Over the last several years, the United States Department of Justice has aggressively prosecuted U.S. companies involved with corrupt activities abroad, collecting billions in fines and sending executives to jail. These legal actions, pursued under the auspices of the Foreign Corrupt Practices Act, could spell trouble for Rupert Murdoch.
Among other corrupt practices, The News of The World, a subsidiary of Murdoch’s U.S.-based News Corp, is accused of bribing UK police officers for information on former Prime Minister Gordon Brown.
Here are just a few recent examples of the U.S. Government pursuing similar cases:
In 2008, Siemens paid over $1.6 billion in disgorgement and fines to settle alleged violations of the Foreign Corrupt Practice Act. The SEC complained alleged that “Between March 12, 2001 and September 30, 2007, Siemens violated the FCPA by engaging in a widespread and systematic practice of paying bribes to foreign government officials to obtain business.” [SEC]
Former KBR chairman and CEO Albert Stanley was accused of making illicit payments to Nigerian officials to obtain contracts. In 2008, Stanley pled guilty to “conspiracy to violate the FCPA” and other charges. He agreed to face up to seven years in jail and pay $10.8 million in restitution. [Department of Justice]
Last year, Filmmaker Gerald Green and his wife Patricia were sentenced to six months in prison and fined $250,000 after they were found guilty of violating the Foreign Corrupt Practices Act. The Greens bribed a Thai tourism official to secure a contract with the Bangkok film festival. [ABC News]
Individuals who have been found to violate the Foreign Corrupt Practices Act have been sentenced to as much as 87 months in jail. Roger Witten and Jay Holtmeier, two attorneys that specialize in FCPA cases, note that “recent large settlements have set new standards for the government, and penalties are likely to be higher in the future than for comparable conduct in the past.”
The U.K. Daily Telegraph reports that News Corp would have to foot the bill for any investigation, even if they are never prosecuted, which could cost more than $100 million. A global investigation into Avon Products, started in 2008 and still ongoing, has so far cost the cosmetics giant $154 million.