Wal-Mart’s Victims, Part XIV: We Did It Before, We Can Do It Again

I suggested in the last post that using the proceeds of an FCPA enforcement action to directly compensate overseas victims had been done before.  And it really worked. Or I should say, it is still working, to this day.

The year was 2002, at the very front end (if not a year or two ahead) of the modern FCPA enforcement era. A private U.S. lawyer named James Giffen was arrested for allegedly bribing officials in Kazakhstan on behalf of U.S. oil companies to the tune of $80 million. Background about the case and its outcome is here.

In settling the case, the U.S. enforcement agencies brokered a most extraordinary deal. They arranged with officials in Kazakhstan and Switzerland to release the $80 million in alleged bribes from the Kazakhstani leaders’ Swiss accounts and establish a trust fund. That fund now finances a Kazakhstani NGO called the BOTA Foundation, whose purpose is to “improve the lives of children, youth and their families suffering from poverty in Kazakhstan through investment in their health, education, and social welfare.”

BOTA has three programs funded by the recovered bribes. Eligible poor families may receive funding for access to health, education, and social welfare services. Another program makes grants to local and international NGOs to promote early childhood development, special needs services, and benefits to orphans and other severely disadvantaged children. And a tuition assistance program provides college and vocational education scholarships.

I was lucky enough to travel to Kazakhstan a few years ago and speak with some of the BOTA folks. They’re good people, doing good work. Sure, their government is mightily corrupt, but these people are not. And just to be safe, BOTA’s board of trustees includes government representatives from the U.S. and Switzerland as well as Kazakhstani academics and professionals. It does not include any Kazakhstani government officials.

The Giffen case was unique in that the bribes were easily traced and recovered; this usually isn’t so. But recovering the actual bribes is not the only way to finance such a program. Following the environmental law example of the SEP, we can use settlement monies instead. In the last few posts of this series, I’ll specifically show how FCPA enforcement can fund effective, accountable community organizations that directly benefit bribery’s overseas victims.

There is absolutely no reason, legal or practical, why this cannot work.

Wal-Mart’s Victim’s Part I can be viewed here, II here, III here, IV here, V here, VI here , VII here, VIII here, IX here, X here, XI here, XII here, and XIII here.

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Andy Spalding is a senior editor of the FCPA Blog.