Hughes (S. Baker agreed to pay $23 million in disgorgement. 2007). v. Tex 2007). and a cease and desist order. U. which is traded on the NYSE Tyco is listed on the NYSE 78. Brief case description Notes Case name Date of prosecution 76.D. Bahraini.jsp The combined penalty of $44 million may be the largest ever in an FCPA case. The DOJ agreed not to bring any further charges provided that Baker Hughes continues to cooperate in the investigation for the next 2 years. merged with Teleglobe Tyco’s Bermuda subsidiary paid an unspecified amount of improper payments to Brazilian and South Korean officials to secure government contracts.york. $647.Y.1 million in improper payments to Kazakhstan officials to secure $205 million in oil and gas services. .com/ OFFP case Miriam F. Ott (D. Tyco (S. bakerhughesdirect. 2006) 2006 (SEC) Hydraulic Well Control. In conjunction with the SEC action. York disgorged $10 million and paid a $2 million civil penalty. As part of the SEC settlement. Weismann 79. $4.N. LLC – subsidiary of Oil States International.com/cgi/ bhi/myHomePage/ myHomePage. Baker Hughes 2007 (DOJ & SEC) Baker Hughes (oil refinement services) http://www.S.N.J. Tyco agreed to a $50 million fine and $1 million in disgorgement.D. York International 2007 (DOJ & SEC) York International (HVAC services – acquired by Johnson Controls in 2005) http:// www. and Senegalese officials totaled $267K in exchange for an undisclosed amount of business. and UAE gov’t officials as part of the OFFP to secure $51 million in contracts.000 in payments to Iraqi.650 APPENDIX continued Company name The subsidiary Hydraulic Well Control paid $348K to Venezuelan officials to avoid stoppage of work. Baker Hughes pled guilty and agreed to pay an $11 million criminal fine. The improper payments to Nigerian. v. Turkish. a $10 million civil penalty. SEC v. York agreed to a $10 million fine and an independent monitoring system for its compliance programs.S.

In exchange. Textron 2007 (DOJ & SEC) Textron (defense contractor) http://www.000 in disgorgement (SEC) without admitting or denying the charges. Rwandan. In July 2007. Wooh. U. Young pled guilty. Textron. Young (D.284 million in disgorgement and an $800K civil penalty. Same case (#68) OFFP case 84. SEC v. textron. v. the DOJ sent letters to 11 oil and oil service companies regarding illegal payments to customs agents (primarily Nigeria). Textron paid $2.S.S.com/ Wooh also paid $1. The improper payments to Nigerian. 2007.APPENDIX continued Date of prosecution 2007 (DOJ & SEC) IXTC. His sentencing was set for Nov 19. v. Improper payments of $204K to Chinese officials in exchange for approximately $102 million in profits. portlandsteel.7 million in bribes to private parties in China and South Korea. Wooh 2007 (DOJ & SEC) Schnitzer Steel (steel processing and trading) http://www.N. Wooh agreed to pay $40. Egypt.com/ Young was the Managing Director for Africa and the Middle East. The SEC granted a 6-month stay until the conclusion of the DOJ investigation.15 million fine (August 2007). Panalpina World Transport 2007 (DOJ & SEC) Swiss based shipping company $600K in illegal payments in Iraq and $115K in illegal payments in other countries (Bangladesh. Indonesia. Textron entered into a non-prosecution agreement and agreed to pay a $1. As part of the SEC settlement. SEC v. SEC v. Investigation stage only 651 . U. and Senegalese officials totaled $267K in exchange for an undisclosed amount of business. The SEC is conducting its own independent investigation. 2007). merged with Teleglobe Same case Company name Brief case description Notes Case name 81.J.S. Young 82. U. Textron received $1. The Foreign Corrupt Practices Act 83. v.9 million in profits from Iraq and $328K in profits from other countries. and India).

