Oh wow. FCPA violations. One of the key rules of American business is that you do not dance around with the FCPA [0]. (I suspect many new startup managers are not familiar with the FCPA but you can bet their investors are.) Violations of the FCPA do not just result in fines, they result in actual jail time for whomever did the bribing, whether they be individual low-level employees, contractors, or CEOs.
That said, the FCPA explicitly allows small "greasing" bribes that encourage low-level bureaucrats to expedite some action they would have taken anyway -- when such greasing payments are legal in the country in question. Obtaining the medical records of a rape victim certainly does not fall within this exception.
Note that the facilitation payment exception to the FCPA is (i) extremely narrow; (ii) still requires the company to accurately report the payment as a facilitation payment, which Uber probably didn't do: https://globalanticorruptionblog.com/2014/06/17/the-fcpas-fa...
> On top of that, even if a grease payment is exempt from the FCPA’s anti-bribery provisions, if that payment were not accurately recorded as a facilitation payment in the company’s books, then the company would be in violation of the FCPA’s accounting provisions–and if the mischaracterization in the books was “willful and knowing,” this would also be a criminal violation. On the other hand, if the company were to accurately record facilitation payments in its books, it would be officially confessing violations of the host country’s anti-bribery laws, as well as the laws of other countries that might have jurisdiction over the transaction (such as the UK) that lack any exception for facilitation payments in their foreign bribery laws. It is perhaps for this reason that I’m not aware of any company that today formally records facilitation bribes accurately in its books.
Yes, what could possibly go wrong if an official doesn't respect the fact that you can't bribe them, pay their "official" fee, or hire a consultant from a very short list of "approved" consultants?
Anyone who hasn't chosen to spend years in jail when they were a victim of the airport mall shoplifter scam is an example of someone who has violated the FCPA.
Could you bribe someone to avoid imprisonment for trial in US courts for health or safety reasons?
I don't think the DOJ will necessarily honor that unless you have some kind of health condition and evidence the foreign court is refusing to hear about it.. I don't think anyone in the cases I referenced made medical arguments before bribing officials.
Get accused of shoplifting and police give you the option of paying a $5k - $10k fine to avoid waiting in Thai jail for months awaiting trial.
Some accounts say it wasn't a scam and the people were actually caught on CCTV and that they were given the option of a paying a bribe to avoid waiting months in jail.
Exactly, and the defense claimed they handled the goods and put them back with the video being cut to simply imply they never were put back..
If you can claim duress in this case, then can you not bribe authorities in every case of being arrested and awaiting trial? Do you need to file paperwork to claim this duress, might another country acquire this paperwork before you flee? AFAIK, it is all a minefield as the higher post claims.
As you point out for a business the FCPA is both elementary, serious, and enitrely possible to comply with.
That said the "jail time" provision is a joke. Going from memory no corporate officer has ever gone to prison for an FCPA violation. A handful have been hung out to pay nominal fines. The vast majority of personal culpability (when it does happen) are settled by the company.
Edit: yes, some employees have gone to jail. But not officers that I can recall.
While I feel the same raging wish to see corrupt business leaders suffer, I think it's just the nature of these cases that most enforcement works via Civil liability.
The FCPA is mostly concerned with larger, often public companies. Corruption at that level almost certainly is a sign of a organisational failure. It's the shared responsibility of a lot of people to create structures that don't allow for corruption.
At the core of it are the incentives: for an employee to consider bribing someone, a lot must have gone wrong. After all it carries the risk of jail time for them, while any benefits go to their employer first.
"Doing business"? Hell, setting foot in Israel puts you on a blacklist in many Arab countries, to the extent where if you do this often you generally carry two passports. Goes the other way around too... try going into Israel after having Lebanon or Syria stamps on your passport and enjoy an hour in a dimly lit room answering questions to a couple of stone faced idf officers.
An off-topic gotcha can be illegally importing things into overseas offices --those momentary expediencies can result in long term bans or oversight from those governments when trying to get other things in legally.
Always follow your legal dept guidance. No matter how trivial it may seem (it's just for the expo, client demo, etc).
I didn't say he was good at doing the job consistently, just that he seems pretty fanatical about enforcing it. I can see him ignoring the political side of things and enforcing laws very comprehensively depending on how it fits his ideology and the mood he's in that day.
If I pay a consultant $1M for his expertise in navigating local bureaucracy, and it turns out that he used half of that money to bribe local officials without my knowledge, have I committed a crime under FCPA?
