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Harry Cassin
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Reaching bribery’s victims through the CROOK Act

Ten years later, it still haunts me. I’m sitting at a Mumbai café with an Indian forensic accountant. She’s getting up to speed on what was then a new phenomenon: FCPA enforcement.

“So, a U.S. company who pays bribes in my country can now be penalized?”

“Oh yes,” I confidently reply, “even in the hundreds of millions of dollars.”

She pauses, then asks a question born of innocent curiosity. But to me, it felt like lighting a fuse to a bomb I could not yet see. “Where does that money go?”

Wait, what? I had never thought about it. But I didn’t like where this was going. Startled, I could do no more than sheepishly reply, “um, it goes to the U.S. Treasury.”

“Whom does that help?”

And there it was, laid bare, exposed. An accidental consequence of foreign bribery enforcement. The fine and penalty money is deposited into the public fisc of who? The perpetrator.

Of course, effective criminal enforcement of foreign bribery laws helps the citizens of foreign countries insofar as it deters bribery. But when companies from countries like China, who does not enforce a foreign bribery law, stand ready to take their place, then the benefits to those citizens drop precipitously.

Here’s where the CROOK Act steps in. This bill, now pending in the U.S. Congress, would use FCPA enforcement proceeds to fund overseas anti-corruption initiatives. It proposes taking 5 percent of FCPA enforcement proceeds to fund overseas anti-corruption initiatives, under the supervision of the State Department and an Interagency Task Force. The funding can support governmental or non-governmental organizations and would go to countries that are well-positioned to effectuate meaningful reform.

This bill gets at the problem the Indian accountant exposed. It uses the significant revenue of FCPA enforcement to more directly benefit bribery’s victims: the citizens of the countries where the bribery occurs – typically developing countries. It can raise awareness and strengthen institutions. It can empower host countries to enforce their own values and laws. It tempers our dependence on the supply-side enforcement that is presently so uneven.

It’s just better.

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  1. Indeed, it may be a major step towards more equality for the victims of such practices. however, it would have been “sexier” not identifying specific countries, especially when your scope is global.

  2. I think 5% is not enough. Going in a better direction, but very far from a reasonable end place.

    • Can’t agree more – 5% is far from enough. Doing academic studies and research, launching influential anti corruption campaigns etc. all cost money until it can creat a profound impact on the society. How about allocating another 5% to the solve some global thorny issues like climate change?

  3. Peru did something like you suggest with the Fujimori-Montesinos Case back in 2001, the fund created was called FEDADOI and the money that went in came from assets recovered in Switzerland and the US, several million dollars. It was supposed to fund anti-corruption efforts so that history would not repeat itself. 20 years have come and gone, and the answer as to if it’s a good idea to give money to corrupt developing countries can be found in Peru’s actual situation as to corruption. In 2010 the US Congress approved over 30 million dollars again in the fight against corruption in Peru, USAID managed the MCC Threshold funds, corruption has not decreased. An explanation could be that with systemic corruption if you put one or a hundred people in jail, they will be quickly replaced by others who will thank you for getting them out of their way. I would suggest a very careful design of how that money would be managed locally, and would strongly advise against awareness media campaigns. Thanks for writing on such an interesting topic.

  4. Why 5%? It does seem somewhat miserly.

  5. Thanks for bringing the “Crook” Act to my attention, I hadn’t been aware of this undertaking. I agree with other commentators here in questioning the rationale behind aiming for 5% only; however, I can see that a higher percentage might meet resistance from US institutions, as they would be the ones receiving less money as a result.

    I do have to say that – from a moral point of view – I’m wholly behind the idea of compensating the victims of corruption, which in the case of FCPA violations are normally foreign countries or rather their citizens. However, as Astrid Leigh has pointed out, it is incredibly difficult to properly monitor and ensure the effective use of that money. A thorny dilemma for sure.

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