FCPAméricas Blog

Appearance of Impropriety: The Failure to Compensate FCPA Victims Creates Bad Optics

Author: Matthew Fowler

FCPARestitution1Perhaps the most remarkable feature of FCPA settlements is the price tag. The largest FCPA settlement so far this year was for $398 million, paid by the French oil company Total. This is big money – enough to get the attention of even the largest multinational companies. But as a Brazilian friend recently asked me: where does all that money go?

The answer is straightforward: all criminal fines, civil penalties and disgorged profits from FCPA enforcement actions go into the U.S. Treasury. But is that fair, considering that the most apparent victims of bribes paid to foreign officials are the citizens of foreign countries?

Little Restitution for FCPA Victims

Compensating the foreign victims of foreign bribes would seem consistent with U.S. legal principles – particularly U.S. restitution laws.  These laws seek to compensate victims of crimes financially, using fines and penalties paid by convicted defendants.

But restitution generally does not reach foreign FCPA victims. All criminal fines paid in FCPA cases are directed to the federal Crime Victims Fund, which is used to provide restitution to crime victims. But this fund rarely – if ever – makes restitution payments to victims in FCPA cases. Rather, Crime Victims Fund resources are generally directed to programs that help victims of violent crimes, or that compensate victims for narrowly defined costs (e.g., medical cost, funeral costs and lost wages) that corruption victims generally don’t suffer.

Restitution can also be provided directly – a court can order a convicted defendant to pay a victim a specified amount. In fact, the Mandatory Victims Restitution Act requires U.S. courts to order restitution to the victims of certain crimes. And courts have occasionally ordered restitution in connection with FCPA enforcement matters. Restitution was ordered in 2010 in Green in connection with bribes paid in Thailand (the restitution is subject to appeal) and in Diaz in 2009, in connection with bribes paid in Haiti. But those cases are exceptional – courts very rarely order restitution in FCPA enforcement matters cases. Why is it that a law requiring restitution for crime victims is generally not applied to the foreign victims of foreign bribes?

The answer appears to have two parts: First, the applicable laws create legal and procedural limitations on obtaining victim status and ordering restitution. Second, there appears to be a concern about treating a “corrupt” government as a victim (i.e.,  “paying the fox to buy more chickens”).

The Outside Perspective

These obstacles to restitution for FCPA victims will be described in detail in a later post. For now, it’s worth noting the negative appearance that these limitations create. By channeling big-dollar FCPA settlements into the U.S. Treasury and preventing reasonable restitution for foreign victims, the FCPA starts to look more like a law that allows the U.S. to benefit from the suffering of others than a law that works to reduce corruption in foreign countries. As one who believes that the FCPA does a lot more good than harm, I think that’s a shame.

Note: a version of this post appeared first at Sin Miedos, a blog of the Inter-American Development Bank.

The opinions expressed in this post are those of the author in his or her individual capacity, and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author`s employers, other contributors, FCPAméricas, or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.

© 2013 FCPAméricas, LLC

Matthew Fowler

Post authored by Matthew Fowler, FCPAméricas Contributor

Categories: Enforcement, English, FCPA

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