When Congress passed the Foreign Corrupt Practices Act in 1977 in the wake of a series of high profile “questionable payments” cases brought by the SEC, the U.S. was largely going it alone. Nevertheless, the Commission’s Volunteer Program resulted in hundreds of companies stepping forward to resolve questionable payments cases. Critics however, claimed the Act would cause business to flee this country for friendlier havens. Enforcement lagged for years.
Times change, however. By the late 1990s, other countries had enacted anti-bribery legislation similar to the FCPA. Now, FCPA enforcement is a priority here and abroad. Two recent examples which illustrate current enforcement efforts and their broad reach are the Siemens and Nguyen cases. Siemens is emblematic of the fact that FCPA enforcement is a priority around the globe. The company has the dubious distinction of being the current record setter for making the largest payment to resolve an FCPA case as discussed here. Siemens paid a record shattering $1.6 billion to DOJ the SEC and the Munich prosecutors’ office to resolve FCPA charges.
Now however, Siemens has set another FCPA record — and it still faces other investigations. Recently the company agreed to pay an additional $100 million to the World Bank in a corruption inquiry. The bank has long tried to root out fraud in projects it agrees to finance. In this instance, the inquiry focused on an urban transport project the bank financed in Moscow. To resolve the inquiry, Siemens agreed to pay $100 million over 15 years to combat corruption through training and education programs. The company also voluntarily withdrew from World Bank sponsored contracts for the next two years. According to The Wall Street Journal, (July 3-5, 2009) at B-1 (available here, subscription required), this is the first time the bank has resolved such a case with a monetary settlement.
Despite four anti-bribery and corruption settlements, Siemens is not done. The company still faces investigations in other countries. Clearly anti-bribery and corruption enforcement has changed significantly since the 1970s. Now it is a priority not just in the U.S., but in other parts of the world.
Nguyen serves as a reminder of the scope of the FCPA. Many tend to think of the Act in terms of public companies. While it does of course apply to those entities, it also covers private business entities. The Nguyen case is based on claims that a private company, Nexus Technologies, Inc., and its officers, violated the FPCA. Nexus is in the business of identifying U.S. vendors opened for bid by the Vietnamese government to purchase technology and other equipment.
Joseph Lukas, formerly of Nexus Technologies, pled guilty on June 29, 2009, to FCPA violations. Mr. Lukas was responsible for overseeing the negotiation of contracts with suppliers in the U.S. At the time of his plea, Mr. Lukas admitted that from 1999 to 2005 he and others agreed to and did pay bribes to Vietnamese government officials to obtain contracts with government agencies. The bribes were recorded as “commissions” in the books and records of the company.
Mr. Lukas was indicted, along with the company and three other alleged co-conspirators. The charges are pending as to those defendants. Sentencing is scheduled for April 6, 2010. U.S. v. Nguyen, Case No. 2:08-cr-00522 (E.D. Pa. Filed Sept. 4, 2008).
Siemens and Nguyen should leave little doubt regarding the significant enforcement efforts being made in this country and others regarding the FCPA as well as the scope of those efforts.