FCPAméricas Blog
FCPA Meets AML (Part 3: Implications of prosecuting foreign officials in bribery cases)
11.12.2013
When it comes to bribery, it takes two to tango: the briber and the receiver. But the FCPA penalizes only the briber (or offerer, promiser, etc.). As described in earlier posts in this series (see Part 1 and Part 2), however, U.S. prosecutors are finding other ways – principally through application of money laundering statutes – to prosecute the foreign recipients of bribes. This is a significant expansion in practice, with thorny implications for U.S. and international anticorruption enforcement.
Prosecuting foreign officials under the FCPA
The FCPA does not prohibit the receiving (or soliciting or accepting) half of the bribery transaction. This shield for bribe recipients was expanded in 1991 by the 5th Circuit Court of Appeals in U.S. v. Castle. The Castle court established that charges of conspiring to violate the FCPA could not be brought against foreign officials who arranged to receive bribes. The Castle court (quoting the trial court’s opinion) noted that:
… [since] Congress included virtually every possible person connected to the payments except foreign officials, it is only logical to conclude that Congress affirmatively chose to exempt this small class of persons from prosecution…
And subsequently:
Most likely Congress made this choice because U.S. businesses were perceived to be the aggressors, and the efforts expended in resolving the diplomatic, jurisdictional, and enforcement difficulties that would arise upon the prosecution of foreign officials was not worth the minimal deterrent value of such prosecutions.
This principle would likely extend to similar offenses (e.g., aiding and abetting,) but it does not mean that foreign officials can never be prosecuted for FCPA violations. In Basu, the court convicted an international public official and U.S. permanent resident for helping to make bribe payments to other foreign officials.
Prosecuting foreign officials for money laundering violations
The DOJ has brought money laundering prosecutions against foreign officials – in some cases against foreign officials exempt from prosecution under the FCPA. But the same “diplomatic, jurisdictional and enforcement difficulties” described in Castle also apply to prosecuting foreign government officials for money laundering offenses. Consider the diplomatic repercussions if a foreign head of state were charged in the U.S. for money laundering. And how would the U.S. react if such charges were brought against high-ranking U.S. officials?
Such concerns were raised by federal judge George Wu in U.S. v. Siriwan, a case involving money laundering charges brought against a Thai government official accused of accepting bribes. (The bribes were allegedly accepted from movie producers Gerald and Patricia Green, who were convicted of FCPA violations in 2009.) As reported by the FCPA Blog, Judge Wu said in a hearing that:
if… the whole point of Congress in excepting foreign officials is to avoid certain problems when you prosecute foreign officials for these types of criminal acts involving bribery etc… Those are the same concerns when you attempt to go after these people for money laundering because they accepted bribes.
These comments present a question: is the Castle exemption based on the role of the government official in the bribe transaction? This would explain how the foreign official in Basu was prosecuted for paying bribes, and would presumably permit prosecution of foreign officials when they launder money. However, if the Castle exemption is based on the difficulties that efforts to prosecute foreign officials would encounter, than Castle’s exemption would presumably prohibit the prosecution of foreign officials for paying bribes (as in Basu) or for laundering the proceeds of bribes they receive.
The Siriwan case has been stayed pending resolution of the Thai government’s prosecution of the defendant, so we must wait to learn Judge Wu’s answer to the concerns he raises. But, based on the concerns raised in Castle, the basis for prosecuting foreign officials for money laundering offenses is not altogether certain, despite the DOJ’s increasing use of such charges.
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Post authored by Matthew Fowler, FCPAméricas Contributor
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