Washington Lawyer

Engaging in a Global Fight Against Corruption

From Washington Lawyer, February 2015

By Brigida Benitez

Brigida BenitezCorruption is a global problem that takes away funding from significant public works, facilitates criminal activity, undermines good governance, and, ultimately, weakens the rule of law. The risk of corruption looms for many companies that conduct business around the world. The District of Columbia has become a key battleground in the fight against corruption, and lawyers from our bar are leading the charge.

The anticorruption legal field has been growing in recent years, especially in the nation’s capital. There has been increased enforcement of anticorruption laws by the U.S. Department of Justice and the U.S. Securities and Exchange Commission (SEC), both headquartered in Washington, D.C., which have joint enforcement authority of the Foreign Corrupt Practices Act (FCPA). The FCPA was enacted in 1977 to address the growing problem of bribery of foreign government officials by U.S. companies. The Department of Justice and the SEC each created specialized units in the last several years to investigate and prosecute FCPA cases. Together, the two agencies have prosecuted a number of well-known public companies and have assessed hundreds of millions of dollars in fines.

According to public sources, there are more than 100 companies under investigation by U.S. authorities for possible violations of the FCPA. There are very public examples that captivate the headlines; what is less reported, however, are the lawyers involved in these matters, many of whom are members of the D.C. Bar. In these cases, while the alleged conduct may have occurred elsewhere, the key investigations are being conducted in the District.

International financial institutions like the World Bank and the Inter-American Development Bank (IDB), also headquartered in Washington, D.C., also have been engaged in the anticorruption battle. These institutions have developed independent investigative offices and sanctions regimes to address potential fraud and corruption among many companies or individuals who transact business with them.

Several years ago, I led the integrity office at the IDB and oversaw the implementation of compliance programs and fraud investigations throughout Latin America. The sanctions imposed by these institutions—being debarred from eligibility for contracts—can be powerful tools against those who regularly engage in business with these international financial institutions or multilateral development banks.

Countries have adopted laws similar to the FCPA. For example, the U.K.’s Bribery Act, which became effective in 2011, represents a complete overhaul of U.K. anti-bribery laws. The law focuses on both domestic and foreign bribery—official and commercial—and sets new standards for corporate criminal liability. Similarly, in 2013 Brazil enacted the Clean Companies Act, which imposes civil and administrative liability on corporations and individuals for corrupt acts. Brazil was responding to public demand for greater transparency and integrity, especially in light of international events the country is hosting (such as the upcoming Olympics). The law, which became effective in January 2014, is awaiting the implementing regulations and its success will depend on its enforcement. As another example, the government of China recently has started to crack down on corruption. Indeed, this past December, China’s former chief of domestic security, who had been under investigation for months in an anticorruption inquiry, was expelled from the Communist Party and arrested, making him the highest-ranking party leader to be prosecuted in more than 30 years.

As global anticorruption legislation has proliferated, so has coordination in the fight against corruption. For example, the Organisation for Economic Co-operation and Development (OECD) recently issued its Foreign Bribery Report, which seeks to illustrate the crime of foreign bribery by measuring, for the first time, the crime of transnational corruption. The report analyzed data emerging from foreign bribery enforcement actions concluded since the entry into force of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention) in 1999. At the time, the OECD was the first to establish legally binding standards to criminalize bribery of foreign public officials in international business transactions.

A number of members of our bar have taken on significant roles in the anticorruption field. Some are involved in investigating and prosecuting fraud and corruption, others are working in-house as compliance officers assisting their companies in implementing state-of-the-art anticorruption compliance programs. Still others are engaged as outside counsel representing multinational companies and institutions in navigating the anticorruption laws, advising on compliance programs, and, if problems emerge, working with regulators to reach satisfactory conclusions.

The work is fascinating because it involves complex legal issues, challenging facts, strategic thinking, negotiation, and interaction with people around the world, including accountants, clients, local lawyers, witnesses, or even government officials. Knowing another language and having experience and comfort working in different cultures are extremely helpful to the practice. As companies become more global and business transactions cross many borders, the risk of corruption is present just about anywhere. Indeed, in Transparency International’s 2014 rankings of 175 countries based on perceptions of public corruption, more than two-thirds of the countries ranked below 50 on a scale from 0 (perceived to be highly corrupt) to 100 (perceived to be very clean).

Lawyers are making important strides to ensure greater integrity and transparency in international business, and many from this bar have been instrumental in that process.

Reach Brigida Benitez at bbenitez@dcbar.org.