Category Archives: Bribery

Foreign Bribery: Incentives and Enforcement

by Jonathan Karpoff, Scott Lee, and Gerald Martin

Managers caught bribing foreign officials enhance their shareholders’ wealth unless they simultaneously engage in accounting fraud.  Most firms apprehended for foreign bribery generally did not engage in fraud and after adjusting for regulatory penalties, their average ex ante net present value of their bribery-induced projects is positive.  In a new paper, we develop a model that uses a comprehensive set of bribery enforcement to shed light on the how common foreign bribery is among US-listed firms with foreign sales. Continue reading

Legal Person Liability is a Key Component of the Emerging Rules for the Global Economy

by Kathryn Gordon and Brooks Hickman

The liability of legal persons for foreign bribery and related economic offenses is a key feature of the emerging legal infrastructure for the global economy.  Without it, governments face a losing battle in the fight against the bribery of foreign public officials and other complex economic crimes.

In recognition of the essential role that the liability of legal persons plays in combating foreign bribery, Articles 2 and 3 of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention) require “[e]ach Party … to establish the liability of legal persons for foreign bribery” and to apply “effective, proportionate and dissuasive” penalties to legal persons for foreign bribery. Continue reading

What Does the OECD Know About Organizational Liability?

by Kevin E. Davis

The OECD Working Group on Bribery – the group responsible for monitoring implementation of the OECD’s Anti-Bribery Convention – has just closed a request for comments on the topic of liability of legal persons for foreign bribery. I submitted a comment, and I hope that others did as well, but I am afraid that instead of focusing on the issues I was asked to comment on I focused on my worries about the overall purpose of the exercise.

There is no question that the issues raised by the OECD are important. Imagine if the U.S. legal system did not have corporate criminal liability, how would it affect the scope and the intensity of corporate compliance? Would we still have compliance officers reporting directly to the board, supplier agreements replete with anti-corruption reps and warranties, and multi-million dollar internal investigations? Consider the potential effects of even a modest reform, such as treating the existence of an effective compliance program as a complete defense. Or, moving in the opposite direction, what if firms convicted of foreign bribery were automatically disbarred from all government contracts? Continue reading

Bribery Conspiracies, Foreign and Domestic: Ocasio v. United States and Its Implications for FCPA Complicity Theories

by Shu-en Wee and Daniel Richman*

To what extent can a nonresident foreign national be prosecuted for violations of the Foreign Corrupt Practices Act (FCPA)1 when he neither is an agent of a domestic concern nor has committed acts while physically present in U.S. territory?  Does the fact that the FCPA explicitly creates criminal liability in only these two situations mean that he cannot be charged for conspiring to violate the Act, or aiding and abetting a violation?  Such was the issue presented to Judge Janet Bond Arterton in United States v. Hoskins.2  Her rejection of the government’s conspiracy and accomplice theories in that case is presently up on appeal in the Second Circuit, but an intervening Supreme Court case may well lead the Circuit to see the case a bit differently. Continue reading

Kleptocrats in the Crosshairs

by Sharon Cohen Levin

Let’s say you’re a powerful foreign leader who has accepted millions of dollars in bribe payments, a “Kleptocrat.”  You’ve got a problem: where to stash the loot?  The stacks are too big to stockpile in your piggy bank or sock drawer.  You need to be more creative.   Here is one solution: set up an off-shore company, open a bank account in a jurisdiction with strict bank secrecy laws, load the account with the bribe payments you received, and then buy premium real estate in the United States.  Voila – clean money.

Not so fast. Continue reading

Rewarding Subtlety: McDonnell v. United States

by Daniel Richman and Jennifer Rodgers

As teachers, we sometimes push our students to clarify their legal arguments by telling them that “subtlety isn’t rewarded.”  As former prosecutors, we like to think that corrupt officials can’t avoid prosecution simply by avoiding B-movie exchanges that they will do “x” if they are given “y.”  This week’s decision in McDonnell v. United States, however, could be a lesson that subtlety may indeed be rewarded, and that gentility could protect a high official from federal corruption charges. Continue reading