Posted by wlansden |
Filed under news and comments; fcpa
By James Bowden
Much noise is being made in the media over News Corporation’s British subsidiary The News of the World’s alleged hacking into the voice mail of a kidnapped English teen, and even the possibility of similar hacking into 9/11 victims’ voicemail. I’m curious why so little attention is being paid to the possibility that one of the worlds largest and most powerful corporations might be charged with multiple felonies by the U.S. Department of Justice. I’m pretty sure that News Corporation has taken note of the issue.
A little bit of background on the Foreign Corrupt Practices Act – in the late 1970s, the public got wind of U.S. corporations paying bribes to foreign officials. Lots of them. So, the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq., was passed in 1977 to prohibit similar corporate bad behavior abroad in the future. The statute includes two major provisions: (i) adherence to accounting standards and required disclosure on filings with the S.E.C. designed to make under-the-table payments difficult to get away with, and (ii) a blanket prohibition on bribing foreign officials.
So the analysis: The News of the World, a News Corporation Subsidiary (editors note: if you had any doubt as to how huge News Corporation is, check out the length and breadth of its subsidiary list), allegedly paid multiple illegal bribes through its employees to officers in Scotland Yard in order to receive the benefit of non-public confidential information. Suffering Succotash! Sounds like an issue!
The experts seem to be indicating that a suit would be an uphill struggle, if not completely futile. The FCPA is rarely applied to actions taken in G20 countries (read: countries the D.O.J. considers competent to enforce the rule of law itself), and paying cops for information isn’t exactly an action that has previously been prosecuted under the FCPA. I think the most interesting argument is for due process (i.e., that there is no point in prosecuting acts done in Britain by British Citizens in concert with British officials in American courts), but making this an explicit limitation to the FCPA would eviscerate the statute – all a malfeasant company would need to do to avoid prosecution would be to make sure the bribe was paid by a local. The commentary does also note that the D.O.J. has recently been less gun shy about prosecuting companies under the FCPA.
Even if prosecution under the FCPA is unlikely, News Corporation is certainly lawyering up, and there is speculation that they will make a voluntary self disclosure to the S.E.C. and the D.O.J. And while I am not an expert on the FCPA, I know that while many companies survive, the consequences of a felony conviction for a U.S. company are potentially devastating. I also know what the term “willful blindness” means (ahem, James Murdock at 10:41 A.M.), and that it is no defense.
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