Possibly. Most FCPA enforcement actions involve third parties. The FCPA expressly prohibits corrupt payments made through third parties or intermediaries. The fact that a bribe is paid by a third party does not eliminate the potential for criminal or civil FCPA liability. The FCPA expressly states that a company or individual may be held directly liable for bribes paid by a third party if the principal has knowledge of the third party's misconduct. It is unlawful to make a payment to a third party, while “knowing” that all or a portion of the payment will go directly or indirectly to a foreign official. The term “knowing” includes “conscious disregard” and “deliberate ignorance”. Intermediaries may include joint venture partners or agents. Third parties and intermediaries themselves are also liable for FCPA violations.*
So, potentially stupid question but here goes...with a new CEO coming in, what impact will this have on the company in the short-term? Did they foresee this probe coming or is this something that they will have to scramble to react to?
I mean it sounds like they may have expected this investigation with the handling of obtaining medical records, but wow.
> Did they foresee this probe coming or is this something that they will have to scramble to react to?
It depends entirely on whether or not this was a top-down decision. The most efficiently run companies consider the likely returns on illegal activity and the potential ramifications of getting caught. If the math works out in favor of the illegal behavior, they'll go ahead and do that. Depending on the nature of the illegal behavior, they may save for a fund that would pay for costs of being caught.
The math isn't just about money in vs money out, either. The best consider the effect on the brand, cost of a PR campaign, potential legal changes, lobbying fees(to make currently illegal behavior legal), the likelihood of getting caught in the first place, and a lot of other stuff that I'm probably not thinking about.
It's not right, but when shareholders demand exponential growth, the owners and managers will do what is necessary to make that happen.
Come on -- the case in question is in India. Bribes are a way of life there. You literally cannot do business there without paying bribes. Nobody had to tell anyone to pay the bribe; if they're anything like every other company I've worked with over there, they have an official slush fund for this stuff. You just do it.
Now, it's pretty abhorrent that they doxed a rape victim; and that behavior is reason enough to investigate IMO. But the bribery part? Literally everyone does it because you have to if you want anything to get done there as a foreigner / foreign company.
> It's not like one of their drivers was facing a long wait at the DMV and...encouraged...a bureaucrat to care about their job for a few minutes.
That's actually potentially legal under US law if the payment is only intended to expedite the process of getting them to do their official duties and they follow the right steps (which includes making appropriate disclosures).
While you are technically correct, I've had to personally pay bribes to get a laptop with a bunch of sensitive data thru customs. Importing electronics into India without the right paperwork is illegal, but only the manufacturer can apply for the paperwork.
The particular model of laptop was never sold in India (it was some cheap Dell thing - the data was the reason I shipped it). So I paid a nice $50 bribe to the customs official and got the laptop back no problem.
Was what I did technically illegal? Sure. But the bribe was the best outcome for everyone involved.
Except in this case (if this is what happened??) they're paying a bribe to do something you shouldn't be able to do anyway. This isn't paying a bribe to conduct standard business, they're paying a bribe to access someone's medical records. I don't see how that is anymore acceptable if you're doing it in India than in any Western country.
> It's easy for us to look at it and moralize with western eyes, but bribery is simply part of the system in some places.
Seeing as how it's illegal in India, it's accurate to say that lots of Indians think it is immoral too! My dad left Bangladesh in part because a phone company tech wanted him to pay a bribe to get a second line installed and he didn't want to raise kids in a country like that.
> bribery is simply part of the system in some places
Part Indian here. You can definitely lead an ethical life in India. It's harder. But not impossible. Characterising every Indian as corrupt by nature because it's their "way of life" is a cop out.
Full Indian here. You're right, but it is exponentially harder to do that and conduct a successful business. Businesses have to pay bribes at literally every step otherwise they simply won't be able to function.
I don't know about the US, but in Australia, our foreign bribery laws explicitly exempt "facilitation payments", i.e. bribes that are customarily paid to grease the wheels of bureaucracy and get routine government actions done.
However, that certainly wouldn't cover anything like this alleged rape doxxing, and it also wouldn't cover bribes intended to secure new business, which are presumably extremely common in countries like India.
The FCPA similarly differentiates. However the practical problem is that running a defense based on whether a certain activity was a facilitation payment (to secure the performance of a "routine government action") means you essentially have to admit that the potentially unlawful activity actually took place, and you move onto generally very treacherous ground. For that reason most companies don't go that route.
In any case as others have noted it's not relevant here because getting someone's medical records isn't a service that you're entitled to.
