FCPA Compliance and Ethics Blog

March 3, 2014

Ahab Captures the White Whale: ‘In the Public Interest’ Defense to FCPA Enforcement

Moby DickIt is an axiom in the trial lawyer world that bad facts make bad law. The reason is if the facts are particularly egregious, most judges and juries will go out of their way to try and see that justice is served if not done. An example might be from the arena of toxic torts where companies with de minimis involvement with asbestos and silicosis are dragged into multi-million dollar, seemingly never ending, lawsuits, bankruptcy cases and other proceedings that bear no resemblance to a company’s actual liability. (We will leave the greedy plaintiff lawyer debate for another day.)

But if you are one of those folks who believe that Foreign Corrupt Practices Act (FCPA) prosecutions are inherently unfair, there is a case across the pond where some very bad facts might do some good for you. The former editor of the UK newspaper, The Sun, Rebekah Brooks is on trial for, in part, authorizing the payments of bribes to UK government officials to obtain information used in news stories. As reported in the Wall Street Journal (WSJ) by Alexis Flynn, the article, entitled “Brooks Approved Payments to British Officials”, stated  “On the stand, Ms. Brooks, who edited News Corp’s Sun newspaper and its now-closed News of the World sister title, said the payments were made for good reasons, and done so on rare occasions and after careful consideration. “My view at the time was that there had to be an overwhelming public interest to justify payments in the very narrow circumstances of a public official being paid for information directly in line with their jobs,” said Ms. Brooks.”

For those of you keeping score at home, this was an admission by Ms. Brooks that ‘after careful consideration’ she violated the FCPA. But if you are the US Chamber of Commerce, other institutions or persons who believe there should be an affirmative defense to the FCPA, you should be jumping for joy about now as Ms. Brooks has articulated a new defense that you can graft upon. Let’s call it the ‘In the Public Interest’ defense. Clearly presaging the US National Football League (NFL) and its own scandal about bullying on the Miami Dolphins, Ms. Brooks stated in her testimony that it was ‘in the public interest’ to pay for information from UK military officials because it was “about the bullying of recruits at an army barracks.” I guess its too bad that she is no longer the editor of The Sun and on trial or she could pay bribes for the inside scoop on the Incognito/Martin/Dolphin bullying parties.

How might this new defense play out? The first point to note is that Ms. Brooks also apparently presaged the FCPA Guidance when she testified that she authorized bribery payments only after “careful consideration”. In other words, she thought through the process and decided that paying of bribes was merited. It is not clear from her testimony that she documented her decision making calculus but at least she properly recorded the payments as bribes because during its direct presentation, the prosecution had “already shown the jury what they said were records of payments made to military officials by the Sun during the period of Ms. Brooks’s editorship.” But, going further than the prosecution, her defense counsel, “Mr. Laidlaw read out loud extracts of the Sun articles that had resulted from payments to officials” thereby tying her decision to the payments made to the benefit obtained by the Sun for paying the bribes.” All rather brilliant wouldn’t you say? It’s the Dog Bite defense on steroids, I paid bribes but the world is a better place because I did so.

But, there was more as Ms. Brooks had a couple of other nuggets for those wanting an affirmative defense to the FCPA. In addition to being ‘in the public interest’ Ms. Brooks also said that were “good reasons”. While the WSJ article reported that the calculus of “careful consideration”; “information directly in line with their jobs” and “good reasons” were all tied together, some creative lawyering might disjoin them so that each of these factors alone might come to stand for a FCPA defense on its own. Just consider how far you could run with a defense to paying bribes where the bribes were paid with ‘good reason’.

Take that tacky part of the FCPA that talks about ‘obtaining or retaining business’. No longer a problem because the bribe was paid, not with the best intentions but with good reasons. All you have to do at trial is to show that your company made more money, your employees got to keep their jobs because you paid bribes to get that multi-million dollar contract or even perhaps that poor down-trodden government official in [name the country] was able to put food on his table for his impoverished family all because you stood up and paid a bribe. You might even claim that it was “the American thing to do” so that you could patriotically wrap your defense in the flag.

But for those Ahabs out there still chasing the white whale of the ultimate FCPA defense consider the final factor that Ms. Brooks articulated, “a public official being paid for information directly in line with their jobs.” With one fell swoop, you could complete eviscerate all FCPA prosecution if you only paid bribes to those who can help you directly in line with their jobs. Except for the Darwin Award winners out there who would pay bribes for government officials not directly in line with their jobs, it would certainly seem that you might have captured the great white whale himself with this prong.

However these are mere speculations about what the In the Public Interest defense would really look like in an American court. So for those of you who want to pay bribes and violate the FCPA, you should probably start with the following components (1) careful consideration; (2) good reasons; and (3) payments directly in line with the foreign government officials job. Lastly, for those persons who actually use this defense I do have some very good advice – get fitted for an orange jump suit, you are going to be wearing one for a very long time.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com. © Thomas R. Fox, 2014

1 Comment »

  1. A mite surprised that as a son of Texas you didn’t identify this as a variant of the well-known “He needed killing” defense.

    Comment by Scott Killingsworth — March 4, 2014 @ 1:01 pm | Reply

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