The Foreign Service Journal, June 2016

32 JUNE 2016 | THE FOREIGN SERVICE JOURNAL THE FCPA and the Rule of Law Abroad Tom Firestone is a partner in the Washington, D.C., office of Baker & McKenzie. His practice focuses on the FCPA and matters related to international corruption. He pre- viously served for six years as an assistant U.S. attorney in the Eastern District of New York, where he prosecuted international organized crime cases. He also served for eight years as the Depart- ment of Justice resident legal adviser at U.S. Embassy Moscow. F rom 2002 to 2004 and from 2006 to 2012, I worked as the Department of Justice resi- dent legal adviser at U.S. Embassy Moscow. One of my jobs was to promote anti-cor- ruption and the rule of law, a challenging task, given the political environment in Russia. I worked on a number of legisla- tive reforms with the parliament and on training programs for prosecutors, judges and defense lawyers. I also worked on rule-of-law programs in several other former Soviet countries, including Ukraine, Kazakhstan, Moldova and Latvia. Based on these experiences, I believe that the U.S. Foreign Corrupt Practices Act is one of the most effective instruments at the disposal of the U.S. govern- ment for promoting the rule of law overseas. Passed in 1977 in the wake of scandals involving overseas The Foreign Corrupt Practices Act, rarely enforced before 2000, has become one of the most effective tools in the fight for good business ethics. BY THOMAS F I RESTONE bribery by U.S. corporations, the FCPA criminalizes the pay- ment of bribes to foreign government officials to obtain or retain business. It also has provisions containing penalties for false or inadequate accounting. The FCPA applies to U.S. busi- nesses, but also applies to foreign businesses that sell shares in the United States (“issuers”). Even if a foreign business is not an issuer, it can still be prosecuted for violating the FCPA if it par- ticipated in a scheme to bribe foreign officials and any part of that scheme took place in the United States (defined broadly). Until the early 2000s, the FCPA was rarely enforced. But all of that has changed; some of the most significant U.S. corpo- rate criminal prosecutions of recent years have involved FCPA violations. Many of these have involved foreign companies. For example, in 2008, the German company Siemens paid approxi- mately $800 million to DOJ and the Securities and Exchange Commission to settle FCPA charges. In 2014, the French company Alstom paid $772 million to settle FCPA charges. According to one authoritative source, eight of the top 10 FCPA settlements (as measured by the fines imposed) involved for- eign companies. A Very Effective Tool The increase in FCPA enforcement has been accompanied by the adoption of international conventions, such as the Organi- FOCUS ON CORRUPTION AND FOREIGN POLICY