Mike Koehler on the Politics of the FCPA

In March 2017, the New Yorker magazine published an article by Adam Davidson titled Donald Trump’s Worst Deal: The President Helped Build a Hotel in Azerbaijan That Appears To Be a Corrupt Operation Engineered by Oligarchs Tied To Iran’s Revolutionary Guard.

Mike Koehler
Southern Illinois University
School of Law

Southern Illinois University Law School Professor Mike Koehler calls the article “a political hit piece.”

And he says that some of the Foreign Corrupt Practices Act (FCPA) experts quoted in the article were donors to the Democratic Party and to Hillary Clinton.

This was not mentioned in the Davidson article.

“When FCPA commentators write about topics political in nature including statements about specific political actors, should the commentator disclose their political contributions so that readers can better assess the credibility and objectivity of what the commentator is saying?” Koehler writes on his FCPA Professor blog.

He clearly believes the answer to be yes.

“Before the article was published, Mr. Davidson reached out to me,” Koehler told Corporate Crime Reporter in an interview last week. “We talked for about thirty minutes to forty five minutes. He ran some of the things past me and wanted my opinion. He wanted to know whether what he was describing was a violation of the FCPA. I said — it depends on the facts and circumstances. But what he was describing to me did not seem like an FCPA violation. And I told him that. At which point, he accused me of being in defense counsel mode. I responded — well, I’m in law mode, not defense counsel mode.”

“If one was writing an article and spending three and a half months on an article, you would think that there would be more of a thorough coverage of potential FCPA implications. By the way, I had the same concerns about David Barstow’s April 2012 article in the New York Times about Wal-Mart. It was similar. A journalist spends many months on an article writing about a company and the FCPA, but the end product was not a very representative, or accurate or comprehensive depiction of the FCPA.”

Alexandra Wrage says in the article that the FCPA criminalizes conscious avoidance.

Do you agree with that?

“The FCPA has third party payment provisions in which a payor can be liable for payments made to foreign officials made by third parties.”

“You have to be willfully blind or consciously disregard the fact that some person is making payments to a foreign official on your behalf. Someone puts their name on an office tower and that office tower years before or months before may have had some corruption associated with it. The notion that that makes everyone associated with that office tower in violation of the FCPA — that’s ridiculous.”

“I told Davidson — imagine this office tower in Azerbaijan was built through some corruption and a year later, Starbucks decides to put a café in the lobby of that office tower. Does that mean that Starbucks has consciously disregarded corruption and therefore Starbucks is in violation of the FCPA? Of course not.”

“Going back to your question — does the FCPA criminalize conscious avoidance? No, not in the abstract. Yes, if one is aware, or should be aware, that a third party is making payments to a foreign official to advance your business interest. Yes, that is potentially an FCPA issue. But that’s not what the article was about.”

What you are saying or implying in your piece is that the battle over the FCPA is actually a political battle. These people who are weighing in on the FCPA have a political point of view and they are going after Trump based on politics, not based on the law.

“Generally speaking, no that is not what I’m saying. In the context of this specific article, wouldn’t it have been nice for a journalist who spent three and a half months writing one article to disclose that his expert commentators are contributing to political candidates?”

The implication of what you are saying about the people quoted in the New Yorker piece is that they are going after Trump because they support Hillary.

“That’s not what I’m saying. I’m saying if a journalist is spending three and a half months writing an article and you include expert commentary that helps the journalist support his position, is it not in the public interest to include in that article the political contributions of that person?”

Are you are Trump supporter?


Did you vote for Trump?

“Yes, I voted for Trump because I didn’t want to vote for Hillary Clinton. In the state of Illinois, it’s a reliably blue state.”

Shouldn’t law professors make public their moonlighting? Are they working for companies that would affect their point of view on any public law issue? You say you have not made political contributions. But should law professors disclose who they are moonlighting for?

“Most law professors are subject to laws and regulations that require them to do just that.”

I’m not sure that’s the case.

“It is for state schools. I made all of the required disclosures I’m required to make.”

Do you do business with companies you write about?

“There have been some situations where I have been involved as an expert in FCPA cases. When I write about those, I always include a disclosure. When I am writing about a topic that involves a company that I have been involved with, I can’t disclose every time somebody hires me. But when I write about a topic, it’s strictly factual — who what where, without offering one opinion. Recognize my FCPA Professor website is the leading source of FCPA information that is free and publicly available. A lot of times what I’m writing about are simple enforcement actions. Other times there are opinions. If there is ever a situation where I feel there is an opinion or a commentary that is impacted by some relationships I have, yes I would disclose that.”