74).48 million in disgorgement.D.C. Fu was the founder and former CEO of Syncor International. v. Fu agreed to settle with the SEC for $75K and a permanent injunction. com/ Willbros Same case (Nos. (oil company) http://www. SEC v.S. Jefferson pled not guilty and his trial was set for Jan. He allegedly authorized roughly $600K in bribes through illegal commission payments to doctors at private and public hospitals in Taiwan to get them to purchase radiopharmaceutical products. vetcointernational. Weismann 88. v.D. El Paso agreed to a $2. Steph pled not guilty and a trial date was set for December 2007. Syncor Taiwan 2007 (DOJ) UK officials have already prosecuted and convicted a Ministry of Defense Official Investigation stage only 90. Steph (S. $5. 89.Y. Smith (C. v. U. Va. 2008. 2007) 2007 (SEC) 91. and an injunction. Texas) 2007 (DOJ) Same case (#69) 87. Steph was the manager of Willbros Nigerian off-shore operations.5 million to Iraqi officials to obtain illegal surcharges. Cal 2007) 2007 (DOJ) Pacific Consolidated Industries One of Vetco’s US subsidiaries (Gray Controls) paid $2. 2007) 2007 (SEC) El Paso Corp.5 million in construction contracts.1 million in bribes to Nigerian officials for preferential treatment in the customs process.com/ Pride announced an internal investigation as to FCPA violations and the DOJ has requested information about the firm’s dealings with Nigeria.S.652 APPENDIX continued Company name Vetco International (oil company) http://www.25 million civil penalty. El Paso paid $5. Tex 2007) 2007 (DOJ) 86.D. Monty Fu (D. Vetco and Gray pled guilty and agreed to a collective fine of $26 million and agreed to hire an independent monitor of their compliance program. Smith was indicted in April 207 and was set to go to trial in April 2008. a telecommunications company. El Paso Corp (S. He allegedly paid $6 million in bribes to secure $387.N. In violation of the UN OFFP. U. 2007) 2007 (DOJ) Jefferson is a current US Representative Miriam F. Jefferson (E. OFFP case . Pride International Syncor International. Vetco (S. U. elpaso.D.S. U. Brief case description Notes Case name Date of prosecution 85.C. SEC v. v.D. 55. Smith paid $300K in bribes to the British Government to secure contracts with the Royal Air Force.S. Jefferson allegedly paid $500K to Nigerian officials as part of a joint venture with NITEL.

and a required independent review plan for their internal controls.S. The SEC issued Bristow a cease and desist order. 2007) 2007 (SEC) Bristow Group (helicopter services) http:// www. The gov’t agreed not to prosecute if all of the conditions were met within 18 months. com/ 96. The former CEO agreed to $70K in fines and EDS agreed to pay $490K in disgorgement in addition to a cease and desist order.000 to Nigerian officials.APPENDIX continued Date of prosecution 2007 (SEC) Dow Chemical http:// www. Delta Pine (D.com/ Company name Brief case description Notes Case name 92.T.dow.5 million government contract through phony invoices. SEC v. The purpose of the payments was to secure a $1.monsanto. 653 . Dow consented to a $325K civil penalty and a cease and desist order. The SEC gave Delta Pine a $300K joint fine.D.bristowgroup. com/ EDS (IT services) http://www. Srinivasan (D. Dow Chemical 93.500 in bribes to Kazakhstan officials. v. In the Matter of Bristow 2007 (SEC) The Foreign Corrupt Practices Act 95. Kearney. Paradigm BV 2007? (DOJ) Paradigm BV (provides software services to oil companies) http:// www. Electronic Data Systems. Bristow paid $423K in bribes to Nigerian officials to secure $873K in helicopter services business.C. 2007) 2007 (SEC) Subsidiary of Monsanto http://www.48 million contract in Mexico and a $250K contract in Kazakhstan.D. Bristow also under-reported its payroll taxes. Delta Pine paid $43K in bribes to Turkish officials to secure government reports that would allow them to operate in Turkey.000 in Mexico.eds. Defendant Srinivasan was the president of the EDS Indian subsidiary A.C. and approximately $150. U. SEC v. a cease and desist order.asp 94. SEC v. Paradigm agreed to pay a $1 million penalty and implement internal controls. com/dpl/default. The D authorized $720K in probes to Indian officials to secure a $7. paradigmgeo.com/ Dow paid $200K in bribes to Indian officials to expedite the registration of their pesticide products. approximately $200. $22.

