Some commentators like Henning have claimed that the “obtain or retain business” language of the law is too narrow to be applied to News Corporation’s case. But Koehler disagrees. He notes that while the law once targeted companies that directly bribed foreign officials for government contracts, the Department of Justice has ramped up FCPA enforcement in recent years, pursuing cases against companies who have gained—through payment to customs and immigration officials, for instance—any sort of comparative business advantage.
Koehler explains in a blog post:
Thus, payments to London police officers that allowed News of the World to obtain non-public information to write sensational news stories - and thus sell more newspapers - would seem to fit the type of FCPA enforcement. Given that News Corp. is a media company and its product is information, such payments are similar to an oil and gas company making payments to a “foreign official” to obtain non-public information concerning the location of oil and gas deposits.
In addition to criminal bribery allegations, News Corp. should also be concerned with civil charges that could arise as a result of the “books and records” provisions of the FCPA, says Koehner. These provisions fall under the jurisdiction of the SEC and essentially penalize companies for bad bookkeeping.
As ProPublica’s Jake Bernstein told On the Media last weekend:
If you pay off the policeman and you don’t write it down in your company ledger as ‘bribe to policeman,’ then this can be a problem because you haven’t accurately kept your books and records.
Koehner explains further at his blog:
Thus, if other payments part of News Corp.’s wide-ranging scandal—such as “hush” settlement payments to phone hacking victims are misrecorded on the company’s books and records, such entries would provide the basis for independent FCPA books and records violations—even if such conduct does not directly implicate the FCPA’s anti-bribery provisions.Koehler explains the Justice Department has a great deal of discretion in FCPA cases, which in all but two cases in the history of the law have been settled through negotiated agreements. The agency determines their enforcement action based on the cooperativeness of the offending company and the degree to which company leadership knew about the corrupt practices. The more cooperative and less knowing company executives are, the better the offending company tends to fare.
The financial consequences for companies charged with violations of the FCPA can be enormous. Siemens paid $800 million in a 2008 settlement. If an FCPA case is raised against News Corp., it will be a lengthy and costly process for the company, but it’s unlikely to bring down the whole enterprise.
For this reason, Richard L. Cassin, a lawyer who specializes in FCPA and started “The FCPA Blog,” wrote last week that it would be a shrewd move for News Corp. to disclose everything up front to the feds. He says these investigations inevitably lead investigators to ask “Where else?”
But Cassin is less convinced than Koehner that News Corp will need to disclose anything, or that the DOJ will press the case against News Corp.
Though he acknowledges the FCPA could be applied here, and that there is mounting political pressure to do so, he says there is no reason for the United States to take on a local case that is already getting legal attention from British authorities.
On this point, he and Koehler disagree. Koehler says the UK lacks the laws to seriously pursue a bribery case against News Corp. Until July 1, 2011, he says the UK’s bribery laws were weak; though the current law is airtight and even stronger than America’s FCPA, it only applies to cases that have taken place after the law’s implementation—meaning not News Corporation. Reuters columnist (and CJR Audit contributor) Felix Salmon has also made this point.
Many commentators—that Washington Post editorial for one—have also argued that using the FCPA to go after News Corp. would be an example of American overreach, butting into matters the United Kingdom is completely capable of adjudicating itself.