The enforcement action against Tyson Foods announced yesterday by the DOJ and SEC contains some important lessons.
Here are three of them:
First, the cover up is often worse than the crime. From 2004 to 2006, Tyson paid around $90,000 to two veterinarian plant inspectors, and about $260,000 over ten years, either through phony invoices or through their wives’ no-show jobs. Chicken feed, excuse the pun, compared with some of the enforcement actions we’ve seen lately. But some Tyson people who should have known better learned about the bribes and didn’t stop them. In fact, they formed a committee of top execs to think up ways to keep the bribes secret but still flowing. The SEC said: “It was not until two years after Tyson Foods officials first learned about the subsidiary’s illicit payments that its counsel instructed Tyson de Mexico to cease making the payments.”
Second, public graft isn’t a victimless crime. A myth peddled by opponents of compliance and fans of facilitating payments is that no one gets hurt and business keeps moving. Not true. As our friend Elizabeth Spahn has said about petty bribery, “Like it or not, we are all in this together. Everybody gets hurt.” Last year, she delivered this prophetic message about graft and food and product safety risks:
If we get rich enough, maybe we could afford to personally avoid the avalanche of toxic products descending on clueless consumers of global products. Someone else’s puppies and babies get killed. We rich, educated very much First World Americans and Europeans can afford organic, locally grown slow food; children’s toys hand carved by hippies in Vermont or Tyrol. Caveat emptor, after all.
Third, companies deserve second chances. Although Tyson initially covered up its bribery, things changed. Somewhere along the line, some people at Tyson understood what the company had done. They self-reported the crimes to the DOJ and SEC. They cooperated in the investigation and the corporate clean up. And for that the company was rewarded with a two-year deferred prosecution agreement instead of the typical three-year deal. We believe in second chances for companies (and for people) who admit their crimes and try to make things right.
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The FCPA Blog on the road. We’ll be speaking in Houston on March 10. More details here.
2 Comments
Second chances do not exist for people convicted of FCPA violations. No matter how much one may admit, cooperate or plead, they will never have a second chance. They are labeled forever. Conviction of an FCPA crime is a Federal felony. It can never be expunged.
In these days of the Internet, no one who has been convicted can put it behind them and seek to re-enter a business career. Potential employers check and identify individual criminal histories with a click of the mouse.
No second chances allowed.
Tyson is no virgin when it comes to felonies. Felonies don't stop them.
They were convicted of bribing the Sec. of Agriculture but got a presidential pardon. They spent $425,000 on lobbying to former Senator Trent Lott's lobbying firm. Lot was majority leader in the Senate but left to be able to lobby Congress. He was implicated in his own judge bribery scandal with his brother in law who was handling Trent Lott's case.
The total fine for Tyson on the bribery scandal was less than one half of one percent of reported sales in that division alone. The fine and getting out of criminal prosecution of the people actually committing the crimes will only allow others to be safely complicit in similar crimes in the future. The penalty was a hall pass compared to sales that were reported by that division alone.
If we want to make white collar criminals and corporations follow the law, the fines and penalties have to be greater than the profits generated and they have to hold the people who did it accountable.
These fines did not do that.
Allowing them to report their own profits and using that as a standard for penalties is a bit like allowing drug dealers to come up with their own penalties based on the quality of the high from their last hit.
They make a mockery out of our federal judicial system, our regulatory agencies, and the rule of law.
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