A Boon for Bribery
by Philip Mattera, director of the Corporate
Research Project for the Dirt Diggers Digest
A statement accompanying the order
claimed the step was needed to “save our country” and that “every policy must
be geared toward that which supports the American worker, the American family,
and businesses, both large and small, and allows our country to compete with
other nations on a very level playing field.”
This is classic MAGA double-speak, trying to make the case
that a policy benefiting large dishonest corporations serves the interests of
workers, families, and small firms.
That reference to a level playing field is also misleading.
Trump tries to give the impression that the U.S. is the only country that
prosecutes bribery. In fact, other countries are also active in policing the
practice.
In Violation Tracker Global, we document
dozens of cases brought by authorities outside the United States. For example,
in 2020 Airbus agreed to pay over 2 billion euros to resolve allegations
brought by French prosecutors relating to foreign bribery. In 2017
Rolls-Royce paid over 500 million pounds to resolve a
bribery case brought by the UK’s Serious Fraud Office. The Brazilian government
has collected the equivalent of several billion dollars through an
anti-corruption campaign known as Operation Car Wash.
In numerous large FCPA cases, the U.S. Justice Department worked in concert with prosecutors in other countries. That’s true of the Airbus and Rolls-Royce cases mentioned above as well as investigations of other companies such as ABB Ltd, BAE Systems, and Goldman Sachs.
What Trump also seems to be ignoring is that the Justice
Department and the SEC have brought many cases against foreign companies. In
fact, of the 122 FCPA cases in the U.S. version of Violation Tracker linked to
a large parent, more than half involve firms headquartered abroad. Fifteen of
the 20 largest penalties were paid by foreign defendants. By suspending FCPA
enforcement, Trump is helping foreign corporations much more than domestic
ones.
The final fallacy is the idea that the FCPA has been a
substantial burden on corporations. Although the DOJ handles foreign bribery
cases as criminal matters, it routinely allows companies to sign deferred
prosecution and non-prosecution agreements—leniency arrangements under which
they pay a penalty but do not have to enter a guilty plea. More than 80 percent
of all FCPA cases have included one of these agreements.
The theory is that leniency deals will incentivize companies
to clean up their practices to avoid a future conviction, yet in some cases DOJ
has allowed repeat offenders a second leniency agreement rather than lowering
the boom.
In some cases, the DOJ takes the leniency process a step
further and resolves FCPA cases through a process called declination. This
typically occurs when prosecutors want to reward a company for cooperating with
an investigation. The firm agrees to disgorge the profits it received from the
illegal activity, and the DOJ essentially drops the case. The most recent
example of this occurred in August, when the Boston Consulting Group agreed to
disgorge about $14 million related to profits from
contracts received as the result of improper payments to government officials
in Angola.
All these forms of leniency have not satisfied large
corporations, which have complained about the FCPA ever since it was enacted in
the wake of widespread revelations of foreign bribery in the 1970s. Now they
have finally gotten their wish from a president who serves the interests of big
business while pretending to be an economic populist.
