Shades of Gray in Rare FCPA Trial

Three weeks ago, in the first criminal trial in three years for violation of America’s foreign bribery law, the Foreign Corrupt Practices Act, the defendant suddenly pleaded guilty to steeply reduced charges in the middle of trial. Although the conviction was immediately touted as a win by the government, you can decide for yourself.

The defendant, an American entrepreneur, was the co-founder and co-CEO of an oil-and-gas services company that operated in Colombia, and supposedly, to win a $45 million contract with the country’s largest oil company, he conspired with two other executives—his co-CEO and the firm’s general counsel—to funnel $333,500 in payments to an employee of the Colombian company. The company was a state-run company, however, which made the employee a “foreign official” for purposes of the FCPA, which prohibits the bribing of foreign officials to win business. See 15 U.S.C. §§ 78dd-1 et seq.

The defendant’s two co-conspirators had already pleaded guilty, and one had just testified against him at trial when a plea deal was reached. The other was slated to do so.

The matter originally came to the government when the company’s board of directors disclosed it voluntarily, but experts contend that the case was underwhelming from the start and that it settled after the testifying co-conspirator gave false testimony on the stand.

Meanwhile, other reports suggest that the defendant was, in fact, set up by the company’s board, which was dominated by Colombian nationals who bristled at his persistent efforts to clean up the company and fired him for it. According to these reports, the company only approached the Justice Department with its voluntary disclosure after the defendant threatened to sue the company for firing him and to reveal that its chairman, the former minister of commerce in Colombia, had demanded $1 million in exchange for actions he took on the company’s behalf while serving in government. According to the defendant, he refused this demand and was terminated within months.

Although the defendant had faced a maximum of twenty years in prison on all charges and was offered ten years before trial, the plea agreement called for a sentence between probation and one year in prison. It also dismissed five of the six counts that the government had brought against him.

At sentencing, the government argued for the year in prison, but the court went the other way, sentencing the defendant to probation instead. Along the way, it expressed frustration with the government’s handling of the case.

The government then publicly declined to prosecute the company itself for just the second time in the FCPA’s history. The purported basis for it was the company’s voluntary disclosure and its cooperation in prosecuting its former officers.

That may be well and good, but if the government just prosecuted an American for pissing off powerful foreign interests—while giving them a pass—then it scored a notch on its belt but left a bad taste in everyone’s mouth.