Immucor.000. In addition.’’ KING and BARQUERO paid $1.S.654 APPENDIX continued Company name Owl Securities & Investments (OSI) Brief case description Notes Case name Date of prosecution 97. Without admitting or denying the allegations in the SEC’s complaint. and would represent to investors that a portion of the invested funds would be used to cultivate ‘‘friends’’ in the Costa Rican government. Chief Executive Officer and stockholder of OSI made or promised bribes to Costa Rican government officials. King 2001 (DOJ) Miriam F.’’ and ‘‘closing costs. These payments were referred by and using code words such as ‘‘political support money. In April 2004.jsp In order to secure a land concession to the develop the Costa Rican project KING and BARQUERO along with co-conspirator Stephen Kingsley now deceased.000.000 for the bribes and the funds were not to be released until the concession agreement was granted and were referred to as ‘‘closing costs. Inc made an improper payment of $16. political parties. In addition. Weismann 98. in order to help the director to void the Italian tax. Immucor agreed to abide by the cease and desist order without admitting or denying the complaint allegations. and candidates for public office from Fall 1997 to October 2000. . Gioacchino De Chirico. De Chirico agreed to pay a civil penalty of $30. Civil Action File No.’’ ‘‘kiss money.com/ site/aum_company _profile. SEC v. Italy as a quid pro quo for the hospital director favoring Immucor in selecting contracts for supplies and equipment.000 to the director of a public hospital in Milan.’’ ‘‘tolls. U.’’ ‘‘consulting fees.GA) 2007 (SEC) Immucor (medical devices) http:// www. was President. v.’’ The ‘‘closing costs’’ were to be put in an escrow by way of an letter of credit. 1:07-CV2367 (N. party officials.immucor.D. KING and BARQUERO would solicit investors in the United States for the Costa Rican Project. De Chirico recorded the payment as a bogus consulting fee.

2 million was for fines and penalties. Many of the kickbacks utilized Jordanian Ministry officials as intermediaries. In addition.’’ travel expenses. ingersollrand. The remaining $560. the proceeds of the price-mark-ups went to Iraqi officials through the intermediary. SEC v. SEC v. The surcharge proceeds were passed along to Iraqi officials for the purpose of inducing them to sell oil to Chevron. Chevron paid $20 million in illegal surcharges (kickbacks) to third parties in conjunction with the UN OFFP. $5 million to the NY DA’s Office. Some of the third party intermediaries were European shell companies. $3 million to the SEC. Ingersoll-Rand The Foreign Corrupt Practices Act OFFP case 100. $1.com/ IR Italia and TKL entered into 12 contracts involving ASSF kickbacks to Iraqi officials as part of the Oil for Food Program. The kick-backs totaled roughly $1. IR Italia paid $11.5 million. The kickbacks were recorded at 10% price mark-ups on the UN Oil for Food Bid paperwork.000 was for pre-judgment interest. Ingersoll-Rand agreed to pay $6.APPENDIX continued Date of prosecution 2007 (SEC) Ingersoll-Rand (manufacturing and construction services) http:// company.95 million was for the civil penalty.000 in bribes in the form of ‘‘pocket money. The purpose of the kick-backs was to entice the Iraqi officials to select Ingersoll-Rand for several road construction contracts totaling $3. $1. Chevron 2007 (DOJ & SEC) Chevron (oil and gas company) http:// www.7 million in fines and penalties to settle the case. 655 .aspx Company name Brief case description Notes OFFP case Case name 99.2 million. and $2 million to the US Treasury’s Foreign Assets Control Office. Chevron signed a non-prosecution agreement requiring that the company pay $30 million in fines and penalties: $20 million to US Attorney’s Office. and entertainment expenses to officials at the Iraqi Oil Ministry’s Baiji refinery.7 million was for disgorged profits.chevron. $4.com/ Pages/default.

As part of the agreement Lucent agreed to pay $1 million in fines and to enhance internal controls. but the improper payments likely relate to bribes to Iraqi officials as part of the UN OFFP. In a related SEC action based on the same conduct.000 employees of Chinese SOEs to whom Lucent was seeking to sell equipment and services or to retain as existing customers. siemens. The investigation was initiated by the French government and the DOJ.5 million. Weismann The details in the Form 6-K are not specific. and with improper recording of travel expenses and other things of value provided to authorities at Chinese state owned enterprises (SOEs). and the German government subsequently began investigating the allegations. Without admitting or denying the allegations.com/entry/en/ Brief case description Notes OFFP case Case name Date of prosecution 101.usa. Siemens Investigation 2007 (DOJ & SEC) 102.S. the SEC. policies and procedures. . Lucent 2007 (SEC & DOJ) Merged with Alcatel (see above) Miriam F. Lucent entered a 2 year non prosecution agreement with the Department of Justice (DOJ). Lucent is charged with violating FCPA books and records and internal control provisions. Lucent agreed to pay a civil penalty of $1.656 APPENDIX continued Company name Siemens (broad services and technology) http://www. Lucent was charged with violating FCPA books and records and internal control provisions. for over 1. Between 2000 and 2003 Lucent spent $10 million on 315 trips to the U.

