Five FCPA cases that help us understand our times
Some Foreign Corrupt Practices Act cases break the mold — and teach important lessons for the Trump 47 era
Most FCPA cases follow a familiar pattern: a company looks for a shortcut, funnels money to a corrupt official, and together they leave a trail of evidence for the DOJ or SEC to follow. But some cases stand out — with lessons especially relevant now.
I’ve picked five cases that stand out for me. You might nod in agreement with my choices, or not. That’s okay. These picks are personal, like a Spotify playlist.
With that caveat, here are my five cases:
Walmart (2019) – $282 million
There was an instant rush to judgment when the New York Times reported the story: Alleged corruption in Mexico involving the world’s biggest retailer that everyone loved to hate.
I was driving from Virginia to Florida to visit my sick mother the day the story broke. Emails and texts started pouring in. I did an NPR interview from a gas station in South Carolina. By the end of day one, Walmart had been tried and convicted in the court of public opinion.
The thing was, over the next seven years, Walmart spent north of $900 million investigating the alleged corruption and improving its compliance program. In the end, the allegations that had briefly put the FCPA in the headlines — and won the New York Times a Pulitzer Prize1 —didn’t match the hype. The case finally came to a somewhat sputtering end — disappointing those who had hoped for something more dramatic.
Walmart admitted paying an intermediary in Brazil for help obtaining construction permits, and having weak anti-corruption internal controls in Brazil, China, India, and Mexico. During the investigation, it worked with the feds, who later lauded Walmart’s cooperation and remedial efforts.
But the public’s rush to judgment, followed by seven years of legal limbo, wasn’t a good look for the FCPA or federal enforcement agencies. Actions have consequences. I’ve wondered if the public’s brutal treatment of Walmart, and the DOJ’s interminable delays resolving the case, contributed to President Trump’s negative attitude toward the FCPA and enforcement practices.
Keppel Offshore & Marine (2017) – $422 million
Singapore is famously corruption-free — so how did Keppel, a jewel in the government’s corporate portfolio, end up in so much trouble?
The world’s biggest builder of offshore oil and gas rigs admitted paying $55 million in bribes to officials in Brazil during a decade-long scheme in exchange for about $1 billion in contracts. This was no rogue-employee operation. An agent who handled bribes for Keppel named at least five high-ranking executives allegedly involved in the scheme. Keppel itself said it acted against 17 former or current employees.
Singapore has always ranked at or near the top of the Corruption Perceptions Index. I lived there for nearly 25 years. You could leave your car unlocked with the engine running and piles of cash visible on the seats, and no one would touch it. But something went haywire for these Singaporeans doing business overseas. They did things they’d never do at home.
The Keppel case should rile us. Those bad acts in Brazil hurt American competitors in a strategic industry. But the case shouldn’t be twisted into an illogical pretext for an America-first enforcement agenda or an excuse for American companies to bribe foreign officials to remain competitive.
Goldman Sachs (2020) – $3.3 billion
The DOJ said $4.5 billion disappeared from Malaysia’s sovereign wealth fund, 1MDB. Some of the money was used for bribes and kickbacks to officials in Malaysia and the Middle East.
The alleged mastermind was 36-year-old Malaysian financier Jho Low. After the scandal broke, he disappeared — triggering unconfirmed sightings in Phuket, Macau, Hong Kong, Taiwan, and Shanghai. U.S. prosecutors said Jho Low and others laundered stolen money through high-end art buys, New York luxury real estate, and even the production of the Hollywood blockbuster The Wolf of Wall Street.
Malaysian police later raided the home of Jho Low’s political godfather, ex-Prime Minister Najib Razak. During the raid, police seized $28.6 million in cash, 457 handbags worth $12 million, 423 watches valued at $19 million, 234 sunglasses worth $93,000, and jewelry worth around $180 million. Najib was sentenced in Malaysia to twelve years in prison.
Goldman Sachs — which earned $600 million for arranging bonds that financed 1MDB — was assessed the biggest criminal and civil FCPA penalties ever. The bank’s rainmaker in Southeast Asia, Tim Leissner, cooperated with the DOJ. He was sentenced to two years in prison and forfeited $43.7 million.
Without the FCPA, without the DOJ pushing hard, would the bizarre 1MDB scandal have come to light? I doubt it. It could have remained buried forever in opaque Malaysia. This made-in-America prosecution against the leading American bank and a star banker is a prime example why FCPA enforcement — without fear or favor— is so important in the fight against global corruption.