However, that certainly wouldn't cover anything like this alleged rape doxxing
The article didn't say anything about the rape case. Getting her info could have cost less than $100, but staying in business in certain countries could run in tens of millions.
> The article didn't say anything about the rape case.
From TFA: "Reuters in June reported that Uber had hired a law firm to investigate how it obtained the medical records of an Indian woman who was raped by an Uber driver in 2014."
> Getting her info could have cost less than $100, but staying in business in certain countries could run in tens of millions.
I'm honestly not sure what point you're trying to make here. Regardless of the calculus, it was morally bankrupt and probably illegal.
I believe the link changed, it was a WSJ article first with no mention of the rape case. I doubted that they'd be investigated for small sums of payments.
Fair enough. Now that I reread the whole article, the mentioning of the incident does actually seem a bit out of place in this as well; it doesn't explicitly connect it to the preceding paragraph or the rest of the paragraph.
I don't see why this is a good argument. If you can't do business without breaking the law, don't do business. Participating in bribery because everyone else does it is immoral, perpetuates bad behavior, and risks infecting your company with people who act illegally.
The argument you're leveling is equivalent to: never start a business in any country and never do business in any country. It requires a perfect bureaucracy in terms of government and requires perfect knowledge by all participants and at all times (ie it will never exist).
Even well run nations generally have very large numbers of regulations on the books, frequently outdated or poorly thought-through, requiring you to regularly break the law just to function on a day to day basis typically without knowing that you're doing so.
You might as well argue we should just all commit suicide by starvation or general mass economic deprivation. That's the only thing pursuing your premise to its logical conclusion could lead to. Alternatively, figure out a perfect system of government that never has flaws or malevolent actors and figure out how to get people to behave as strictly programmed robots.
You're right that there are more laws than any one person knows. There are also complex interactions between laws and interpretations of laws such that even diligent legal scholars acting in good faith would struggle to do complex actions without arguably violating some law. I definitely believe the law should be simplified and clarified to improve comprehension.
However, there is a world of difference between unwittingly violating subsection III A.15 of some act you've never heard of, and intentionally bribing a government official. In the latter case you are intentionally suborning the function of government for your own benefit, and corrupting the whole system thereby.
Bribery is inefficient. Systems that operate according to law are safer, cleaner, and more productive. The only argument in favor of bribery is that in the short term, the specific criminals involved, get what they want. That's not a great argument when compared to the harmony and productivity of a society.
Bribery is illegal for a reason. If you can't do business without committing a crime, then you shouldn't do business. If India's culture has rampant bribery, then firms from less bribery-inclined areas should not do business there. Either other countries will come around to India's policy of bribing people, or India, desirous of commerce with the outside world, will come around to the "Bribery is bad" school of thought. In either case, whole societies will be enriched and improved.
I'm not sure what I understand what you mean. Could you explain how the illegality or rarity of bribery in the US led to the Ferguson scandal, or the death of Michael Brown?
As I understand it, one of the causes of the death of Michael Brown was the civil unrest due to law enforcement malpractice. The city needed money so they heavily enforced lots of minor traffic laws to increase the revenue from court fines and traffic tickets.
That sort of thing cannot happen in a corrupt city because people would bribe the cops directly instead of paying or disputing traffic tickets, and the city government wouldn't see any of that money. Such a city wouldn't even try something like that.
But surely the locals were upset that they were losing money, not that the money they lost went to city hall. In other words, I doubt they'd be relieved that their money was going to corrupt policeman rather than the city government.
If all the available money for fines was being extorted from drivers by corrupt cops, the city would have to get money another way, or cut services. This would likely upset the people of Ferguson even more.
Another way of looking at it is, what wealthy, safe, clean, productive societies regularly engage in bribery?
Cutting services is awful and harmful but it's not dangerous in the same way that using heavily armed police as emergency tax collectors is. It's bad but the depressingly stable self-perpetuating kind of bad, not the unstable riot-causing kind of bad.
My point is that, in a bribery society, the police would be collecting the tax anyway. The difference is that they would keep most or all of it for themselves personally. Thus, all of the anger would be there over losing money, plus anger at the injustice of having to bribe corrupt cops, plus diminished services.
I also think cutting services can be dangerous. For example, a service to feed the elderly, inspect water safety, maintain roads, deploy police to prevent or reduce crime, after school programs for disadvantaged teens who might otherwise get into or cause dangerous situations, etc.
You can't really use the but-everyone-does-it defence when it's a case that in no way could be considered a business requirement.
Maybe there actually are conscientious business leaders that hate being forced into corruption by some countries' customs–personally, that sounds just a bit too convenient at times, and I've some actually moral business leaders go through all sorts of trouble to avoid being compromised.
