A Challenge that Was Inevitable


But I was surprised to see it coming from Thailand.  The motion filed by the ex-TAT Governor, Ms. Juthamas Siriwan, and her daughter, Jittisopa Siriwan (both presumed innoncent), to dismiss a U.S. indictment against them, as reported in this PriceSanond news piece, evidences a reaction to efforts by U.S., and now other countries, to more strictly enforce anti-corruption laws.

As part of an overall effort to enforce anti-corruption laws, U.S. officials are pushing the legal envelope to charge foreign officials who are believed to be recipients of illegal payments in Foreign Corrupt Practices Act (FCPA) cases.  They are using the tools they have, even if somewhat limited, to curb the demand side of international corruption.

In recent years U.S. officials have aggressively pushed the supply side of international corruption on U.S. parties that pay bribes or don’t do enough – in the eyes of U.S. authorities – to curb the payment of illegal payments under the FCPA.  Fines have sky rocketed and people are – as the former head of FCPA enforcement at the Department of Justice (DOJ) said they should – going to jail.  It’s no longer “fun and games”.

Not surprisingly, the U.S. business community has pressed back, complaining that, among other things, the playing field is uneven because their competitors from other countries don’t face anything remotely similar to the FCPA’s tough enforcement regime.   It’s still early days, but other countries are now starting to enforce their anti-corruption laws.  I don’t see that trend reversing itself.

And what about the recipients of illegal payments?  In some cases, bribes are paid to gain an advantage over competitors, but in other cases they are simply paid because they are believed to be necessary to do any business at all (on the facts alleged, this case would not appear to fall within that category).   Not surprisingly, this generates tremendous resentment.  Businesses subject to strong foreign anti-corruption laws ask: why isn’t more being done to prosecute foreign officials that solicit and accept and, in some cases, demand bribes?

It’s a fair complaint and it resonates well not only with the U.S. business community, but with the international business community generally now that foreign anti-corruption laws are starting to show some teeth.  It doesn’t seem fair to punish the payer (supply side) when a foreign official receiving a bribe (demand side) escapes punishment.

Because of limits within the FCPA, it’s essentially impossible to employ that specific law against foreign officials.  So other measures are employed.  U.S. money laundering laws are pushed to their limits, raising the question: could this be a case of bad facts creating bad law?

Other measures are employed:

  • Immigration holds that prevent suspected corrupt foreign officials from entering the U.S.
  • Detaining and searching foreign business people when they pass through U.S. airports.
  • Extraditions from outside of the U.S.
  • A proposed law that would give U.S. companies handicapped by the corrupt practices of their foreign competitors with a civil remedy against those competitors.
  • Rule of law initiatives aimed at strengthening anti-corruption laws in countries where bribes are often paid.

The vast majority of people in countries where bribes are paid suffer the most from corruption.  They are the ones who are most damaged by corruption, although they sometimes don’t appreciate the role corruption plays in impoverishing their society. But that is changing too.  NGOs and more proactive journalists are helping to make the connection between corruption and the harm it causes.  When government officials spend millions, if not billions, on a product or project that doesn’t seem to do anything or is grossly over-priced, it often garners front page news now and questions about which government officials benefitted from the deal.

The pressure on the supply side will continue.  The U.S. may lose a few procedural skirmishes, but the trend to increase pressure on curbing the demand side of corruption will continue.  We may hear cries about ‘neo-colonialism’, but, in the end, those cries will be recognized for what they really are and fall on deaf ears.  Only a very few in countries with corruption problems benefit from corruption; the vast majority are victims.  They pay taxes that are siphoned off to vested interests or sometimes, when safety standards are compromised in an effort to make a profit, they pay with their lives.

It’s still early days – just like it was early days when the DOJ and U.S. SEC started to more aggressively enforce the FCPA in the U.S. in the mid part of the last decade – but we will see more pressure to curb the demand side in the form of enforcement actions and, perhaps, new laws to address gaps in existing laws.  We’ll also see press-back in response to these efforts to curb the demand side of corruption and plenty of skirmishes along the way.

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