To Combat Overseas Bribery, Authorities Make It Personal

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OCTOBER 8, 2009

To Combat Overseas Bribery, Authorities Make It Personal

By DIONNE SEARCEY

WSJ

In its pursuit of overseas corruption, the Justice Department is getting personal. So far this year, a dozen executives and high-level employees of corporations have been criminally charged with violating the Foreign Corrupt Practices Act. The law bans companies that trade on U.S. stock exchanges from bribing foreign government officials or employees of state-owned companies. The tally already has surpassed last year's count in which 11 people were charged with violating the act. Additionally, three criminal trials in recent months have resulted in convictions on foreign bribery charges.

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The FCPA was passed in 1977 but seldom was applied until the past decade. In recent years the Justice Department and the Securities and Exchange Commission, which administers the civil enforcement of the law, have issued record fines for violations. For example, German industrial conglomerate Siemens AG agreed in December to pay $800 million in U.S. fines to settle bribery investigations involving alleged payments to government officials around the world to win infrastructure contracts. But companies can absorb the cost of big fines and the hit to their reputations. The Justice Department is hoping for a bigger deterrent effect by targeting people rather than just punishing their employers.

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Corporations have begun to take notice. At the start of General Electric Co.'s annual leadership meeting in January, Brackett Denniston, the company's senior vice president and general counsel, showed a video that flashed the images of executives at other corporations caught up in alleged FCPA crimes. "I show them the individuals and their faces, and that has a very powerful impact," Mr. Denniston says. The SEC also has taken action against high-level individuals in recent years, sending "a loud message to others that they can't shield themselves and expect that the corporations alone will pay the price for their misconduct," says Cheryl Scarboro, associate director of the SEC's division of enforcement.

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The jury convictions for FCPA crimes include former U.S. Rep. William Jefferson, charged with bribing Nigerian officials to enrich his family; Gerald Green and Patricia Green, two Hollywood producers of the movie "Rescue Dawn" who bribed Thai film festival officials; and Frederic Bourke, founder of upscale handbag company Dooney & Bourke, who was accused of having ties to a bribery scandal in Azerbaijan. Mr. Bourke's case was particularly unnerving for corporate counsels because he wasn't accused of bribing anyone but of knowing his associates were likely making illicit payments to government officials in Azerbaijan. He faces up to 10 years in prison. A lawyer for Mr. Bourke didn't respond to requests for comment.

In March, the Justice Department unsealed indictments against two U.K. citizens whom it accused of helping energy giant KBR Inc., then called Halliburton Co., bribe Nigerian officials. Jeffrey Tesler, a London lawyer, and Wojciech Chodan, a former employee of KBR's London subsidiary, were tied to bribes paid to obtain contracts to build liquefied-natural-gas facilities in Nigeria, the Justice Department says. Messrs. Tesler and Chodan couldn't be reached for comment. A KBR spokeswoman said the company "in no way condones or tolerates unethical or illegal behavior."

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http://online.wsj.com/article/SB125495862894771979.html (subscription)


Printed in The Wall Street Journal, page A13