Crackdown Brings New Attention to the Federal Corrupt Practices Act
A U.S. Department of Justice sting operation recently resulted in 22 arrests for violations of the Foreign Corrupt Practices Act.

April 24, 2010 /24-7PressRelease/ -- Crackdown Brings New Attention to the Federal Corrupt Practices Act

A U.S. Department of Justice sting operation resulted in 22 arrests in December for violations of the Foreign Corrupt Practices Act (FCPA). The executives and employees of the military and law enforcement products industry caught in the sting operation were charged with bribing an undercover officer posing as a foreign government official in connection with a fictitious $15 million contract for military equipment. The Justice Department called its sting the largest of its kind in FCPA history.

The FCPA, passed in 1977, aims to preserve confidence in the free market system while protecting the integrity of foreign governments whose interests might be undermined by corporate bribery of unscrupulous officials. The sting operation that resulted in the December indictments was one of approximately 140 FCPA investigations underway by the Department of Justice (DOJ). The DOJ expressed hope that this highly publicized sting operation might deter other corrupt business officials tempted to bribe foreign officials to win contracts.

The indictments allege that the defendants, including gun manufacturer Smith & Wesson's vice president of sales, believed that they were bribing a procurement officer with a 20 percent commission. The indicted parties were informed that half of the commission would be paid to a foreign defense minister as a bribe, in order to win part of a $15 million contract to provide military equipment to an African country.

The undercover operation apparently stemmed from a separate case in which Armor Holdings' former vice president for international sales, Richard Bistrong, was charged with paying bribes to obtain business from 2001 to 2006. He apparently cooperated in the sting operation, a move legal experts presume relates to seeking a plea bargain.

The Wall Street Journal spoke with FCPA lawyers who suggested that the sting operation means a change in rules for FCPA cases. One attorney pointed out that the scope of the sting operation indicates a serious commitment on the DOJ's part to weed out foreign corruption.

Another significant departure from past practices is the targeting of individual businessmen rather than corporations. This, of course, means jail time will result from convictions, not merely corporate fines.

As for corporations intent on staying on the right side of the law, the Justice Department's signaling of heightened interest in FCPA enforcement means it is time to revisit the company compliance program and see if it could use some strengthening.

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