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Jessica Tillipman: The most important FCPA case of all time is . . .

The FCPA Blog’s post Wednesday about important cases mentioned Telia, Siemens, TSKJ, The Africa Sting, and U.S. v. Kay. For the reasons set out in the post, those are all good candidates. But for me, hands down, the most important case is Siemens.

It put the FCPA on the map for a lot of people who weren’t paying attention to the FCPA before 2008. And, as the post noted, it set the standard for large, multinational FCPA settlements. Yes, Telia is a direct descendant of Siemens. So are Odebrecht, SBM Offshore, BAE Systems, VimpelCom, and Alstom, among others.

I still teach Siemens in my course because the facts are jaw-dropping.

“The corruption involved more than $1.4 billion in bribes to government officials in Asia, Africa, Europe, the Middle East and the Americas,” according to Linda Chatman Thomsen, the director of the SEC enforcement division in December 2008.

In Argentina alone, the company paid more than $31 million in bribes to officials, “through purported consultants and other conduit entities.”

As the DOJ said then, beginning in the mid-1990s, “Siemens AG engaged in systematic efforts to falsify its corporate books and records and knowingly failed to implement and circumvent existing internal controls.”

But since December 2008, the company’s remediation efforts, and its ethics and compliance turnaround, have been just as stunning. Siemens has made the most out of its second chance.

So to me, Siemens will always remain the seminal FCPA case.

Also, the post Wednesday didn’t mention it, but I would add Wal-Mart.

Although it hasn’t settled yet, if it wasn’t for the New York Times exposé about the company’s alleged bribery in Mexico, for which the Times’ David Barstow and Alejandra Xanic von Bertrab won a Pulitzer Prize, the Chamber of Commerce may have successfully convinced Congress to weaken the FCPA.

I like to think of Wal-Mart as the company that unintentionally saved the FCPA.

____

Jessica Tillipman is a Senior Editor of the FCPA Blog and Assistant Dean at The George Washington University Law School. You can follow her on Twitter at @jtillipman

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6 Comments

  1. Jessica,

    I agree with you in many respects. Siemens was the poster child of systemic corruption. Let's not forget that the thorough Germans even had a cost centre where the bribes were booked. From memory, it was call (in translation) 'for other useful purposes'!

    I also think the Chinese Princelings cases deserve a special mention among the most important FCPA cases. These are the best examples of corruption that does not involve cash or bank transfers. The banks were selective in which children they would hire, to 'optimise' the improper advantage. The fact that the banks kept concise spreadsheets, which showed which children they wanted to employ to gain a particular company as their client, shows that it's not German 'Gruendlichkeit' but also a proper accounting mindset that can get you into FCPA trouble!

  2. I agree with Jessica’s choice for all of the same reasons.

    However, I would also add the Jim Giffen/Kazahkgate case to the top 3 list.
    Remember: This is one of those rare cases where a lot of stolen/hidden government money was actually recovered from a sitting President and then put to good use for a laudable social purpose – right under the President’s utterly corrupt unwilling nose. Kudos to the international community on this one. An important case study that highlights and links-up public accountability, investigative journalism, scholarly research and the role of academia, the name-and-shame game, money-laundering, asset recovery, civil society oversight, human rights and social rights/programs, poverty/women and children, public and private sector bribery, corruption in the legal profession and the all important area of international law enforcement cooperation.

  3. I'm admittedly biased since I was on the trial team for Mr. Murphy in the Kay case in Houston, but if the Fifth Circuit had upheld the dismissal in Kay in 2004 and effectively endorsed Judge Hittner's decision that the statute was more limited in scope, what might that have meant for everything that came after? Since most of the early enforcement action came out of Texas, a Fifth Circuit ruling could have had a very chilling effect on the momentum of the FCPA's course.

  4. Jessica, I believe you are totally right. Siemens because of their size and quality products
    and services was very hard to detect, I suppose. Also in Germany such practices, as they pleaded guilty
    to, where not illegal (?).
    Argentina has for at least twelve years been host to an investment bank that has far exceeded the
    German company. Yet nobody even casually mentions it – like me. One communications wrongdoing that is hard to miss. YPF is another and LNG overprices done by government and stached away by the bank.
    Nobody ever mentions the bank. Hard to understand.

  5. Jessica

    We would very much like to speak with you.
    Could you email us and perhaps we can talk on the phone.
    [email protected]
    We have a major FCPA case and need to find legal counsel asap.
    Thanks,
    John.

  6. I would agree with Eric Morehead that Kay was critical, in keeping the FCPA aligned to the OECD Anti-Bribery Convention (e.g. Article 1 defines the quiz pro quo for bribery as “obtain or retain business or other improper advantage in the conduct of international business”).

    Commentators differ over the merits of this alignment, possibly due to ongoing delays in OECD standards on the treatment of overlapping cases, but US equivocation on its treaty commitments would have slowed if not stopped progress elsewhere (e.g. the U.K., France, Russia, Canada, Argentina to name a few countries that legislated against their preexisting legal principles to clarify their own alignment).

    Also worth considering if, without Kay, the UN Convention would also have been sunk, by acceptance of petty corruption, facilitating payments and nepotism as normal everyday business practice.


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