The US Foreign Corrupt Practices Act: a Case of Judicial Overreach?

Denis LyonsThe US Foreign Corrupt Practices Act: a Case of Judicial Overreach? by Denis Lyons 

The sight of European corporate malefactors being pursued by American prosecutors is a welcome one for many. Football fans in particular will be glad to see FIFA’s corrupt edifice crumble under the weight of American transnational justice. There is, clearly, a newly found prosecutorial zeal to US Attorney General Loretta Lynch’s activities in rooting out corporate corruption. (See previous BRRT Blog “US Bank Fraud: A new Chapter”)

On closer examination, however, the grounds for such prosecutions can be seen to be highly questionable. Under the Foreign Corrupt Practices Act (FCPA), an American court can deem itself competent to proceed against a corporate entity anywhere in the world if two conditions are met. First, where an allegedly corrupt practice is denominated in whole or in part in US Dollars. Second, where there has been an exchange of e-mails via an American Server. If either of these requirements is fulfilled, the American Authorities can then enter into a kind of legalised blackmail known as “plea bargaining” with the company in question. Pressure is brought to bear for the company “to roll” on itself and identify past and present alleged infractions as well as those employees responsible. All of this with a view to merely having to pay a fine of a few million or billion Dollars: as opposed to a lengthy period of incarceration for key players. If a company refuses to play ball, its overseas personnel in the US may be arrested and the US market closed off.

All of which flies in the face of the customary rules of International Criminal Jurisdiction. Countries generally like to try their own citizens as an exercise in sovereignty. British citizens and subjects can be tried before the courts here for crimes committed abroad and this is the internationally recognised norm. Extradition proceedings exist to ensure that where this is not possible, proceedings in other jurisdictions are up to scratch. Even within the European Union where judicial standards are broadly similar, such proceedings are often hard-fought. The American Act effectively short-circuits this process and could be seen as a dangerous step along the road to a kind of universal American Justice.

Given the flaws in the American system like excessive prison sentences, the widespread use of life imprisonment without parole, the prosecution of minors in adult courts, the aforementioned plea bargaining, the erosion of civil liberties by the Patriot Act, the mediatisation of proceedings and abhorrent anomalies such as the Death Sentence and Internment without Trial Guantanamo style, this is not something to be desired.

Those recently caught in the headlights of American Justice in this country like the NatWest four have fought tooth and nail not to be extradited with good reason. They are however on the back foot from the start given the bilateral (but highly lopsided) Extradition Treaty signed by Britain with the US and the phenomenon of judicial overreach exemplified by the FCPA.

There is no denying the success of the Act and of Justice Department Prosecutors from an American perspective. Among European companies who have had to cough up for Uncle Sam are Siemens, Total , and various leading banks including BNP/Paribas who have had a $8.9 billion Dollar fine imposed for sanctions busting regarding Iran. Sanctions, it should be borne in mind, put in place by the American and not the French Government.

Is it fair that a European firm should be heavily fined for what is effectively a breach of American foreign policy?

My view is that it is not.

We all wish to see the fight against corporate corruption vigorously pursued and won, but the imposition of one country’s deeply flawed justice system on the rest of the world is not the way forward.