NEW YORK, Dec 2 (Reuters Breakingviews) - Prosecutors are
corrupting effective anti-corruption law. A U.S. judge just
adamantly overturned the first court win against a company
under the Foreign Corrupt Practices Act, ruling the government
fudged evidence. It's an extreme case, but not the first time
prosecutors have stretched to nail firms for bribing overseas
officials. It further threatens a useful federal law already
A criminal conviction under the FCPA could be crippling.
It's why most companies usually cut pricey deals to avoid
having to fight bribery accusations in court. In 2008, for
example, Siemens settled a case for a record $1.6 billion. U.S.
companies have paid a total of about $4 billion to resolve FCPA
charges over the last five years.
With so few cases scrutinized in court, prosecutors have
been free to test the outer limits of what is an increasingly
popular law for them to use. Unproven offenses have become
benchmarks for other settlements. Some companies, like Japanese
tiremaker Bridgestone this year, have paid fines for practices
that may not even be illegal.
That's why the Lindsey Manufacturing trial was an important
test. In May, the electrical-tower maker and its top executives
were convicted for bribing officials of Mexico's state-owned
electric utility. But on Thursday, a judge overturned the
verdict and dismissed the indictment, finding that government
lawyers had hidden grand jury testimony, altered sworn
statements and committed other serious misconduct.
The embarrassing reversal may encourage companies to fight
rather than settle. It has already emboldened efforts in
Congress to weaken the FCPA. Critics, including the U.S.
Chamber of Commerce, say the law doesn't clearly define terms
like "foreign official" or give companies enough credit for
reporting wrongdoing or adopting programs to prevent bribery.
They claim the Lindsey debacle highlights those flaws.
But that sounds like a stretch unto itself. The FCPA has
generally been a success. It has forced firms to address
corruption and served as a model for similar laws in Britain,
Russia and elsewhere. The real problem has been overly
aggressive enforcement that oversteps legal and ethical bounds.
That's the lesson of the Lindsey trial. It's up to prosecutors
to rightly uphold the law, not for Congress to blunt it.
-- A U.S. district court judge on Dec. 1 overturned the
bribery conviction of Lindsey Manufacturing, ruling that
prosecutors had altered sworn affidavits, failed to turn over
grand jury testimony, defied a judge's orders and committed
-- In May, the California-based maker of electrical towers,
its president and its chief financial officer were found guilty
of violating the U.S. Foreign Corrupt Practices Act, which
prohibits bribing foreign officials. A jury decided that the
executives had made illegal payments to employees of Mexico's
state-owned electric utility. The judge dismissed the charges
with prejudice, meaning they cannot be refiled. Prosecutors
said they would appeal the decision.
(Reporting by Reynolds Holding, a Reuters Breakingviews
columnist. The opinions expressed are his own.)
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