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Wal-Mart’s Victims, Part XVI: Compensating Victims through the STP

The proceeds of FCPA enforcement actions currently go directly into the U.S. Treasury. But that need not be so. My proposed Supplemental Transparency Project would use a portion of the settlement proceeds to directly fund programs in the countries where the bribery occurred.
Following the precedent set by the DOJ and EPA with their Supplemental Environmental Project, the STP does not require Congressional authorization. That’s the beauty of it. It is a negotiated agreement between the enforcement agencies, the defendants, and the NGOs charged with administering the project. It falls within the DOJ’s prosecutorial discretion.

That means we could do this tomorrow. If we wanted to.
The STP would have two aims: to remedy the specific harms caused by the defendant’s bribes; and then to prevent future harms.
Let’s focus first on the remedy. How this worked would depend on the purpose of the bribe involved. If the bribe circumvented an environmental restriction, for example, the NGO could use the settlement funds for remediation – cleaning up pollution, restoring waterways, etc. If the bribe bought a bypass of building code requirements, the money could be spent on retrofitting buildings to bring them up to code. You get the idea.
But some harms are not readily undone. If a new retailer (we need not name names) violated zoning regulations or devastated local retail markets, this may not be reversible without actually relocating the brick-and-mortar store. Short of that, the local merchants and residents could be compensated financially. The STP could identify the residents whose quality of life is substantially impacted by the zoning violation, or the merchants whose business model is destroyed, and compensate them directly. A relatively small portion of a big-ticket FCPA settlement could go a very long way here.
But the trick would be two-fold: we’d have to fairly identify the victims; and then be absolutely sure we’ve compensated those victims without misappropriating the funds.
How can we do that? Who would administer this STP? I’ll explain next post. And from there, we’ll discuss the second important function of an effective enforcement action: preventing future harms.

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, XIII here , XIV hereXVa here, and XVb here.


Andy Spalding is a senior editor of the FCPA Blog.

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