Prosecuting foreigners under the FCPA
The Foreign Corrupt Practices Act may not be used to prosecute an individual with no ties to the United States.
A US appeals court blocked prosecution in late August of a British former Ahlstom executive whom US authorities say was involved in hiring two consultants with knowledge that the consultants would use part of what they were paid to bribe Indonesian officials to help secure a $118 million power contract for Ahlstom.
The executive was working for Ahlstom at the time in Paris.
The US says he approved hiring the consultants and knew that part of what they were paid would be used for bribes.
He had no link to the United States.
US prosecutors say several parts of the scheme were executed in the United States. Several Ahlstom executives attended meetings in the US about the scheme and made calls and sent emails about it while on US soil. The bribes were paid from Ahlstom bank accounts in the US and went into a US bank account of one of the consultants.
The Foreign Corrupt Practices Act is a 1977 US law that makes it a crime to offer anything of value to an official of a foreign government, political party or public international organization in an effort to win or retain business or secure any improper advantage.
Even if a crime can be proven, US prosecutors can charge a foreigner only if they can show that he committed the crime while present in the United States while working as an agent of a US company or of a foreign company whose securities are traded on a US exchange or over-the-counter market or are widely held in the United States.
The appeals court said prosecutors would have to show that the Paris-based executive acted as an agent of the Ahlstom US subsidiary. It is not possible to charge him as an accomplice or co-conspirator of others who are covered by the statute.
The case is United States v. Lawrence Hoskins.
Separately, the Brazilian petroleum company Petrobras agreed in late September to pay $853 million to settle FCPA violations.
The US Justice Department said in a statement: “Executives at the highest levels of Petrobras — including members of its executive board of directors — facilitated the payment of hundreds of millions of dollars in bribes to Brazilian politicians and political parties and then cooked the books to conceal the bribe payments from investors and regulators.”
The Foreign Corrupt Practices Act has an accounting standards section that requires companies to keep books and records “which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets” of the company. Companies are also required to maintain internal controls that provide reasonable assurance against illegal payments and to run internal checks at “reasonable intervals.”
The US Justice Department and Securities and Exchange Commission will keep only 10% of the money. The rest will go to the Brazilian government.
Petrobras shares are traded on the New York Stock Exchange.