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Harry Cassin
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Chasing Dirty Money

The Foreign Corrupt Practices Act may frighten business people everywhere, but it has never been a big concern for crooked overseas officials. That’s because they can’t be prosecuted under the FCPA, which is aimed exclusively at punishing those who pay them bribes. But the Justice Department may have found one way to help plug that gap.

Last week it filed a forfeiture action against bank accounts in Singapore held by Arafat “Koko” Rahman (pictured above), the son of Bangladesh’s former prime minister, Khaleda Zia. The accounts allegedly hold nearly $3 million in bribe money that Siemens AG and China Harbor Engineering Company paid to Rahman and other Bangladeshi officials.

Siemens and three of its subsidiaries were penalized $800 million after pleading guilty last month to violating the Foreign Corrupt Practices Act. One of the subsidiaries, Siemens Bangladesh, admitted that from 2001 to 2006, it paid $5.3 million in bribes through purported business consultants to Rahman and other local officials in order to win a mobile telephone project.

The Justice Department says it has forfeiture jurisdiction over the money because the proceeds of foreign offenses such as bribery and extortion that flow through the United States are covered by U.S. money laundering laws. Some of the money that ended up with Rahman came from a U.S. bank account, according to the DOJ, and the bribes paid in U.S. dollars were sent through the U.S. financial system before landing in the Singapore accounts.

The Singapore government, meanwhile, has reportedly received an official U.S. request for the funds. And last month, the head of Bangladesh’s Anti-Corruption Commission said Singapore authorities had already frozen $1.6 million belonging to Rahman.

Acting Assistant Attorney General Matthew Friedrich said the Justice Department will not only “prosecute companies and executives who violate the Foreign Corrupt Practices Act, we will also use our forfeiture laws to recapture the illicit facilitating payments often used in such schemes.”

View the DOJ’s January 9, 2009 release here.

For a discussion about why foreign officials who take bribes cannot be prosecuted under the FCPA, see our earlier post here.

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