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. 

The article reinforced that old adage of “those who lie with dogs, get fleas” as it noted that “Mr. Mebiame was brazen in making sure he got his cut of the deals he undertook on behalf of Och-Ziff.” At one point he threatened to go public with the company’s illegal tactics to obtain deals even saying “he would let the world know what kind of international crooks you are.”

This final statement demonstrates what happens if you bring corrupt third parties into a relationship with your company. It also points to the need to know about companies and individuals with which you are doing business. 

Continue the conversation at Compliance Week Europe: 7-8 November at the Crowne Plaza Brussels. Join us as we look at changes in global anti-corruption regulations, slave labour risks in your supply chain, and how to detect fraud, to name just a few topics. Learn more