George Carlin and Erga Omnes: the Petrobras Bribery Scandal Expands

On this date in 2008 George Carlin died. If you grew up in the late 1960s or early 1970s and you had anti-parental or anti-establishment inklings, which of course all teenagers do, you knew about George Carlin. In the early 1960s, Carlin was a relatively clean-cut, conventional comic. But around 1970, he reinvented himself as an eccentric, biting social critic and commentator. In this new incarnation, Carlin began appealing to a younger, hipper audience. He grew out his hair and added a beard together with a wardrobe in the stereotypically hippie style.

Carlin’s comedy also became counter-culture, not Cheech and Chong, hippy-dippy dopers, but with pointed jokes about religion, politics yet with frequent references to drugs. His second album with his new routine, FM/AM, won a Grammy Award for Best Comedy Recording. My favorite cut was the 11 O’Clock News. But it was his third album Class Clown that had, what I believe, to be the greatest comedy monologue ever, the profanity-laced routine “Seven Words You Can Never Say on Television.” When it was first broadcast on New York radio, a complaint led the Federal Communications Commission (FCC) to ban the broadcast as “indecent.” The US Supreme Court later upheld the order, which remains in effect today. The routine made Carlin a hero to his fans and got him in trouble with radio brass as well as with law enforcement; he was even arrested several times, once during an appearance in Milwaukee, for violating obscenity laws.

Interestingly I thought about Carlin and his pokings of the Establishment (AKA The Man) when I read several articles over the weekend about the recent spate of arrests around the Petrobras bribery and corruption scandal. In article in the Wall Street Journal (WSJ), entitled “Brazil Probe Sweeps Up Corporate Magnates” Will Connors, Rogerio Jelmayer and Paul Kiernan reported that “Brazilian officials arrested the heads of two Latin American construction giants, alleging they helped to mastermind a cartel that stole billions of dollars from state-run oil company Petrobras with the help of corrupt politicians to whom they paid kickbacks.” Also arrested with the heads of the two companies, Marcelo Odebrecht, head of Odebrecht SA and Chief Executive Officer (CEO) of Andrade Gutierrez, Otávio Azevedo.

The WSJ article reported that “Odebrecht is Latin America’s largest construction conglomerate, with business in the U.S., Europe and Africa, and whose head, Marcelo Odebrecht, is a household name in Brazil. Andrade Gutierrez has business in 40 countries. The privately owned companies are deeply involved in the development of stadiums and infrastructure for the 2016 Summer Olympics in Rio de Janeiro.” Moreover, Odebrecht is reported to have “a presence in 21 countries”. Obviously a question is if the company had engaged in bribery and corruption in Brazil, did they do so in any of the other countries in which they are doing business?

Interestingly, these arrests “come months after the heads of other construction companies were detained by Brazilian authorities.” Indeed in a BBC article in , entitled “Petrobras scandal: Top construction bosses arrested in Brazil”, David Gallas said, “Odebrecht had been named by former Petrobras executives as one of the companies that allegedly paid bribes in exchange for contracts with the oil firm, but until now the firm had not been targeted by investigators.” The WSJ article quoted Brazilian prosecutor Carlos Fernando dos Santos Lima who said at a news conference that the executives from the two companies had not been arrested earlier as the entities, “had a more sophisticated system for making the alleged bribe payments, using foreign bank accounts in Switzerland, Monaco and Panama, so it took longer to prove their case.” David Fleischer, a Brasilia based political analyst, quoted in the WSJ article was even more circumspect. He said, “The prosecutors are very careful. If you’re going after big fish you want to make sure you can take them down.”

Brazilian police said the arrests were “Erga omnes” which the WSJ translated from Latin as “towards all”. I thought about that statement in light of the ongoing debate about enforcement of the Foreign Corrupt Practices Act (FCPA) here in the US. On one side is the Chamber of Commerce and their allies who raise the ever-burgeoning cry that the Department of Justice (DOJ) needs to prosecute the invidious ‘Rogue employees’ who violate the FCPA. You will notice they never want the DOJ to look at the executives who might facilitate payment of bribes in the first place; whether through faux commitment to doing business in compliance, failing to properly allocate resources to compliance and ethics, simply rewarding those employees who git ‘er done no matter what the circumstances or (my favorite) putting a paper program in place and calling it a best practices compliance program.

Indeed those progenitors of relaxed enforcement want the DOJ to back off and let them do business the old fashioned way. However, if the bribery and corruption news from the first half of this year has told the world anything, it is about the dire effects of allowing such illegal conduct to take place and warning against slacking off laws which mandate doing business without bribery and corruption. In another WSJ article, entitled “Roots of a Brazilian Scandal That Weighs Heavily on the Nation’s Economy, Politics”, Marla Dickerson noted, “The scandal has crippled Petrobras, Brazil’s largest and most important company. In late April, the company wrote off more than $16 billion related to losses from graft and overvalued assets. The company’s woes have all but paralyzed the nation’s oil and gas sector. Hurt by slumping oil prices and strapped for cash, Petrobras has slashed investments, sparking a wave of credit downgrades, bankruptcies and layoffs among its suppliers that the weighed on Brazil’s economy.”

I wonder what George Carlin might have thought about all of this. He might have said that what else would you expect but I am relatively certain he would have done so while also sticking his thumb in the eye of The Man. 

For a YouTube version of the 11 O’Clock News, click here.

