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Harry Cassin
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Andy Spalding
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Jessica Tillipman
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Richard L. Cassin
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Julie DiMauro
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Thomas Fox
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Marc Alain Bohn
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Bill Waite
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Russell A. Stamets
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Richard Bistrong
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Eric Carlson
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What Deters Foreign Bribery?

During an unprecedented Senate investigation into the DOJ’s FCPA enforcement practices, Senator Arlen Specter, left, today questioned why no one is going to jail in the most egregious cases of foreign bribery.

For example, he said, why haven’t any individuals been charged in the prosecutions of Siemens, BAE, and Daimler?

He repeatedly asked the DOJ’s Greg Andres to explain how fines levied against big corporations deter illegal bribery.

“Criminal fines are added to the costs of doing business,” Specter said. “Going to jail is what works to deter crime.”

Senator Specter chaired today’s hearing in Washington of the Subcommittee on Crime and Drugs, part of the Senate Judiciary Committee.

In September, we reported that no one from Siemens — which the DOJ itself called “arguably the most egregious example of systemic foreign corruption ever prosecuted” by the U.S. — has been indicted here. It’s the same (so far) with the brass from U.K.-based BAE. The company paid $400 million to settle an FCPA case last year. But no one from BAE has faced U.S. charges. Daimler AG paid $185 million in penalties this year and no one from that company has been charged by the DOJ.

Raising other concerns, Senator Amy Klobuchar from Minnesota said she’s heard during the past year from company lawyers and executives who say they “can’t sleep at night” because of uncertainty about FCPA enforcement.

“What behavior will trigger an enforcement action?” she asked Andres, the DOJ’s Deputy Assistant Attorney General of the Criminal Division.

Other witnesses testifying at today’s hearing included Mike Koehler, Andrew Weissmann, and Michael Volkov.

They all said there’s great uncertainty about who’s a “foreign official” under the FCPA. According to the DOJ’s expansive view, Weissmann explained, all employees of Bloomberg News, still associated with New York Mayor Michael Bloomberg, or General Motors, controlled for a time by the U.S. government, might be included if the FCPA were applied to them.

Weissmann also talked about harm to well-meaning companies victimized by even a single rogue employee at any level through the application of respondeat superior. He proposed a compliance defense similar to what’s in the U.K. Bribery Act.

Volkov, meanwhile, said defenses only work if you go to trial, which is too late for FCPA defendants. Instead, he said, there should be an amnesty for companies that try to comply with the FCPA — if they audit compliance and self-report and correct problems they discover.

Senator Specter asked Koehler to share his sentencing research with senate investigators.

The hearing started just after noon today and finished at 2 pm.

It was an extraordinary day for the FCPA. We’ll have more to say about it in coming posts.

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1 Comment

  1. The Honorable Senator wants individuals to be punished as a deterrent, but loses sight of the fact that these Companies aren't convicted of an FCPA violation (settled in NPAs & DPAs) and continue to do business in the USA; especially with the US Government.

    As the Senator correctly states the fines are viewed as "a cost of doing business" and when a fine of $1.6B still results in $105B in revenues, as in the Siemens case, well you do the math…

    And while doing business in the USA; these Violators invest in and buy US Companies, potentially propagating their corrupt business practices; case in point ABB's recent $58M DOJ/SEC Settlement and yesterdays announcement that ABB will buy Baldor Electric Co. for $3-$4B.

    The Senator's initiative will probably send some peons and little people to jail, but I respectfully submit, that the real deterrent would come from "hitting the business in the pocketbook"; by stopping the awarding of US Government Contracts to the ABBs, BAEs, and Siemens of the World, as well as prohibiting investments in the USA and in US Companies for a period of time, based on the severity of the violations; especially those settled with NPAs and DPAs.

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