Virtual bribes; real arrests
This week the FBI announced the results of one of the largest FCPA investigation ever. Moreover, it was a full scale undercover investigation; for FCPA cases that is a large step.
“This ongoing investigation is the first large-scale use of undercover law enforcement techniques to uncover FCPA violations and the largest action ever undertaken by the Justice Department against individuals for FCPA violations,” said Assistant Attorney General Lanny A. Breuer. “The fight to erase foreign bribery from the corporate playbook will not be won overnight, but these actions are a turning point. From now on, would-be FCPA violators should stop andponder whether the person they are trying to bribe might really be a federal agent.”
“Corrupt payments to foreign officials to obtain or retain business erode public confidence in our free market system and threaten to undermine foreign governments,” said U.S. Attorney Channing Phillips. “These indictments set forth serious allegations and reflect the Department’s commitment to aggressively investigate and prosecute those who try to advance their businesses through foreign bribery.”
What happened? Allegedly the suspects engaged in a scheme to bribe a minister of defense of an African country. At least: they thought they would be bribing the minister. They ended up dealing with a lot of undercover agents. The suspects are all related to the US defense industry and tried to ‘market’ body armor, small arms, armored vehicles etc.
As part of the undercover operation, the defendants allegedly agreed to pay a 20 percent “commission” to a sales agent who the defendants believed represented the minister of defense for a country in Africa in order to win a portion of a $15 million deal to outfit the country’s presidential guard. In reality, the “sales agent” was an undercover FBI agent. The defendants were told that half of that “commission” would be paid directly to the minister of defense. The defendants allegedly agreed to create two price quotations in connection with the deals, with one quote representing the true cost of the goods and the second quote representing the true cost, plus the 20 percent “commission.” The defendants also allegedly agreed to engage in a small “test” deal to show the minister of defense that he would personally receive the 10 percent bribe.
Though all suspects had the intent to bribe officials to secure contracts, no corruption actually took place since the only officials involved were undercover FBI agents. There has been some debate as to why the FBI allocates that much of their resources to create a case from scratch… Not enough ‘real life’ cases to investigate? Obviously we don’t know all ins and outs of this investigation to comment. But this case highlights the commitment of the US to halt corruption. A lot of businessmen will think twice now before setting up such a scheme; a good result in itself. But will the ones that have already been engaged in corruption successfully stop before actually getting caught?
http://washingtondc.fbi.gov/dojpressrel/pressrel10/wfo011910.htm