One story I remember was the 70 years+ founder of a company, with personal wealth in the 9 digits, refusing to pay some government goon at an airport in west Africa. He spent a day and a half in this guy's office, in 100degF+ heat, without ever being tempted to take the easy way.
That's correct - and it definitely affects the math involved. It would be way more expensive in many ways to be involved in bribery in a larger country like Canada, to the point that the illegal activity likely wouldn't be worth the potential cost. But in India, the cost of such illegal activity is very different, thus is more likely to be worth it.
The best run companies transform top-down decisions into bottom-up ones, helpfully protecting executives from consequences. How it works is through setting high expectations in a "get it done" culture, and then carefully cultivating strategic ignorance about illegal activity that's positive value.
Well, most 100+ employee companies are probably older than the law. Other than that, your attitude is of the rather useless variety: it's easy to disprove, as just a single counter-example is sufficient.
I'm actually not even sure if the majority of US companies does /any/ business in foreign countries. Even among those 100+ sized, an awful lot of them are hospitals, regional cleaning companies etc that couldn't bribe any foreigners even if they wanted.
(edit: just noticed that I had missed the "sharing economy" qualification. You may be right in that context.)
Then, to take an example closer to this audience, there are all those that sell into foreign markets but have basically no contact with those markets other than what's mediated by their payment processor. Think of some medium-sized ISV: under which circumstances would they even get into a situation where bribery was an option?
Is corruption something that actually occurs in the US–to such a degree that a significant portion of white-collar employees know how it works? Because I've never seen it, and wouldn't know were to start.
The FCPA is actually among the rather great achievements of US diplomacy. Until its enactment, my wonderfully law-abiding home country of Germany still allowed foreign bribes to be tax-deducted. It wasn't that bribery itself was tolerated domestically–far from it. But they considered it a matter of pragmatism to adjust to lower moral standards in other countries. Of course such rules only perpetuated those "lower moral standards", and German businesses never were the powerless victims they claimed to be.
When the US started to enforce rules against foreign corruption against domestic companies, these had a strong incentive to lobby for similar standards abroad, and for the US to use their unparalleled power to directly enforce such rules against foreign companies as well. The result was the almost complete elimination of corruption among a segment of the economy, namely large internationals, and specifically their b2g business.
This is a bit off topic but I have never understood why the US cares about corruption in foreign governments. I understand why corruption is bad and should not happen but what I don’t understand why the US cares. If a US company can make more money this way (without violating any domestic bribery laws) why does the US care? It is not like that they are known to have high moral standards when it comes to other countries unless it somehow aligns with their own interests.
They care because if I expand to the foreign market rather than in the US market because I can bribe my way to advantages, that's competing on very unfair terms with competitors that stay in the US.
That and the fact that OECD has a convention against bribery, so if you want to trade in the largest trading block in the world on good terms, you better help enforce the rules.
They care because it becomes a political disaster for America when an American corporation is enabling some kind of bribery scandal.
This could easily lead to american investment abroad being blocked, and generally tarnishing the image of America on the international stage.
A lot of the American world order is based upon the perception that America are "good guys", allowing corruption to run rampant is very counter to that.
Gut feeling: they did it, early and often. In many countries that's the only way to operate it, especially if you're breaking the laws (taxi rules and regs.) A wire transfer or a suitcase full of cash will automatically make you complaint and a law abiding company...doesn't matter who complains about you.
They will throw the person under the bus and pay a huge fine, but it will definitely hurt them in a lot of countries.
That is true in some foreign countries, but probably not as many as one may think. Uber ran into a lot of trouble in countries such as France and Germany, where attempts of bribery are probably doomed–if only because whoever you're trying to bribe is quite likely not to even understand what you're trying to do.
That doesn't mean you couldn't find corrupt people in those countries. But the sort of regulatory trouble Uber was having would require bribing group of local officials all over those countries. And only a single one of them would have to go public to not only ruin your chances in that country, but also get you into trouble in the US.
There is actually some corruption in France (domestically). If you work in the building business and want some juicy contract with the City, building gratis a new pool for the mayor's house will definitely help.
That said, the FCPA explicitly allows small "greasing" bribes that encourage low-level bureaucrats to expedite some action they would have taken anyway -- when such greasing payments are legal in the country in question. Obtaining the medical records of a rape victim certainly does not fall within this exception.
[0] https://en.wikipedia.org/wiki/Foreign_Corrupt_Practices_Act