Attacking Corruption at Its Source: the Doj's Recent Efforts to Prosecute Bribe-taking Foreign Officials

• Publication year: 2015
• Author: By Miwa Shoda and Andrew G. Sullivan*

Attacking Corruption at its Source: The DOJ's Recent Efforts to Prosecute Bribe-Taking Foreign Officials

By Miwa Shoda and Andrew G. Sullivan*

I. INTRODUCTION

On February 9, 2015, the Eleventh Circuit affirmed the conviction and nine-year prison sentence of Jean Rene Duperval on charges of accepting bribes while he served as the director of Haiti's state-owned telecommunications company.¹ This decision represents the latest development in a string of recent enforcement actions by the U.S. Department of Justice ("DOJ") against bribe-taking foreign officials.²

Historically, the DOJ has not targeted this category of bad actors because the prosecutorial tool used to combat foreign bribery—the Foreign Corrupt Practices Act ("FCPA")—does not extend to the prosecution of foreign officials who solicit and accept bribes.³ However, the DOJ recently has changed course by side-stepping the FCPA and instead prosecuting these foreign officials under other laws,⁴ most commonly the Money Laundering Control Act⁵ ("MLCA") and related conspiracy charges.

This article examines whether the DOJ's targeting of bribe-taking foreign officials under the MLCA is an illegal end run around the limitations of the FCPA. First, this article will review the jurisdictional scope of the FCPA, and the Fifth Circuit's decision in United States v. Castle which clarified that bribe-taking foreign officials are outside the FCPA's reach. Next, this article will discuss the DOJ's bellwether prosecution of Thai official Juthamas Siriwan on MLCA charges relating to bribes she accepted during her tenure as governor of the Tourism Authority of Thailand. In the early stages of the Siriwan prosecution, Judge George Wu of the Central District of California suggested that charging a foreign official under the MLCA potentially violates congressional intent because lawmakers meant to shield bribe-taking foreign officials from prosecution when drafting the FCPA.⁶ Siriwan's U.S. prosecution was subsequently stayed pending the outcome of her prosecution in Thailand, and during that time, the DOJ has managed to successfully convict a number of bribe-taking foreign officials on MLCA charges without raising the same judicial concerns expressed by Judge Wu. While the recent conviction of Jean Rene Duperval may suggest a resignation to the DOJ's approach of using the MLCA, no court has formally addressed the concerns raised by Judge Wu, and these concerns could pose a legal hurdle that the DOJ may need to overcome in future prosecutions.

II. THE LONG (BUT LIMITED) ARM OF THE FCPA

Congress enacted the Foreign Corrupt Practices Act in 1977 after the Watergate scandal revealed the widespread practice of U.S. companies paying foreign officials in order to obtain business from foreign governments.⁷ The anti-bribery provisions of the FCPA criminalize the act of paying and offering to pay foreign officials, foreign political parties, and candidates for foreign political office in order to secure business overseas.⁸

The anti-bribery provisions of the FCPA have a wide prosecutorial reach. Under the FCPA, the DOJ and SEC have jurisdiction over all citizens, nationals, and residents of the United States; all domestic corporations that are either incorporated or have their principal place of business in the United States;⁹ and all issuers of securities registered on U.S. stock exchanges, including foreign corporations.¹⁰ Additionally, the FCPA reaches all officers, directors, employees, and agents of domestic corporations and corporations trading on U.S. stock exchanges, even when those individuals are foreign nationals,¹¹ as well as any foreign corporation or individual that commits an act in furtherance of a corrupt payment while in the U.S.¹²

In short, nearly every person involved in the bribery of a foreign official is subject to the FCPA when either the person or the act of bribery has some connection to the United States, even when the person bribing the foreign official is a foreign national. However, despite this expansive reach, one category of bad actors remains conspicuously outside the scope of the FCPA: the foreign officials who solicit or accept bribes.

In United States v. Castle, the DOJ employed a novel legal theory in an attempt to pull foreign officials within the jurisdictional ambit of the FCPA.¹³ In Castle, the government attempted to prosecute two Canadian officials who allegedly accepted bribes from U.S. executives when awarding a municipal contract.¹⁴ While prosecutors acknowledged that the FCPA does not criminalize the receipt of bribes by foreign officials, they nonetheless attempted to prosecute the Canadian officials under the federal conspiracy statute for conspiring to violate the FCPA.¹⁵

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On appeal, the Fifth Circuit rejected this attempted utilization of the FCPA against foreign officials, citing to the Supreme Court's decision in Gebardi v. United States.¹⁶ In Gebardi, the government attempted to prosecute a woman who agreed to be transported by her lover across state lines under a charge of conspiracy to violate the Mann Act. The Mann Act prohibited transportation of women across state lines for immoral purposes, but did not criminalize the conduct of the woman being transported.¹⁷ The court rejected the government's attempt to reach the woman with a conspiracy charge, holding that Congress had demonstrated its intent to leave transported women unpunished because a violation of the Mann Act necessarily required the acquiescence of the woman being transported, however the Act did not make the woman's consent a crime.¹⁸

In Castle, the Fifth Circuit reviewed the legislative history leading to the enactment of the FCPA and determined that, because Congress had enumerated a list of those individuals within the Act's reach, which included "virtually every possible person connected to the payments except foreign officials," it was therefore "only logical to conclude that Congress affirmatively chose to exempt this small class of persons from prosecution."¹⁹ The court concluded that, as with the Mann Act, Congress passed the FCPA to deter and punish an activity that necessarily involves the agreement of at least two parties but chose to punish only one party to the agreement, and therefore using the federal conspiracy statute to prosecute the other party violated legislative intent.²⁰ The Castle court noted that this legislative policy was likely the product of Congress's concern about the "inherent jurisdictional, enforcement, and diplomatic difficulties" raised by the application of the bill to noncitizens of the United States.²¹

III. THE DOJ'S RECENT APPROACH IN UNITED STATES V. SIRIWAN

The Fifth Circuit's decision in Castle largely halted enforcement efforts against bribe-taking officials for nearly two decades. However, over the past five years the DOJ has launched a series of prosecutions of bribe-taking foreign officials under laws other than the FCPA.²²

To prosecute these officials, the government primarily relies on charges under the MLCA, which makes it a crime to launder money obtained as a result of the commission of certain specified unlawful activities ("SUAs").²³ Under the MLCA, prosecutors have jurisdiction over foreign nationals where any of the money laundering activity takes place in the United States and the value involved is greater than $10,000.²⁴ The DOJ therefore prosecutes foreign...