On August 4, 2011, in a Miami federal courtroom, a jury returned quickly with convictions of two former top executives of a Miami telecommunications company. The jury found that the defendants bribed officials of the state owned telecommunications agency, Haiti Teleco. The specific charges included seven counts of substantive Foreign Corrupt Practices Act (FCPA) violations, twelve counts of money laundering, and of course, the prosecutor's best friend, conspiracy counts (one count of conspiracy to violate the FCPA and wire fraud statutes, and one count of money laundering conspiracy). These convictions followed guilty pleas by four other defendants to the same scheme., including one of the former government officials who admitted receiving more than $1 million in bribes from Miami-based telecommunications companies. The defendants who plead guilty received between 6 and 57 months in prison. The defendants convicted at trial can expect even more jail time. Six other defendants charged with a related scheme continue to await trial.
Assistant Attorney General Lanny Breuer described the defendants convicted earlier this month as having "authorized more than $800,000 in illegal bribe payments to Haitian officials in exchange for business advantages—a clear violation of the FCPA." He went on to say: "This verdict is another powerful example that bribery of government officials—whether at home or abroad—has serious consequences."
As the Government charged and the jury found, the defendants, former President and Executive Vice President of Terra Telecommunications Corp., bribed at least two Haitian officials over several years by wiring bribe payments and enlisting co-conspirators to launder the bribe money through shell companies and various bank accounts. The purpose of the bribery was to maintain the preferred relationship that the defendants' company enjoyed with Haiti Teleco, which was the sole provider of land line phone service in Haiti, as well as to secure preferred lower rates and occasional debt write offs. In addition to using shell companies to conceal the payments, the defendants falsely recorded their purpose as "consulting services," even though no such services were performed or even intended.
As has been our firm's practice, we followed the Haiti Teleco prosecution and now make several observations.
*Greater clarity was provided on the scope of an element of the FCPA that requires the government to prove that the defendant intended that the purpose of the payment (or offer) to the foreign official was to obtain or retain business. While it has been common in other FCPA prosecutions for the Government to focus on a specific defined purpose of securing a valuable contract or particular business objective, in this case the business the defendants sought to obtain or retain was arguably more vague and consisted simply of maintaining a profitable business connection and its attendant benefits. Companies that do business abroad, especially in areas of the world known for their high incidence of corruption, need to be even more vigilant and ensure that their compliance programs are designed to root out and eliminate payments made for the vague, but improper objective of securing an improper business advantage.
*The government's method of charging FCPA violations has taken on a clear pattern. Substantive violations of FCPA are being coupled with one or more conspiracy counts (which enables prosecutors to take advantage of broader, less onerous evidence rules for the introduction of otherwise hearsay statements), and with one or more money laundering counts (which raises substantially the potential prison terms). In this climate of heightened enforcement, the dangers of not adopting and adhering to a robust and effective global anti-corruption compliance program continue to grow exponentially. Through experience and aggressiveness, the Government has learned how to make cases easier to prove and to open the door to more draconian results.
*The circumstances under which the government will prosecute individuals or be satisfied with a corporate settlement/payment of a substantial fine remain unclear. In this case, where the value of the bribes paid was under a million dollars, multiple individuals will serve lengthy prison sentences. In contrast, while Siemens allegedly made more than $1 billion in corrupt payments around the globe, not one individual has yet to be charged. While the Department of Justice has declared "aggressive prosecution of individuals" a cornerstone of its FCPA enforcement policy, apparent inconsistencies like this remain a puzzlement.
*Although the FCPA does not apply to foreign officials who receive bribes, the government has successfully end-run this statutory roadblock by charging these officials with money laundering. The import for U.S. companies doing business abroad is simple—despite the limitations of the FCPA, the government has a strong stick to employ against foreign officials to encourage them to cooperate in investigations against U.S. companies and individuals. This is yet another fact that makes creation, implementation and compliance with robust anti-corruption programs and procedures a must for any domestic company doing business outside of the United States.