Corruption Я Us

For Americans doing business overseas, it seems that so many officials in so many governments have their hands out, and that to get anything done, businessmen facing global competitors willing to cross the line have to “go with the flow” and make those “concessions.” But there is a little statute that governs U.S. residents wherever they are, and it even covers the use of intervening consultants or “expediters” that you know or should know are crossing the line.

“The Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq. (‘FCPA’), was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. Specifically, the anti-bribery provisions of the FCPA prohibit the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person.” Department of Justice website, justice.gov.

While other nations have similar statutes, and virtually all countries have laws against bribing their officials, enforcement of these provisions in certain nations overseas is often lax or simply overlooked because it is so commonplace. The U.S. government has had some very significant cases involving some very serious corporations, as Wikipedia confirms: “Notable cases of the application of FCPA are with Wal-Mart, BAE Systems, Baker Hughes, Daimler AG, Halliburton, KBR, Lucent Technologies, Monsanto, Siemens, Titan Corporation, Triton Energy Limited, Avon Products, and Invision Technologies.

An April 2012 article in The New York Times reported that a former executive of Wal-Mart de Mexico alleged in September 2005 that Wal-Mart de Mexico had paid bribes to officials throughout Mexico in order to obtain construction permits, that Walmart investigators found credible evidence that Mexican and American laws had been broken, and that Walmart executives in the United States ‘hushed up’ the allegations. According to an article in Bloomberg, Walmart's ‘probe of possible bribery in Mexico may prompt executive departures and steep U.S. government fines if it reveals senior managers knew about the payments and didn't take strong enough action, corporate governance experts said.’ Eduardo Bohorquez, the director of Transparencia Mexicana, a ‘watchdog’ group in Mexico, urged the Mexican government to investigate the allegations.

“Former Representative William J. Jefferson, Democrat of Louisiana, was charged with violating this act by bribing African governments for business interests. In 2008, Siemens AG paid a $450 million fine for violating the FCPA. This is one of the largest penalties ever collected by the DOJ for an FCPA case.

“The U.S. Justice Department and the Securities and Exchange Commission are currently investigating whether Hewlett Packard Company executives paid about $10.9 million in bribery money between 2004 and 2006 to the Prosecutor General of Russia ‘to win a million-dollar contract to supply computer equipment throughout Russia.’ Stronger USDOJ and SEC enforcement increased the prominence of the FCPA from 2010 onwards.”

Paying for what you need to have happen is ingrained in many businessmen. They need to see that the world maximizes their upside opportunities, minimizes limitations and taxes, and sometimes, in their world, you just do what “you have to do.” In the U.S., SuperPacs are one way to foist your corporate desires into federal policy, if you have the money to make those campaign contributions large enough to shift opinions. Certainly, Vegas casino magnate (Sands Hotel), Shel Adelson has been anything but shy this year in putting his money behind conservative issues and candidates… about $35 million at last count. According to the U.S. Supreme Court, it is perfectly legal to overwhelm the media with your political messages.

But it is possible that Mr. Adelson’s proclivity to buy the right corporate environment might have crossed the line, at least in PRC-held Macau (the regional gambling Mecca), where he has been pursuing expanding his casino empire (pictured above) in that city and region. The New York Times (August 13^th): “[When Adelson] needed something done in China, he often turned to his company’s ‘chief Beijing representative,’ a mysterious businessman named Yang Saixin… Mr. Yang joined the Sands in 2007 as the company worked to protect its interests in Macau, where its gambling revenues were mushrooming, and pressed ahead with plans for a resort in mainland China. Boasting of ties to the People’s Liberation Army and China’s state security apparatus, Mr. Yang was hired for his guanxi [political clout/connections], that mixture of relationships and favors that is critical to opening doors in China, according to former executives.

“But today, Mr. Yang, along with tens of millions of dollars in payments the Sands made through him in China, is a focus of a wide-ranging federal investigation into potential bribery of foreign officials and other matters in China and Macau, according to people with knowledge of the inquiries… The broad outlines of the mainland China investigation were… reported by The Wall Street Journal. But a review of more than a thousand pages of corporate records in China, as well as interviews with former Sands executives and others, provides a more detailed picture… The documents show that the Sands paid out more than $70 million to companies tied to Mr. Yang for the trade center and for a Chinese basketball team the Sands sponsored. But several million dollars appear to be unaccounted for after the projects were suddenly shut down by the company, The New York Times found.”

Of course, Adelson and the Sands issued denials; the investigation continues. And there may be no fire behind this smoke. But the underlying message – that the United States really has created a political system of campaign contributions determining federal policy at the most significant rate in our history – seems to be a hypocrisy that is unsustainable. It’s OK to bribe politicians under the guise of massive campaign contributions that change policy in favor of those with the money that to implement such spends, but it is flatly illegal to bribe an overseas (or domestic) official directly to accomplish that same purpose even if that is the way business is done “over there.” We are living in a world where how you are corrupting the system matters more than if you are corrupting the system at all. And when such corrupting elements are institutionalized, it is one more sign of a society near the beginning of the end.

I’m Peter Dekom, and it is time for us to be very conscious about how we seem to be planting the seeds of our own destruction.