Immigration Lessons From the FIFA Scandal

As most people know, soccer's governing body, FIFA, wasrocked last week by a corruption scandal allegedly involving $150 million. United States authorities arrested many of the FIFA's top officials, now accused of corruption going back years. How can the US police a sport that barely rates a passing mention in this country, and what is the connection to immigration?

I've written articles and spoken many times about the importance of compliance, including FCPA compliance, in global immigration. Some countries have a culture of bribes, where paying government officials is seen as a necessary cost of doing business.  I once called a Bangladeshi lawyer that I hoped to use, and his description of his fees was "My fee is $X and the bribe is $Y". When I told him that our company did not pay bribes, he said we would not get an approval if we didn't. Not surprisingly, I ended that call very quickly and found another lawyer. At an immigration conference in London, a Nigerian lawyer was amazed that some laws considered gifts to officials as corrupt. She said their view was that the gift givers were "just being nice." 

The US has indicted the FIFA officials under various statutes, in particular the 1970 Racketeer Influenced and Corrupt Organizations Act (RICO). For an explanation of this aspect of the case, see this Slate article.  This blog post describes another law that Justice Department officials are using: The Foreign Corrupt Practices Act (FCPA).

Anti-Corruption Legislation - FCPA and UK Bribery Act

Although the FCPA is a US statute, it has very broad reach and could govern unorthodox payments to foreign officials to secure benefits including visas, work permits, etc.

Bribery — or “facilitation fee” — payments are a major concern of corporations worldwide, with good reason. Many countries are seriously trying to crack down on corruption, some more than others. The United Kingdom enacted its Bribery Act in 2010, and it came into effect on July 1, 2011. The Act defies bribery generally as giving someone "a financial or other advantage" to encourage that person to perform their functions or activities improperly or to reward that person for having already done so. The Act also holds companies strictly liable for bribery committed on the company’s behalf (e.g., by an agent). Excellent guides to the United Kingdom Act are available on the UK Justice Ministry website: www.justice.gov.uk/guidance/making-and-reviewing-the-law/bribery.htm

The United States enacted the FCPA in 1977. The FCPA’s anti-bribery provisions prohibit offering anything of value, directly or indirectly, to

"(1) any foreign official for purposes of - 
(A) (i) influencing any act or decision of such foreign official in his official capacity,
(ii) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, or
(iii) securing any improper advantage;

or (B) inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality"

“Anything of value” is strictly interpreted, and could be meals, free travel, charitable donations, promises of future employment, etc. The perception of the recipient is often key to determining whether “anything of value” was offered. Both the UK Bribery Act and the FCPA allow the company to defend itself by showing that it believed that it had adequate procedures in place to prevent the bribery.

How does the FCPA apply to you – and to FIFA?  

The FCPA has very broad application, and can be enforced against companies and citizens that are not based in the United States, as many FIFA officials learned this week. Minimal US contact can trigger FCPA jurisdiction, including wire transfers through US bank accounts and even e-mails stored on US servers. The FCPA applies to actions committed outside the United States by companies that trade on the US Stock Exchange, for example, and by companies that do business with a US company. One of the companies in the FIFA scandal is a US company, Traffic Sports USA, and there were wire transfers made from the US. This was enough to connect the scandal to the US.

Most of the top 10 FCPA cases involve non-US companies. The largest settlement in FCPA history was by Siemens AG in 2008 – a whopping $800 million. The US government claimed jurisdiction because Siemens shares are traded on the US Stock Exchange and because the money was funneled through US banks. 
 
Facilitation fees  

The US FCPA and the UK Bribery Act acknowledge the existence of “facilitation fees” in conducting business overseas. The FCPA exempts such payments from its anti-bribery provisions. The Act considers a facilitation fee to be one paid to expedite or ensure a routine government action (e.g., to speed up a routine visa approval). The distinction between what is and is not allowed is extremely vague, however, so please seek legal advice before trying to avail of this exception.

The UK Bribery Act prohibits facilitation fees. The UK's Serious Fraud Office (SFO) has stated that

"A facilitation payment is a type of bribe and should be seen as such. A common example is where a government official is given money or goods to perform (or speed up the performance of) an existing duty. Facilitation payments were illegal before the Bribery Act came into force and they are illegal under the Bribery Act, regardless of their size or frequency."

Other resources

The law firm of Gibson Dunn produces an excellent year-end guide to RICO and FCPA cases here.
American Corporate Counsel journal article on compliance, by Elaine Martin

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