akzonobel.V. Akzo Nobel 2007 (DOJ & SEC) The Foreign Corrupt Practices Act Akzo Nobel.. and if a timely resolution with Dutch authorities is not achieved. and between 2000 and 2003 Akzo’s total profits from contracts in which illegal payments were made totaled $1.000 to the U.000 in improper kickback payments to Iraqi government officials.000 civil penalty.9 million in fees and penalties. through two of its subsidiaries N. or was reckless in not knowing that these payments were being made. Akzo is expected to pay 381. Department of Justice (DOJ). treasury.V.6 million in profits on the tainted contracts and a $750. is accused of making $280. These payments were miscategorized in Intervet’s and Organon’s books and records as legitimate commission payments to agents.com/com/ Brief case description Notes OFFP case Case name Date of prosecution 103. and Akzo knew. Akzo agreed to pay $800. Without admitting or denying the allegations. Akzo’s subsidiaries negotiated these contracts and ASSFs through third party agents and consultants. The payments were made in the form of ‘‘after-sales-service-fees’’ (ASSFs) and were funded through inflated contracts and inflated commission payments.000 euro in criminal fines to Dutch authorities.S.6 million. including disgorgement of $1. Akzo’s subsidiaries were paying Iraqi ministers approximately 10% of the total contract price in illicit payments in order to secure and retain contracts related to the UN Oil For Food Program (OFFP). Akzo agreed to pay $2. Akzo’s subsidiaries failed to devise and maintain an effective system of internal accounting controls to protect against FCPA violations. 657 . Organon and Intervet International B.APPENDIX continued Company name Akzo Nobel (medical products) http://www. The SEC settled FCPA books and records and internal control charges based on the same conduct.

000 in improper payments to various Ministry of Railroad officials between 2001 and 2005. obtaining product delivery certificates. westinghouse. as well as in scheduling pre-shipping product inspections.S. Corporate compliance monitor Miriam F. In January 2007 the Department of Justice (DOJ) announced the indictment of the Greens for conspiracy to bribe and for making improper payments to the TAT official.000 in improper payments to the senior government authority (the Governor) of the Tourism Authority of Thailand (TAT). The SEC charged Wabtec with violating the FCPA’s anti-bribery provisions as well as its books and records and internal control provisions.com/ insidefm. and curbing what it viewed as excessive tax audits. U.000 civil penalty. Westinghouse 2008 (SEC & DOJ) Westinghouse (electronics and services provider) http://www. and pursuant to that order Wabtec is required to pay approximately $290. SEC v. These bribes were made in order to have its bids for government business granted or considered.html Brief case description Notes Case name Date of prosecution 104. Wabtec.658 APPENDIX continued Company name Film Festival Management http://www. through its Indian subsidiary Pioneer is charged with making approximately $135. v. Listed in SEC SelfReporting Document. These bribes were made in order to secure film festival contracts and other contracts from TAT.festival managementinc. Without admitting or denying the allegations Wabtec agreed to pay a $87.000 in disgorgement and prejudgment interest and engage an independent compliance consultant.000 penalty and adopts ‘‘rigorous’’ internal controls. Wabtec entered a 3 year non-prosecution agreement with the Department of Justice (DOJ) who agreed not to prosecute if Wabtec pays $300. Weismann . Green 2008 (DOJ) 105.com/ Gerald and Patricia Green are charged with making more than $900. Based on the same conduct the SEC filed an administrative order finding that Wabtec violated the FCPA.

U.. v. of which approximately $2. Flowserve entered a three year DOJ deferred prosecution agreement.flowserve.APPENDIX continued Date of prosecution 2008 (SEC & DOJ) Flowserve (pump. The SEC filed FCPA books and records and internal control charges. where Flowserve acknowledged responsibility for the actions of its subsidiaries and agreed to pay a $4 million penalty. The Foreign Corrupt Practices Act 659 .7 million is disgorgement from profits on the contracts and prejudgment interest and a $3 million civil penalty. Company name Brief case description Notes OFFP case.S. The kickbacks were made in the form of ‘‘after-sales-service-fees’’ and funded through inflated contracts and inflated commission payments to the agents.000 in improper kickback payments via agents in connection with twenty contracts with the Iraqi government under the OFFP. and services provider and manufacturer) http:// www.com/ eim/index.html Flowserve. Flowserve agreed to pay approximately $6. is charged with making $820. Corporate non-prosecution agreement Case name 106. Flowserve Corp. Without admitting or denying the SEC allegations. through two of its foreign subsidiaries.V. Flowserve Pompes and Flowserve B. valve.5 million.

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