For a YouTube version of the 7 words you can never say on television, click here.

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, 2015

 

Code Words for Bribery and Corruption Across the Globe

Life sometimes imitates art. Remember the Orthofix enforcement action, where the company used the used the code word chocolates to identify the bribes it paid? This lead to the memorable quote from Kara Brockmeyer, chief of the Securities and Exchange Commission (SEC) Enforcement Division’s Foreign Corrupt Practices Act (FCPA) unit, who said “Once bribery has been likened to a box of chocolates, you know a corruptive culture has permeated your business”. It turns out this ‘Gumpism’ is not limited to US companies in the wide-world of bribery and corruption. David Henig, from the University of Kent, and Nicolette Makovicky, from the University of Oxford, who both jointly run the Languages of Informality Project, posted an article in the online BBC Magazine, entitled “Stinking fish and coffee: The language of corruption”, where they detailed some creative euphemisms for bribes used across the globe. I cite their list below.

1.      Cash for soup (Turkish)

If you are stopped by traffic police in North Africa the officer may well ask you to sponsor his next cup of “kahwe”, or coffee. In Kenya you might be stopped by traffic policemen and asked to contribute to “tea for the elders”. But in Turkey, the police would rather you give them “cash for soup” – soup is traditionally eaten at the end of a night of heavy drinking.

2.      Respect (Azeri)

Whether it happens on the street, or in the boardroom, corruption rests on the abuse of power and privilege. But popular euphemisms often deny this reality and present corrupt behaviour as altruistic “favours” for friends. In Azeri, the word commonly used for bribe – “hurmat” – is interchangeable with the word for respect. An official requesting a bribe will therefore ask you to “do him a favour”.

3.      A fish starts to stink at the head (Turkish)

The phrase “a fish starts to stink at the head” comes from Turkey, reminding us that petty bribes at street-level are often matched by greater corruption at the top of organisations and institutions. Mexican officials looking to earn a kickback for arranging a business deal will demand they are given “a bite”, while their Columbian counterparts are said to “saw” off a part of a government contract for themselves.

4.      Gratitude (Hungarian/Mandarin)

The term corruption implies both illegal and immoral behaviour. But in some regions, what is technically illegal may in fact be seen as acceptable or even moral behaviour. In Hungary, doctors and nurses can expect a “gratuity” from their patients in the form of an envelope containing money. In Poland, gifts in kind turn a faceless bureaucrat into an “acquaintance” who may be able to “arrange things” for you in the future. In China, healthcare workers and government officials also expect a “little token of gratitude” for their services. As it is said in Russia, you cannot “put ‘thank you’ into your pocket”.

5.      Under the table (English/ French/ Farsi/ Swedish)

Popular phrases used for speaking about corruption are often metaphorical. The well-known English phrase describing money being passed “under the table”, for example, also exists in French, Farsi  and Swedish. Other expressions emphasise movement. In Hungary, “oiling money” is paid to officials to grease the wheels of bureaucracy, while the Russians know it is sometimes necessary to put something on the palm of an official’s hand in order to move things along.

6.      Something small (Swahili)

Many euphemisms of corruption and bribery work to deflect attention from the action or minimise its importance. The Swahili expression for something small is a good example of this. In Ivory Coast the police used to ask for the cost of a drink, comparing the size of the bribe to that of a small tip. The Brazilian term for a bribe – a little coffee – also doubles as the term for a tip in the conventional sense.

7.      Money for tea (Pashto/Farsi)

The universal popularity of tea and coffee as metaphors for bribes points to another way euphemisms function to conceal the true nature of a corrupt transaction. In Afghanistan and Iran the expression for a bribe is “money for tea”. In both countries, tea-drinking is an essential part of social life. Asking for “money for tea” carries the suggestion that the bribe will be shared with others. Some expressions – such as “beans for the kids” – appeal to a sense of charity by claiming a bribe benefits someone more deserving.

8.      Cash for questions (English)

Large-scale corruption has its own vocabulary, often created by the media. The “cash for questions” scandal involving British politicians comes to mind, as well as the Italian “bribesville” scandal in the early 1990s. Combining “tangente” meaning kickback, and “-poli” meaning city, the term referred to kickbacks given to politicians for awarding public works contracts.

9.      Nokia box (Hungarian)

In Hungary, the term “Nokia box” became a symbol of corruption in 2010 after the head of the Budapest Public Transport Company, Zsolt Balogh, was caught handing over cash to the deputy mayor of Budapest, Miklos Hagyo, in a Nokia box. Since then, “Nokia box” has also become a sort of unit of measurement – meaning 15m forints ($65,000) – the size of Balogh’s original bribe.

10.  Little carp (Czech)

In the Czech Republic, the terms “little carp”, or “fish”, were used as a coded language during a large corruption scandal in Czech football. In the communication between the managers, referees and players, a “little carp” also operated as a unit of measurement, meaning 1,000 Czech koruna ($50) a “fish”. The euphemism “little carp” has become a Czech synonym for corruption.

Perhaps hot having seen the movie Forrest Gump or heard of the Orthofix FCPA enforcement action, the authors did not include the Orthofix code word in their list. Then again they were not focusing on how companies hide their illegal actions. But the point, as laid out by Kara Brockmeyer, is that if you use common words or phrases to hide bribes in your books and records, corruption has permeated your organization.

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, 2013