Siemens (2008) – $800 million
Outside counsel assigned to investigate a whistleblower complaint had a free hand and clear marching orders: “Get to the bottom of things — ASAP.” As the lawyers worked, however, the investigation kept expanding. They’d discover corruption here, and that would lead to more corruption over there.
Siemens, one of Germany’s shining post WWII industrial success stories, was in deep, deep trouble. American prosecutors wouldn’t discuss a negotiated resolution until they knew the full extent of the graft. That started to look impossible. Would Siemens’s final fate be corporate dismemberment or even death?
To save itself, the company went all in with the DOJ. Together they came up with a novel plan — amnesty for employees below executive rank who confessed and brought receipts. A second phase extended a leniency program on a case-by-case basis to senior employees. Eventually more than 170 Siemens people came forward. Lawyers documented corruption in Argentina, Bangladesh, Venezuela, China, Israel, Iraq, Mexico, Nigeria, Russia, and Vietnam.
Finally satisfied, the DOJ and SEC settled with Siemens. The company brought in new directors and managers, became a model for compliance and corporate citizenship, and survived and flourished. The DOJ’s thoughtful and cooperative approach to FCPA enforcement helped clean up not only Siemens but the global power generation sector.
Lindsey Manufacturing et al (2011) – convictions vacated
FCPA defendants face overwhelming odds at trial. One reason is that the government is always a “repeat player” in the U.S. court system, and that gives it an enormous advantage against FCPA defendants, who are usually “one-shotters.”2 Still, some defendants can’t or won’t admit guilt — because they’re innocent and they know it. They go to trial in spite of overwhelming odds.
Innocence is what drove a small California-based firm, Lindsey Manufacturing Company, its CEO Dr. Keith Lindsey, and CFO Steve Lee to go to trial. What happened?
Predictably, prosecutors convinced the jury that the Lindsey defendants paid millions in bribes to an official at the Mexican state-owned electric utility in exchange for contracts. The jury convicted all three defendants of conspiracy to violate the FCPA and five substantive FCPA offenses. Then something strange happened.
On a post-trial motion from the Lindsey defendants’ lawyer, Jan Handzlik, the trial judge threw out the jury verdicts entirely due to prosecutorial misconduct.
Judge Howard Matz agreed with Handzlik — prosecutors cheated at every step along the way. The government team (in Judge Matz’s words):
Allowed a key FBI agent to testify untruthfully before the grand jury
Inserted material falsehoods into affidavits submitted to magistrate judges in support of applications for search warrants and seizure warrants
Improperly reviewed e-mail communications between a defendant and their lawyer
Recklessly failed to comply with its discovery obligations
Posed questions to certain witnesses in violation of the court’s rulings, and
Engaged in questionable behavior during closing argument and even made misrepresentations to the court.
Good grief. Federal prosecutors — for reasons only they could know — grossly perverted the judicial process and blackened the FCPA. Prosecutorial misconduct? More like prosecutorial madness.
The government inadvisably filed a notice of appeal against Judge Matz’s post-trial rulings. Five months later (presumably after its own internal review), Main Justice withdrew the appeal and closed the case for good.
A law enforcement professional said to me after the case ended, “The potentially tyrannical power of the government — the ultimate insider of our court system — was on display in the Lindsay case. The Lindsey prosecution showed why our Constitutional protections are needed.”
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Those are my five cases. What do they tell us? First, it’s a mistake to oversimplify the FCPA, to say on one hand it’s always a good law, or on the other that it weakens our country. It’s also a mistake to turn it into a partisan issue. Congress adopted the FCPA unanimously— because opposing corruption through the rule of law is the right thing to do, even if it’s sometimes complicated and messy.
Finally, the five cases are a reminder that the FCPA depends on fair and just enforcement, which is always in the hands of mere humans— with all our flaws and shortcomings. But that’s true of every law, and it’s why the Founders gave us three branches of government full of intended checks and balances.
Despite everything, the FCPA is legislative genius — an American creation that continues to reshape global attitudes and inspire countries to confront corruption. It’s one of our greatest exports. Undermining it now through radical shifts in enforcement priorities would be short-sighted and self-defeating.
Two New York Times reporters won the 2013 Pulitzer Prize for Investigative Reporting. David Barstow and Alejandra Xanic von Bertrab “exposed how Wal-Mart used widespread bribery to obtain permits and gain a competitive advantage in Mexico. The reporters also showed how officials for the retailer, the world’s largest, sought to cover up corrupt tactics. The reporting led to an investigation by the Justice Department into whether Walmart had violated the Foreign Corrupt Practices Act. ‘It started with a tip that led to documents, which led to more documents,’ Mr. Barstow said.”