This article will provide an overview of
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Nadine Tushe Writing Sample Ethisphere

Published on: Mar 3, 2016

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  • 1. 28 29ETHISPHERE.COM ETHISPHERE.COM Anti-CorruptionAnti-Corruption This article will provide an overview of four other laws that can be used to supple- ment and expand the reach of the FCPA in foreign bribery cases: (1) the Money Laun- dering Control Act (MLCA); (2) the Travel Act; (3) the mail and wire fraud statutes; and (4) the Racketeer Influenced and Cor- rupt Organizations Act (RICO). 1. The Money Laundering Control Act With the paying of a bribe often comes practicesdesignedtoconcealthesuspicious funds. The Money Laundering Control Act (MLCA), 18 U.S.C. § 1956, enacted nine years after the FCPA, made it a separate offense to launder proceeds of “specified unlawful activity,” including foreign public bribery. The Department of Justice (“DOJ”) has drawn on the MLCA both to supplement the FCPA and to expand its reach. One motivation for prosecutors to bring in the MLCA is its comparatively severe sentencing for individuals. An individual may be sentenced to up to five years of incarceration for an FCPA bribery count, but up to 20 years for each money launder- ing count. The longest ever FCPA sentence of 15 years in prison, given in 2011 to tele- com executive Joel Esquenazi, was driven largely by his conviction on money laun- dering charges. The MLCA also has the power to expand anti-corruption enforcement to areas un- reachable by the FCPA. While “foreign offi- cials”arenoteligibleforprosecutionunder the FCPA, they may be charged with vio- lating the MLCA. The 11th Circuit brought this into sharp focus earlier this year when it affirmed the conviction of Haitian tele- com official Jean Rene Duperval on money laundering charges. Duperval had been the first public official to be convicted at trial for money laundering based on an underlying FCPA bribery scheme. The Duperval ruling has implications beyond prosecutions of foreign officials alone, as the DOJ may now better use money laundering charges to convince foreign officials and others to cooperate in pursuing US companies and executives for FCPA violations. Now that its power has been demonstrated, expect the MLCA to remain a feature of the US govern- ment’s anti-bribery efforts. 2. The Travel Act The Travel Act, 18 U.S.C. § 1952, prohibits the use of the facilities of interstate or for- eign commerce to intentionally support any unlawful activity, including bribery in violation of state or federal laws. These fa- cilities of commerce include such common transactions as cross-border phone calls, emails, and wire transfers. While the relevant provisions of the fed- eral anti-bribery law, the FCPA, only ap- ply to conduct involving public officials, the majority of states have laws also criminalizing commercial bribery. Thus, as the SEC and DOJ themselves affirm in the 2012 FCPA Resource Guide, the Travel Act effectively enables the federal govern- ment to reach commercial as well as pub- lic foreign bribery. The Travel Act is also formidable in that a violation is defined by the mere use of the facilities of foreign or interstate commerce, even if the bribe or other underlying unlawful activity is not ultimately successful. The DOJ has not been hesitant to use the Travel Act against both individuals and corporations in the context of foreign bribery, both to fortify and to expand the reach of the FCPA. In 2009, investor Vik- tor Kozeny was convicted of conspiracy to violate the FCPA and Travel Act, with the relevant “unlawful activity” being bribery in violation of the FCPA in Azerbaijan. That same year, California company Con- trol Components pleaded guilty to con- spiracy to violate the FCPA and Travel Act based on both bribery of foreign offi- cials and commercial bribery in violation of California state law. When designing employee trainings and other aspects of a compliance program, companies must take into account the enhanced reach provided by the Travel Act. 3. Mail and Wire Fraud Statutes The older, more general mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343, are other possible complements to FCPA prosecutions cited in the DOJ and SEC Resource Guide. Like the Travel Act, the mail and wire fraud statutes bring a crime that might otherwise be local into federal jurisdiction by virtue of the use of an in- strumentality of interstate commerce. In one 2006 case, SSI International Far East, Ltd., a wholly owned foreign sub- sidiary of a US issuer company, pleaded guilty to wire fraud charges related to its use of funds wired from the parent com- pany’s Oregon bank account. The funds were used to pay illegal commission pay- ments and kickbacks to public and pri- vate parties, disguised as refunds, com- missions, and other legitimate payments. This provides yet another illustration of how other laws can be used to encompass conduct that might not otherwise fall squarely under the FCPA. 4. RICO The Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968, prohibits the use of an “enter- prise” to pursue a “pattern of racketeering activity,” defined in the statute by certain “predicate acts” including bribery, mail Other US Laws Applied to Foreign Bribery Written by Nadine Tushe BEYOND THE FCPA When designing a compliance program, companies must be informed of the standards demanded by the full array of legislation applicable to businesses abroad. In the headlines on bribery abroad, the Foreign Corrupt Practices Act, or FCPA, is the law that often steals the spotlight. With its groundbreaking extraterritorial reach and colossal settlement figures, this attention is not unwarranted. However, companies should be aware that the FCPA is only one of the tools that can be employed in prosecuting foreign bribery. TOPICS COVERED // Risk & Corruption The majority of states have laws criminalizing commercial bribery, extended to federal enforcement via the Travel Act. These include: • California, Cal. Penal Code § 641.30 • Delaware, Del. Code Ann. tit. 11, § 881 • Florida, Fla. Stat. § 838.16 • Illinois, 38 Ill. Comp. Stat. 5/29A-1 • Massachusetts, Mass. Gen. Laws ch. 271 § 39 • New Jersey, N.J. Stat. Ann. § 2C:21-10 • New York, N.Y. Penal Code § 180.00 • Texas, Tex. Penal Code Ann. § 32.431 and wire fraud, and money laundering. The statute allows leaders of a criminal operation to be tried for crimes that they ordered or assisted others to perform. Originally intended to target the Mafia, the law has since been applied in a vari- ety of contexts, with corporate CEOs and controlling shareholders often taking the place of “godfathers” as defendants. RICO liability turns on whether foreign bribery is found to be part of a “pattern of racketeering.” Although courts have dif- fered in finding whether or not the statute should apply extraterritorially, its range of criminal and civil penalties, the latter including treble damages, makes it a pow- erful possibility both for prosecutors and for civil plaintiffs aware of a company’s al- leged foreign bribery activities. Along with the FCPA, these four stat- utes are major features of the complex and dynamic legal landscape surround- ing foreign bribery. When designing a compliance program, companies must be informed of the standards demanded by the full array of legislation applicable to businesses abroad. Author Biography Nadine Tushe is an anti-bribery anti-corruption (ABAC) specialist with STEELE CIS. An attorney from The George Washington University Law School, her work experience includes the World Bank, International Trade Commission, and Overseas Private Investment Corporation. She is a published author on the subjects of export controls, public procurement, and trade and investment agreements. This report is for informational purposes only, and should not be construed as legal advice, which has to be addressed to the particular facts and circumstances. If you have questions as to what laws apply to your situation, contact an attorney with the relevant expertise. 1 Drawnfromcompilationathttp://media.mofo.com/files/Uploads/Images/121008-Liability-Under-the-Travel-Act-For-Commercial-Bribery.pdf Figure 1

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