We saw in the last post that neither restitution nor disgorgement will work very well in compensating the victims of overseas corporate bribery.
But here’s something that might.
Look at what the federal enforcement agencies already do in the field of environmental law. The proceeds of enforcement actions against corporate defendants are regularly used to compensate victims through what is called a Supplemental Environmental Project (SEP). As part of the settlement with the EPA, violators may voluntarily agree to perform a project to benefit the environment. The cost of the SEP is then used to reduce the defendant’s monetary penalty.
Unlike restitution or disgorgement, SEPs are not the brainchild of Congress. They are neither created, authorized, required, nor prohibited by federal statute. They do not require judicial approval. Rather, they are entirely voluntary agreements between the enforcement agencies, the defendant, and the organizations that will carry out the environmental project (and thus receive the funds). They are solely the product of prosecutorial discretion.
In other words, we didn’t need anyone’s permission to do this. We just decided that it was a good idea, and started doing it.
Did we ever. The SEP was just used to an historic degree in the enforcement action against BP for the Gulf of Mexico spill. Resulting in the single largest criminal resolution in U.S. history, with a $4 billion criminal recovery, the resolution is structured so that more than half of this recovery will fund SEPs to compensate those communities and ecosystems most directly harmed by the spill.
This SEP will be dedicated to restoring and preserving the marine and coastal environments harmed by the Deepwater Horizon oil spill. Some money will be directed to significant barrier island restoration and/or river diversion off the coast of Louisiana. Some will be used to fund oil spill prevention and response efforts in the Gulf through research, development, education and training. All in all, $2.4 billion has been dedicated to repairing and improving the conditions in which the victims of that crime now live.
Could we do something like this with the FCPA? Why couldn’t we?
But hold on, you say. Not so fast. This is entirely unprecedented! We’ve never used the proceeds of enforcement actions to compensate overseas victims before . . .
Actually, that’s not true. There is indeed some precedent for what I’m proposing, though it’s little known. I’ll show you what I mean in the next post.
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, and XII here.
Andy Spalding is a senior editor of the FCPA Blog.
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