Bribery Clampdown

Congress passed the Foreign Corrupt Practices Act in 1977 to stop Americans and American companies from bribing foreign officials. The likelihood of one of its own getting involved in such shenanigans likely wasn't within the lawmakers' contemplation. But in June Rep. William Jefferson of Louisiana became the first U.S. government official to be indicted under the FCPA, when prosecutors alleged Jefferson bribed Nigerian Vice President Atiku Abubakar. Jefferson faces up to 235 years in jail if convicted on all counts.

If the allegations are true, Jefferson picked a really bad time to engage in such illegal behavior. In recent years, the SEC and DOJ have dramatically stepped up FCPA enforcement. Between 2001 and 2006, the average number of enforcement actions rose to 6.2 from an average of 1.3 in the preceding five years. Currently, there are more than 30 open investigations, not including the ones that have moved to the prosecution stage.

Finally, the upsurge in FCPA enforcement is part of a larger trend of heightened U.S. scrutiny of cross-border transactions, as evidenced by the anti-money laundering provisions in the USA Patriot Act and tightened export-control regulations.

With so many forces driving it, then, FCPA enforcement is unlikely to wane, which means companies will have to find a way to deal with its many perils.


Julius Melnitzer

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