Home -> Law Blog Directory -> International Law Blogs -> The FCPA Blog

International Law

: The FCPA Blog

Foreign Affairs

Our singular focus over the past week moved our spouse to ask whether we also plan to redo the walls in Siemens Blue. We're considering it. But what really comes to mind after the biggest FCPA enforcement action in history is that it involves not a U.S. company -- not a Boeing or an Exxon or a GE -- but "a corporation organized under the laws of Germany with its principal offices in Berlin and Munich." And it was snared by the FCPA because, as the Justice Department's Information put it: "As of March 12, 2001, Siemens was listed on the New York Stock Exchange and was an 'issuer' as that term is used in the FCPA. 15 U.S.C. § 78dd-1(a). By virtue of its status as an issuer, Siemens was required to comply with the provisions of the FCPA."

Aside from its listing on the NYSE, there is nothing in the DOJ's Information to connect Siemens' FCPA violations to the United States. Its Supervisory Board (the highest authority) is based in Munich and oversees the Managing Board, also based there along with the Audit Committee. Siemens' lawyers are stationed in Germany, in the cities of Erlangen and Munich, which also house the Corporate Compliance Office. The operating groups at the center of the scandal had a toe in the U.S. through satellite offices, though there are no allegations linking the satellites or anyone in them to the bribery or its cover up.

Siemens' employees singled out by the feds are identified as Officer A, Officer B, Officer C, and so on through to Officer G. All are said to be German citizens, with no indication they live outside Germany. Siemens' legal entities named by the DOJ are French and Turkish, and another is a United Arab Emirates-based subsidiary of a German parent. The Information also describes three intermediaries involved in the graft -- Agents A, B and C, consisting of a Paraguayan company registered in Jordan and an unspecified number of Iraqi citizens, none of whom are said to have any connection to the United States.

And yet it was under a U.S. law that Siemens finally paid for its global crime spree. The Munich Public Prosecutor's Office levied some fines, it's true, and is probably charging about a dozen individuals. But our favorite pundit says it was the threat of U.S. criminal prosecution under the FCPA that struck the real fear into Siemens, confirming again that the FCPA has both reach and teeth.

We shouldn't be too surprised that the big hammer fell on a foreign company. Although they weren't subject to the FCPA at all until 1998, since then the pace of investigations and enforcement actions involving foreign companies has accelerated. In addition to Siemens, overseas names in the FCPA news include ABB Ltd (Switzerland), Vetco Gray UK Ltd, Akzo Nobel, NV (the Netherlands), Statoil ASA (Norway), AstraZeneca (UK-Sweden), BAE Systems (UK), DaimlerChrysler (Germany), Innospec (UK), Magyar Telekom (Hungary), Norsk Hydro (Norway), Novo Nordisk (Denmark), Panalpina (Switzerland), Smith & Nephew (UK) and Total (France), among others.

Outside America's borders, its globo-cop role may not sit well (it makes a lot of Americans queasy, too). But this struggle is too important to ignore. In 1998, when Congress amended the FCPA to cover foreign companies, President Clinton committed the United States to "leadership in the international fight against corruption." The Wall Street Journal could say ten years later that the quixotic battle against overseas bribery had turned into one of Congress's finer moments.

The DOJ's Matthew Friedrich summed up the case this week with these words:

For let there be no doubt that corruption is not a victimless offense. Corruption is not a gentlemen's agreement where no one gets hurt. People do get hurt. And the people who are hurt the worst are often residents of the poorest countries on the face of the earth, especially where it occurs in the context of government infrastructure projects, contracts in which crucial development decisions are made, in which a country will live by those decisions for good or for bad for years down the road, and where those decisions are made using precious and scarce national resources.

That's why the fight against international public corruption is worthwhile, and why the FCPA -- the U.S. law with the longest reach and sharpest teeth -- makes sense.
.

Full post as published by The FCPA Blog on December 18, 2008 (boomark / email).