Thursday, July 14, 2011

Murdoch and the Foreign Corrupt Practices Act: A Minefield

Many are talking about whether the U.S. should investigate Murdoch's News Corp for FCPA violations. Obviously no one has a crystal ball to predict whether this will or will not happen, but one thing is for sure - lodging an investigation would be like entering a minefield.

The obstacles facing prosecutors will be enormous, as they should be.  Here are a few:

  • Stretching the Statute- The FCPA, enacted in 1977, came on the heels of the Watergate Investigation that revealed extensive bribery by U.S. companies to foreign officials.  Major corporations had paid foreign officials huge sums of money in order to obtain contracts and other business abroad. The "integrity of the free market" was a key aspect in the passage of the Act. Does this really sound like the allegations here?
  • Extraterritoriality - A key concern has always been whether prosecuting extraterritorial conduct was proper.  For example, in one FCPA case (Castle), the DOJ was barred from using conspiracy to violate the FCPA when it attempted to circumvent the prohibition against charging foreign officials. Would this really be a case of policing U.S. actors?
  • Rogue Employees - Many companies have employees who break the rules.  Companies with strong compliance programs have faced prosecution when individuals within the company exceed the boundaries of acceptable conduct. Unfortunately, Congress and the Court have failed to accept a good faith defense when a company tries to comply with the law.  This case may present a testing ground for the importance of this principle that applies in many civil areas like harassment cases.
  • Overcriminalization - Many are crying for "smart on crime" approaches to crime.  Most importantly it is needed with a Congress that reacts to every public outcry with a responsive statute, irrespective of whether the conduct is already covered under law. Here the issue is more pronounced from a different perspective.  Do we really need to prosecute what is occurring on the other side of the pond?
  •  Due Process - Contributing blogger Lawrence S. Goldman said it better than I could, "As much as I would enjoy seeing Murdoch in the dock, so to speak, I think it would be a terrible stretch to punish conduct committed in Britain by British citizens bribing British citizens to invade the privacy of British citizens in Britain.  Even Murdoch and News Corp. deserve due process."
  • Economics - If everything that is alleged to happen did in fact happen, it sure sounds pretty sad and it needs to get fully exposed and punished.  But unless it will provide us with jobs, assist our budget, and not deplete from our precious prosecutorial resources, let's think twice about this one.

And we haven't even gotten to a discussion of all the procedural issues (e.g., getting the witnesses, evidence, and potential defendants to the U.S.)


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