By James Ledbetter
The opinions expressed are his own.
I wrote last week that using the U.S. Foreign Corrupt Practices Act (FCPA) to charge News Corp over allegations that officials at the now-shuttered News of the World bribed police officials would be an “enormous, unprecedented stretch…which seems unlikely to stand up in court.” There are two qualifiers to this; first, the column was referring to Guardian reports about payments to police supposedly made in 2003, which appear to have been for tips leading to stories for the paper. If it could be shown that subsequent sums to police were made to delay or thwart investigations into News Corp activity—a very big if—then those payments might come a little closer to the types of bribes historically punished under the FCPA. (Even there, however, U.S. authorities would still be reluctant to jump into such a case unless British prosecutors abandoned such an inquiry, which seems unlikely to occur any time soon.)
I also hinted at a second possibility, both more intriguing and more likely: a different part of the FCPA could apply to any police bribes News Corp paid. This is the “books and records” provision of the FCPA; ProPublica’s Jake Bernstein summarized its potential use in this case succinctly: “If you pay off the policemen and you don’t write it down in your company ledger as ‘Bribe two policemen,’ then this can be a problem because you haven’t accurately kept your books and records.”
The FCPA is quite explicit about this: an American company doing business abroad has to maintain timely and accurate books; has to have internal accounting controls that ensure that employees don’t have the authority to wander off paying bribes on their own; and has to constantly check its records for any discrepancies.
At least two aspects of books-and-records make it a very powerful tool that should be keeping News Corp lawyers busy: a) there’s no threshold attached to it, meaning that theoretically even a small bribe could trigger it, b) the government doesn’t need to prove that a bribe met all the specific FCPA provisions, merely that it was improperly accounted for. You might call it the Al Capone technique: when the federal government couldn’t get much traction on more exotic charges, it nailed the mobster for tax evasion.
And so while I am still waiting for someone, somewhere to name a case in which bribes resembling payments to police officers for story tips were successfully prosecuted under the FCPA, there are indeed recent examples in which the U.S. government extracted fines and penalties for books-and-records violations without having to win on the alleged bribes themselves.
