Justice's FCPA Cash Cow

Feb 16, 2012

An out-of-control Justice Department has been getting slapped by federal judges for pushing Foreign Corrupt Practices Act (FCPA) prosecutions too far. The Wall Street Journal editorial page reports:

In December, Los Angeles federal district Judge Howard Matz threw out a jury's bribery conviction of Lindsey Manufacturing after describing government misconduct that included allowing false testimony, submitting false affidavits and failing to comply with discovery obligations.

Houston federal judge Lynn Hughes was similarly skeptical last month about the bribery case against an official at Swiss company ABB, saying in a verbal order that the principal witness "knows almost nothing" and gave answers that were "abstract and vague, generally relating gossip."

What's even more shocking is FCPA prosecutions have turned into a cash cow for the Justice Department:

The government saw a $1.8 billion windfall in FCPA-related fines and penalties from Justice and the Securities and Exchange Commission in 2010 and another $508.6 million in 2011.

According to a report last month by the New York City Bar Association, by April 2011 the five biggest FCPA fines were more than $300 million each, up from a single largest fine of $28.5 million in January 2007. In many cases, companies settle for fines even if they dispute the charge to avoid the reputational risk of an indictment.

I'm pretty sure using the justice system as an ATM wasn't what the authors of the FCPA has in mind. It's also causing uncertainty in the business community and worries Senators like Amy Klobuchar (D-MN) and Chris Coons (D-DE).

The Justice Department needs to pull back and stick to the FCPA's original purpose in fighting international bribery.

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