The United States has been combating the bribery of foreign officials for 35 years through the Foreign Corrupt Practices Act (FCPA). Both domestic and international prosecutions for bribery remained almost nonexistent for decades. In recent years, the United States experienced an explosion of enforcement actions under the FCPA. Broad enforcement theories and increased prosecutorial effort have greatly expanded the scope of the FCPA. Moreover, the passage of the UK Bribery Act in 2010 has forced many U.S. organizations to face additional and conflicting antibribery regimes. Although the United States remains the world leader in prosecuting the bribery of foreign officials, the FCPA has failed to keep pace with the evolving international standard of antibribery legislation. As a result, ever-increasing uncertainty surrounds antibribery compliance and liability. In response to these concerns, Congress must amend the FCPA accordingly, as inaction will only exacerbate the current concerns.
TABLE OF CONTENTS I. INTRODUCTION II. HISTORY OF ANTIBRIBERY LEGISLATION III. OVERVIEW OF THE FCPA A. The Antibribery Provisions B. Corrupt Intent 1. Anything of Value 2. Foreign Official 3. The Business Purpose Test 4. The Facilitating or Grease Payment Exception 5. Affirmative Defenses: Legal Payments and Bona Fide Expenditures B. The Accounting Provisions 1. The Books and Records Provision 2. The Internal Controls Provision IV. ANTIBRIBERY LAW IN THE UNITED KINGDOM: BRIBERY ACT 2010 A. Giving or Receiving Bribes: [section] 1 and [section] 2 Offenses B. Bribery of Foreign Public Officials: [section] 6 Offenses C. Failure of Commercial Organizations to Prevent Bribery: [section] 7 Offenses V. COMPARATIVE ANALYSIS: THE FCPA AND THE BRIBERY ACT 2010 A. Jurisdictional Reach B. Corrupt Element C. Facilitation Payments D. Compliance Programs and the Adequate Procedures Defense VI. A U.S. RESPONSE TO THE BRIBERY ACT 2010 A. A Graduated Penalty System: Proportional Exclusion of Facilitation Payments B. Adoption of a Complete Adequate Procedures Defense VII. CONCLUSION I. INTRODUCTION
Despite the ever-increasing pressures impacting American businesses and jobs--Why does the United States continue to force American companies to spend billions of dollars on bribery compliance while failing to actually curtail international bribery? Far from being a fringe issue, antibribery enforcement has become a top business concern in recent years. (1) It is estimated that bribery conservatively amounts to a trillion dollars a year, (2) which is equal to approximately 1.5 percent of the world's gross domestic product (GDP). (3) Almost a quarter of large international organizations have been approached to pay a bribe within the past 2 years. (4) While disgorgements of profits and fines under the FCPA 5 can be significant, (6) even allegations of bribery can require substantial expenses. (7) Despite facing no formal prosecution under the FCPA, Avon Products Inc., Weatherford International Ltd., and Wal-Mart Stores Inc. collectively spent nearly half a billion dollars in the first nine months of 2012 defending allegations that employees bribed foreign officials. (8)
The relative strength (9) of U.S. antibribery legislation and enforcement has effectively reduced the likelihood of foreign actors requesting bribes from U.S. organizations. (10) However, the effectiveness of the FCPA comes with ever-increasing costs as organizations face more legal uncertainty surrounding FCPA compliance. In-house counsel for the largest companies in the United States cite the FCPA as one of the three main legal uncertainties facing their organizations. (11) Over the past few years, the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) have dramatically increased their commitment to FCPA enforcement. (12) While the DOJ and SEC only brought one FCPA case in 2000, collectively they filed sixty-seven cases in 2009 alone. (13)
Not only do American companies face increasing enforcement but also a far more complicated regulatory regime due to the United Kingdom's Bribery Act 2010 (Bribery Act). (14) The Bribery Act marks the end of an era of UK dormancy in the enforcement and prosecution of bribery. (15) The Bribery Act differs significantly from the FCPA--therefore, the United States must address the increasing uncertainty companies face in the antibribery sector by amending the FCPA to realign with the evolving international standard.
