One of the things not often mentioned in connection with Foreign Corrupt Practices Act commentary is the effect of dealing with corrupt foreign government officials, corrupt officers, and employees of state-owned enterprises and corrupt third parties. The problem with engaging in illegal conduct with any of these groups is that your company is now subject to blackmail and extortion if you stop making the illegal payments or in any other way ‘upset’ such actors. That was one of the takeaways I got from a New York Times story on the swirling Och-Ziff corruption scandal.
It has been reported over the past few months that the company has reserved some $400MM for resolution of a long-standing FCPA investigation. Now there has been an arrest of a Gabonese businessman, Samuel Mebiame, who was allegedly a consultant for a joint venture the hedge fund was involved with in some of its business dealings in Niger, Guinea, and Chad. He was described in the criminal complaint as “fixer” who had “routinely paid bribes”. Rather amazingly Mebiame had two interviews with U.S. government officials in which “he described making cash payments to foreign officials.” Even more amazingly Mediame was residing the United States and clearly subject to U.S. jurisdiction.
