Compliance with the U.S. Foreign Corrupt Practices Act is challenging in some jurisdictions, and there are some things you never want to hear from your lawyer, particularly in high-risk jurisdictions such as Thailand. Here are a few “innocent” statements that have been “repeated” as purported anecdotes, followed by comments on why these statements are dangerous indicia of corruption.
“We don’t pay attention to the FCPA here.” This is not a hypothetical. This statement was made by a partner at a law firm in Thailand. Does this prove that this lawyer or his law firm violated the FCPA or other anti-corruption laws? Not by itself. But it is very dangerous. Why would any lawyer make this comment? It triggers alarm bells that require further scrutiny. Was it made to attract business from clients that do not want a law firm that complies with the FCPA? Is that what the lawyer thinks of your business? Was it made to send a message to colleagues, junior lawyers, and staff that compliance with the FCPA and other anti-corruption laws does not matter “here”? There may be a legitimate reason for making this statement, but its hard to imagine one. At the very least, it suggests that the firm does not take anti-corruption measures seriously; a firm that suffers from an unhealthy compliance environment. When a client hears this or learns that this statement was made, it should run, not walk, away from that firm. And document its dealings with that firm in case, unbeknownst to that client, the firm did engage in corrupt activity to advance the client’s interests.
“You better be careful; I have friends in the police [or army]”, in a statement to an adverse party in a contentious matter. Perhaps you are copied in or bind copied in on the email? Or you are treated to boasts by your local lawyer about his or her connections with high-ranking officials? Again, run, do not walk, away this firm. In most jurisdictions in the U.S. this would be considered extortion. Do you really want your interests represented by a lawyer that, under U.S. standards at least, openly engages in extortion? And what about these “friends”? In Thailand, its generally very difficult to get the authorities to take any action at all, unless they are incentivized in some fashion. How is your lawyer incentivizing the authorities? And think about the optics. What if that adverse party discloses this sort of threat or shenanigans to the press. Do you really want to do business this way? Do you really want the press, customers, regulators, and the stock market to know that you and your company do business this way?
“Yes, we said we said we paid ‘tea money’, but we did not actually pay a bribe to get the approval.” Yes, facilitation payments are permitted under the FCPA, but distinguishing between a permitted facilitation payment and an illegal bribe is an endeavor worthy of Saint Thomas Aquinas. Because of the inevitable confirmation bias, it is not a decision you want to make after the payment was made. Moreover, there is no facilitation payment exception under Thai anti-corruption laws. And even if the firm claims no payment was really made – because, say, the law firm claims it only told its client it made a payment, but did not actually do so – a violation of the FCPA does not require an actual payment. And what does that tell you about the firm? Are they lying now or were they lying when they told you this? Or the firm says the payment was not bribe, but really a legitimate payment that had to paid or, perhaps, arguably was required to be paid. Another lie? All these defenses fail. Intent to pay a bribe is sufficient to violate the FCPA. And if that intent is reflected in email traffic, it will be very difficult, if not impossible, to explain it away. No matter how hard it may be to get a deal across the line, this is a game that no party should play or allow its lawyers to play.
And the classic: “Everyone pays bribes in Thailand. It’s the only way to do business here.” If this is a simply a description of the compliance challenges businesses face in Thailand, it does not necessarily mean the law firm is compromised, although it is an exaggeration of the situation in Thailand. Not every business operating in Thailand pays bribes or needs to do so. But if it is presented as a justification for corruption, it is a serious problem. It telegraphs a readiness to pay bribes and steer clients in that direction by suggesting that there is no other way to get the deal done. It says the firm has done this before and regularly tries to solve legal problems by paying bribes. It also suggests the firm’s lawyers are lazy, incompetent or both. Paying a bribe often appears to be the easy way to resolve legal problems. It does not require legal skills, it does not require legal research, it does not require negotiation and it does not require perseverance. But it often requires shady connections and it always requires a morally bankrupt lawyer and a client that is willing to turn a blind eye.
You do not want to be that client. And if you find that you are that client, you must end your relationship with that firm and lawyer immediately. Do not believe you are protected by the attorney-client privilege or some ethical obligation of your lawyer. This privilege and that obligation does not apply to the planning of a crime. And if your lawyer is caught up in a corruption investigation, why would she or he even hesitate to throw you under the bus?
Putting aside ethical concerns – which are paramount in any event – corrupt activities are frequently disclosed by whistleblowers or in the press, local and foreign. When that occurs, county mangers are fired and often prosecuted and imprisoned in their home countries. You do not want to be that country manager. Companies that engage in these activities not only lose business and share value, but are subject to lawsuits, investigations by local and foreign law enforcement, criminal proceedings, and massive fines.
But you rarely hear about the law firm that suggested and orchestrated the local corruption.