The word “foreign” is taking on even more meaning when it comes to the Foreign Corrupt Practices Act. The FCPA Blog, which keeps a close watch on these cases, reports that nine of the top ten FCPA cases of all times involve foreign companies rather than ones in the U.S.
The long-arm of the U.S. law is reaching out and touching a lot of companies in far-flung spots. The Act prohibits companies that do business overseas from bribing foreign officials. It also covers foreign companies whose securities trade in U.S. markets – a growing trend as the world’s financial markets become even more intertwined.
The most recent companies nabbed by the U.S. prosecutors were Magyar Telekom Plc of Hungary and Deutsche Telekom AG of German, which is its majority owner. The two companies agreed last week to pay $63.9 million criminal penalty to the U.S. Department of Justice and another $31.2 million to settle civil charges with the SEC.
So what got Magyar/Deutsche Telekom into trouble? According to Justice, the case stems from efforts by Magyar in which three executives sought to bribe Macedonian officials via a Greek intermediary, along with a number of false bookkeeping entries. The three executives, all Hungarian citizens, were also sued by the SEC. Their activities took place at a time when Magyar Telekom traded some of its securities on the New York Stock Exchange.
Other foreign companies settling with the U.S. include Siemens of Germany, which paid $800 million in 2008, BAE of England, which paid $400 million in 2010 and Daimler AG of German, which paid $185 million in 2010.
U.S. regulators said that in the Magyar/Deutsche Telekom case they had help from the Hungarian Financial Supervisory Authority, the German Federal Financial Supervisory Authority (BaFin), and the Swiss Office of the Attorney General.
Sweep to the FCPA Blog
The sweet life has finally ended for Lai Changxing, the alleged mastermind of a smuggling network who fled his native China to seek refuge in Canada until he was deported last July. Chinese prosecutors say that they have indicted Lai and other members of his syndicate and that the men have all confessed.
For more than a decade, Lai fought extradition after being accused of heading a network that smuggled cigarettes, cars, oil and more along with bribing government workers in the late 1990s, according to China’s state broadcaster. Chinese media said the enterprise was valued at $10 billion, and the scandal was considered China’s biggest corruption case.
Lai had had used his ill-gotten gains to live large: His toys included a bulletproof Mercedes Benz, a mansion filled with young women, tiger-skin covered conference tables and plenty of gold jewelry.
There is one glimmer of good news for Lai, especially in light of some of the harsh sentences handed down in China. China promised Canada that Lai would not face execution on his return and even sent a diplomatic note to Jean Chretien, then Canada’s prime minister, reiterating that promise.
In India, it appears that efforts to pass the anti-corruption measure, called the Lopal bill, have stalled. The controversial measure – which has gained worldwide attention – passed the lower house of Parliament earlier this week, but failed to gain approval in the upper chamber.
The Indian government blamed the opposition parties for the failure to pass the measure. Meanwhile, the opposition parties blamed the government. It is unclear when the bill would be taken up again as the winter session of Parliament has ended.
With bribery and corruption seen as derailing India’s economic progress and an increasing irritant of daily life, the Lokpal measure had been viewed by many as a step in the right direction. Yet, anti-corruption crusader Anna Hazare, who had conducted several hunger strikes to form of protest, came out against the measure. He claimed that the measure was so weak as to be “useless.”
The measure would have created an independent ombudsman to investigate corruption among politicians and bureaucrats. As far as what happens next, the best that most Indian political analysts could suggest is that the situation is in “limbo.”