I have been telling my students for about a year now that one of the most important legal issues businesses will face is the Foreign Corrupt Practices Act. This statute has been around a long time, and I have always mentioned it in class, but in the last year or so I have been spending increasing time talking about this bribery law. As I like to be in all aspects of my life, I am decidedly on trend on this legal issue. (OK, I am too old to on trend in most ways, but I try.) In the past few weeks we have seen a flurry of news stories on FCPA investigations. First, we learned of the investigation into JP Morgan’s hiring of the children of Chinese officials, allegedly in exchange for being granted contracts. Then yesterday the Wall Street Journal revealed an investigation into Microsoft, who is alleged to have bribed officials in Russia and Pakistan. One interesting note about the Microsoft case is that much of the evidence appears to be coming from whistleblowers pursuant to the bounty program under Dodd-Frank, where whistleblowers get a portion of any money over $1 million recovered by the government. We will talk about both the FCPA and Dodd-Frank in all my classes this semester.
Talk to anyone working for a company that operates overseas, and they will tell you that compliance with the FCPA is a big challenge for their company. The JP Morgan case is a great example of the subtle distinctions that are important under the law: when is nepotism illegal? Many of you probably use your family’s network to get jobs and internships. Most of the time this is entirely legal. But if someone involved works for a government-controlled company, it gets complicated. Your lawyers should train you in compliance with the law, and handle the details, but the takeaway should be that under the FCPA, a bribe isn’t always an envelope of cash changing hands in a back alley.
Underlying all these legal and compliance issues is the ethical question: when is it ethical to bribe? Bribery is a negative word, but we all do it. At least those of us that are parents do … I bribe my children constantly. In a business setting, people send gifts and tokens of appreciation all the time. Parties to a deal may go to a dinner together, or one side may take the other to a baseball game. The Department of Justice has fairly detailed views on whether this is illegal, but the bigger question is whether it is wrong. What do you think? Where do you draw the line on bribes?
