In March the Nigerian human rights group SERAP (Socio-Economic Rights and Accountability Project) sent a letter to the SEC outlining one of the most altruistic FCPA amendments yet proposed. The letter urged the U.S. government to adopt a system for sharing proceeds from FCPA cases with victims of foreign bribery.
SERAP asserted, “Bribery and corruption increase costs to victimized government entities and society at large but…damage remedies are often elusive.”
The letter was written by SERAP’s volunteer counsel Alexander W. Sierck, above, adjunct professor at Georgetown University Law Center and counsel at the law firm of Cameron LLP.
In a response dated April 25, SEC Enforcement Division director Robert S. Khuzami wrote, “The framework of our securities laws requires a proximate connection to the harm caused by a particular violation…We appreciate your thoughtful submission, and will give appropriate consideration to your suggestions.”
Khuzami’s letter provided no further information about the SEC’s reaction to SERAP’s request.
A copy of the SEC’s response can be downloaded here.
Mr. Sierck kindly answered our questions about this groundbreaking proposal.
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Do you think distributions of the sort called for in the SERAP letter would affect funding for DOJ and SEC, and thus their ability to prosecute FCPA cases in future?
If the SEC were to implement SERAP’s proposal and then actually make occasional disbursements, there might be people in the business community and in Congress who would object, but these would be the same people already advocating changes in FCPA along the lines suggested by the U.S. Chamber of Commerce. If SEC/DOJ suffer reduced funding, it will, in my judgment, be more likely for the latter reason than the former, although FCPA critics would, of course, still cite the former. As to the impact on enforcement itself, I have structured the proposal so that it comes into play only after the Enforcement Division (ED) has settled with the wrongdoing company.
Can you tell me a bit about the genesis of the letter?
SERAP approached the International Senior Lawyers Project, based in New York, for pro bono assistance on various anti-corruption policy and legal issues. I volunteered to assist; my writing the letter to the ED followed from that. SERAP is exploring various options for facilitating anti-corruption damage recoveries for victim government agencies in Nigeria and elsewhere; as my letter to the ED indicates, however, other options for doing so are good in theory but challenging to pursue in practice.
If the SERAP proposal were to be adopted, do you think distributions would end up being granted or not granted to foreign countries for political reasons?
If the ED were to adopt SERAP’s proposal, in considering specific requests from victim foreign government agencies or NGOs, it is unlikely that the ED would ignore “political considerations.” By this term I assume you mean considerations in the foreign country (as perceived by the U.S.), not purely domestic considerations such as the identity or political clout of the settling company. “Political considerations” is not necessarily a pejorative term. This could and should include, as SERAP suggests, an assessment of the victim government agency’s commitment to anti-corruption objectives, among other things.
Benjamin Kessler is the managing editor of Ethics 360 Media, publisher of the FCPA Blog and ethiXbase. He can be contacted here.
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