How to Accurately Identify the Corrupt Intent Behind Bribery: Real Life Cases, Anti-Bribery Training

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As I mentioned in my last blog, FCPA expert Tom Fox was recently asked in an interview by Corporate Compliance Insights to define the criteria for what constitutes a bribe under the FCPA. He outlined three key criteria: Is there “anything of value” being exchanged? Is there “corrupt intent?” And lastly, is there an attempt to “obtain or retain business?” In my previous post, I defined some examples of the term “anything of value” from past FCPA violations; in this post I will do the same for the term “corrupt intent.”

The term “corrupt intent” means intentionally making an offer of “anything of value” in an effort to get a government official to abuse his or her official position. Now, you may be asking yourself who counts as a “government official?” I will address THAT conundrum in a future FCPA series blog. For now, I will focus on providing examples of “corrupt intent.”

In a case from 2011, telecommunications provider Magyar Telekom was charged with allegedly making $6 million in illegal payments to senior Macedonian officials in order to delay or preclude the issuance of a license to a new competitor and to mitigate effects of a new law intended to liberalize the market. This was a clear-cut abuse of an official’s power to obtain a competitive, “undue advantage” for Magyar.

In another case from 2011, steel pipe manufacturer Tenaris was alleged to have bribed government officials in Uzbekistan during a bidding process to supply pipeline for transporting oil and natural gas. These bribes gave Tenaris access to confidential bids made by competitors, which provided them with an “undue advantage” during the bidding process to obtain business.

Generally, examples of offers made with “corrupt intent” involve influencing the procurement process, side-stepping or granting exceptions to regulations (including tax treatment), giving someone access to nonpublic bid information or influencing the outcome of a lawsuit or enforcement action. In the words of the U.S. Government, “these payments short-circuit the marketplace by directing business to those companies too inefficient to compete in terms of price, quality or service…it rewards corruption instead of efficiency and puts pressure on ethical enterprises to lower their standards or risk losing business.”

In the examples above the alleged guilty parties offered bribes that were in turn accepted. However, what if there is “corrupt intent” but the bribe is not accepted? Even if the bribe is not accepted it does not negate the fact that there was “corrupt intent” — the initiating party would still be at risk for persecution. In fact, intent required for the violation does not have to be directly proven, but can be inferred from the evidence. You might ask, “but what if a subordinate was forced to make an offer by someone higher up in the organization, would this situation relieve the subordinate of responsibility?” Again, in this case it doesn’t matter. This situation would not offer the employee a legitimate defense in court. Both companies and individuals are liable entities in an FCPA violation.

With these specific provisions, employees need to be on the lookout for even the suspicion of “corrupt intent” as direct evidence is not required. Companies that have compliance programs strong enough to actually self-identify and report FCPA issues may qualify for a deferred prosecution agreement, as in the case of Tenaris.

Employees need to be educated on the difference between “corrupt intent” and legitimate promotion of the business, this can be done by implementing anti-bribery training. Anti-bribery training is valuable because it will help your employees differentiate between for example, the provision of legitimate, bona fide expenditures such as free snacks or promotional items with company logos (seen as an appropriate means for promoting the business) and less reputable offers.

Topics:  Bribery, Corruption, FCPA, Training

Published In: General Business Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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