FCPA Sanctions: Too Big to Debar?ExpressO (2011)
AbstractThe Foreign Corrupt Practices Act (FCPA) criminalizes bribery of foreign government officials; enforcement actions against corporations under the FCPA have been increasingly significantly in the last few years. There is an ongoing problem, however, with the sanctions for FCPA violations: enforcement agencies (DOJ and SEC) have limited themselves to fines, civil penalties, and occasional imprisonment of individual violators. Debarment from future federal government contracts, even temporarily, is an unused sanction for FCPA violations, even though Congress provided for this punishment by statute. Debarment would be a far more potent deterrent than fines and penalties, if the government were serious about reducing corruption, and would fit more logically into the policy goal of protecting public funds from misappropriation. It seems both unfair and imprudent for the government to continue awarding lucrative, multibillion-dollar contracts to firms that the government has just prosecuted for fraudulently obtaining such contracts elsewhere. Enforcement officials shy away from debarment because of the short-term inconvenience it poses for government agencies to lose some of their favorite contractors and to request bids for contracts when the field of potential bidders has thinned. This is the “too big to debar” problem – the federal government is too dependent on a particular set of large, private-sector corporations for equipment and services. These firms enjoy virtual immunity against debarment for FCPA violations. The fines and penalties currently imposed on FCPA violators are a tiny fraction of the potential revenue available from lucrative government contracts. Discounted by the low probability of detection, these sanctions are far too low to deter unlawful activity, especially when firms obtain even larger contracts with the federal government following the sanctions. Debarment would deter potential wrongdoers and incapacitate actual offenders. The deterrent would induce more firms would comply with the law, allowing the “too big to debar” problem to recede over time. To help illuminate these concerns, Part III of this Article will examine the third largest FCPA-related enforcement actions to date: the BAE Systems case. On March 1, 2010, BAE Systems paid approximately $400 million in fines for its corrupt practices abroad. In the 365 days that followed however, the federal government awarded BAE contracts in excess of $58 billion dollars. The U.S.’s refusal to debar BAE because of the potential “collateral consequences” provides a case study on the benefits and drawbacks of deterring foreign corruption through suspension and debarment. This Article concludes that the U.S. must begin to diversify its portfolio of federal contractors so that prosecutors may leverage the legitimate threat of suspension and debarment to deter foreign corruption more effectively.
- foreign governments,
- criminal law,
- white collar crime
Publication DateApril 15, 2011
Citation InformationDru Stevenson. "FCPA Sanctions: Too Big to Debar?" ExpressO (2011)
Available at: http://works.bepress.com/dru_stevenson/14/