This Note examines the major provisions of the FCPA and the Bribery Act to determine the effects the Bribery Act may have upon the FCPA and American businesses. Part II summarizes the development of antibribery legislation in the United States and the United Kingdom and provides insight into international co-operation in this field. Part III offers an overview of the major provisions of the FCPA. Part IV provides an overview of the major provisions of the Bribery Act and the UK Ministry of Justice's guidance on the act. (16) Part V explores the important differences between the two pieces of legislation. Part VI puts forth recommendations for amendments to the FCPA that the United States should adopt in the wake of the Bribery Act. Part VII concludes that the United States needs to implement changes to the FCPA to reduce uncertainty, update the FCPA to the evolving international standard, and allow the United States to maintain its significant influence over the evolution of international antibribery legislation.
HISTORY OF ANTIBRIBERY LEGISLATION
Although the international community has only recently begun to tackle foreign bribery, (17) the United States started developing its antibribery legislation more than 35 years ago. (18) In 1977, Congress enacted the FCPA in response to an SEC investigation in which more than four hundred U.S. companies admitted to illegal or questionable payments to foreign officials totaling over $300 million. (19) In doing so, Congress set out to prevent the bribery of foreign officials and to restore the public's faith in the integrity of American business. (20) In 1988, Congress feared that the legislation forced American companies to operate at a significant disadvantage to foreign competitors. (21) As a result, Congress amended the FCPA to exclude small denomination nondiscretionary payments, known as facilitation payments. (22) Facilitation payments are nominal payments used to expedite the performance of a routine, nondiscretionary action of a foreign official. (23) In an attempt to increase international cooperation in 1998, the United States signed the Organization for Economic Co-Operation and Development's Convention on Combating Bribery of Foreign Officials in International Business Transactions (OECD Antibribery Convention). Subsequently, Congress increased the FCPA's jurisdiction to incorporate this new international agreement. (24)
After the OECD Antibribery Convention, the United States began to more proactively seek out and prosecute actions of foreign bribery under the FCPA. (25) In his analysis of FCPA enforcement between 2000-2009, Professor Carl Pacini discovered a number of important trends. (26) These trends highlight the importance of FCPA compliance and the need for clarity in the coming years. Mr. Pacini's study cogently quantifies the federal government's recent aggressive enforcement regime. (27) The number of FCPA cases filed annually has escalated considerably since 2004/s Over 80 percent of case filings in the decade ending in 2009 occurred between 2005 and 2009. (29) In 2005, fourteen cases were initiated compared to sixty-seven in 2009. (30) The federal government has also increased its willingness to file criminal cases, (31) to bring cases against individuals, (32) and to seek greater monetary sanctions. (33) The broad nature of the FCPA has allowed U.S. enforcement agents to establish the United States as the most aggressive prosecutor of international bribery. (34)
In the past 15 years, the international community has taken significant steps toward criminalizing the corruption of international business transactions. (35) Whether out of protectionist concerns, a fear of imposing competitive disadvantages on domestic businesses, or general indifference, no country had enacted a law similar to the FCPA prior to 1997. In 1997, the OECD Antibribery Convention changed this international acquiescence to bribery by obligating its ratifying members to criminalize the act of bribing foreign officials. (36) In 2003, the United Nations began advocating for the criminalization of specific conduct associated with bribery and the strengthening of international enforcement. (37) As more countries address this global issue, regional (38) and nongovernmental organizations (39) are joining the fight against international bribery.
However, international efforts to investigate and prosecute bribery have significantly trailed that of the United States. (40) The level of foreign bribery prosecutions differs greatly among the thirty-nine member countries. (41) The United States is the most aggressive enforcer of foreign bribery (42) with almost double the amount of cases and investigations of any other member country. 43 Although the payments of bribes from U.S. organizations are lower than the global average, such payments remain significant and are proportionally greater than other developed world powers, such as Germany and France. (44) Despite heavy-handed enforcement, the pressure to pay bribes remains strong on account of the pervasive belief within organizations that business is often lost due to bribery committed by a competitor. (45)
Although the United Kingdom was an original ratifying member of the OECD Antibribery Convention, (46) it did little to implement its obligations for 10 years after its signing. (47) Prior to the convention, UK antibribery laws consisted of a few outdated statutes and various common law convictions for...