A recent article in the Financial Times by Simon Kuper, titled “How to buy a foreign election” reminded me that the FCPA specifically makes illegal more than simply bribing a foreign government official or some employed by a state owned enterprise to secure an improper advantage. The FCPA also makes illegal bribes paid to “any foreign political party or official thereof”; “any candidate for foreign political office”; or any person, while knowing that all or a portion of the payment will be offered, given, or promised to an individual falling within one of these categories, all if to secure an improper advantage.
Kuper’s article focused on the avalanche of money dumped into the American political system, particularly on display during this present Presidential campaign. Yet he also worries U.S. interests paying monies to influence political races and elections outside the U.S. as well. He is concerned that “buying into other people’s political system is a bright idea that is conquering the world.” Moreover, “U.S. campaigns have become so pricey that many American donors now see better returns on investment in smaller economies.”
There have been relatively few FCPA enforcement actions where political parties were the recipients of bribes. However the third-highest single FCPA fine was for $579MM, against Halliburton—and its then subsidiary KBR—for involvement in a bribery scheme involving a gas processing plant in Nigeria. Last year saw a SEC-FCPA enforcement action involving the Japanese company Hitachi in South Africa, where the company was involved with the country’s ruling party, the African National Congress.
Lobbying, particularly through campaign contributions, is a well-honored American political tradition. Further the FCPA itself anticipates some forms of political participation with its ‘Local Law’ defense, which requires that “a defendant must establish that “the payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the foreign official’s, political party’s, party official’s, or candidate’s country.” That sounds quite a bit like legal activity in the US, but the FCPA requires an affirmative showing that such conduct is specifically legal under the laws of the country involved, not a time-honored tradition.
Companies subject to the FCPA would be well-advised to consider these strictures during the American political season.