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Harry Cassin
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Wal-Mart’s Victims Part I

It’s probably fair to say that the corporate poster child of FCPA enforcement, right now, is Siemens. But that’s about to change. 

A couple years ago, if a law school professor had written up this fact pattern as a hypo on an exam, it would have been dismissed as unrealistic. Arguably today’s most (in)famous U.S.-based multinational corporation, whose growth strategy was already controversial for its impact on local communities, is alleged to have systematically paid bribes in the flagship developing countries — China, India, Brazil, Mexico, and others.  These alleged bribes might very well have enabled a decade or more of profits in thousands — literally, thousands — of stores around the world. But truth is stranger than fiction, and this is no hypo. It’s really happening.

And  how do we calculate the penalty cap? Twice the profits  made possible by the bribes, plus disgorgement of ill-gotten gains, for a cap of three times the profits. Think of it. The potential numbers are staggering. 

But where will all that money go? As we all know by now, it goes straight to the U.S. Treasury. Tragically, this does little to help the true victims of bribery: the residents of local communities, in Mexico and beyond, whose zoning regulations are violated, whose environments are contaminated, whose buildings are unsafe, and whose markets are disrupted.

But it need not be so. This post is the first in a series demonstrating that FCPA enforcement can and should do more for bribery’s victims. Building on the arguments in this paper, these posts will show that the FCPA was originally designed to build institutions in developing countries, a fact we have collectively forgotten. We have come to think of bribery as chiefly an issue of white-collar crime, and the FCPA as a tool for promoting corporate governance. This curious historical twist is producing perverse results across the developing world. But it’s a problem that can be fixed. I will show specifically how FCPA enforcement, without any statutory amendments or reversal of case law, could help victims in direct and substantial ways. We’ve actually done it before, though we don’t talk about it much. 

The Wal-Mart action begs us to rediscover our past. Let’s do that now.


Andy Spalding is a senior editor of the FCPA Blog.

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