Let’s take Wal-Mart. You have been very public in your opinions about that case. Do you have any relationship with Wal-Mart? Do they come to your training, do you have contact with them, do you have business dealings with them?

“There have been some Wal-Mart people who have attended my FCPA Institute. That is very clear in my marketing for the FCPA Institute, where I include some of the companies and law firms that attend the institute. It’s a training session. They are provided a book, education, meals. There have been some Wal-Mart people.”

Other than that?

“Do I have any other business relationship with anyone else at Wal-Mart? The answer is no. Sorry to disappoint you.”

Not disappointed.

“Well the fact that you ask me every time –”

You are raising this question — is FCPA commentary politically driven? I think a lot of it is.

“I’m not saying a lot of the FCPA commentary is. I’m saying some of it is politically driven. Somehow I was linked to the U.S. Chamber of Commerce and I testified before the Senate and was critical of the Department of Justice and Securities and Exchange Commission enforcement. There was no basis in fact for this public reporting. I have zero ties to the U.S. Chamber of Commerce. The U.S. Chamber of Commerce has never contributed to me or my web site.”

[Update July 12, 2017 7:12 pm: After going to press, we received an email from Mike Koehler: “I went back into some of my donation records.  In 2013, the Chamber of Commerce did contribute $1,000 to my FCPA Professor website. Thus, the statement I made in the interview ‘The U.S. Chamber of Commerce has never contributed to me or my web site’ was not accurate.] 

What do we know so far about Trump FCPA enforcement?

“We know that if there is one more enforcement action in the year 2017, there will be as much Department of Justice FCPA enforcement as there was in Obama’s 2015 enforcement year.”

“FCPA enforcement is highly cyclical. Even during the Obama years, there would be three, four five months with no FCPA enforcement. Between January 20 and last Friday, there was not a corporate FCPA enforcement case under the new Trump administration. You could say — gee, look, told you so. But you just can’t look at things through the narrow lens of a six month period or a twelve month period. Like I said, 2016 was a record year in FCPA enforcement. But you can’t have record years every year. Just ask the Golden State Warriors about that.”

“What do we know about FCPA enforcement under the Trump administration? Very little. The one corporate enforcement action brought under Trump is nearly indistinguishable both in terms of substance and the resolution vehicle used in the Obama administration. Like I said, in 2015, there were two corporate enforcement actions brought by the Department of Justice. If one were to just look at 2015, one could legitimately say that the Obama Department of Justice showed very little interest in enforcing the FCPA. But then of course, 2016 happened. And that was a record year.”

“One other thing about the political aspects of this. Perhaps, perhaps, it’s just a coincidence that between January 3 and January 19, there was a rush in terms of all enforcement cases that came out of the Obama administration. Perhaps it was just a coincidence, that on January 19, the last day of the Obama administration, there was an FCPA enforcement action against Las Vegas Sands. Sheldon Adelson is a major Trump supporter.”

How do you explain the dump of corporate crime cases in the last month of the Obama administration?

“They wanted their name on those cases. They wanted credit.”

But why the last month?

“Human nature is what it is. It’s difficult for things to get done in the corporate space in December, with the holidays and vacations. I don’t know. I’m just speculating. All I know is there was a lot of high dollar enforcement.”

It could be that they wanted to push the cases out the door thinking that the Trump administration would sit on them.

“That’s one explanation.”

Over the past 15 years or so, there have been fewer than 100 public company FCPA cases. That’s fewer than ten a year. How is it that this law has garnered so much attention given how few cases there are?

“It’s fascinating because you are dealing with a criminal law, you are dealing with acts that take place in foreign countries, you are dealing with a law that implicates national security issues. You are dealing with bribery, which tends to be a sexy topic.”

But given all the companies subject to the FCPA and all the companies bribing overseas, why not a lot more FCPA cases?

“There are a lot of people speeding today on interstates. There are going to be relatively few speeding tickets. To state the obvious, law enforcement needs to become aware of an issue before they can enforce a law.”

“Roughly fifty percent of corporate enforcement actions are the result of voluntary disclosures, where the companies turn themselves in. Another twenty to twenty five percent are follow on actions from foreign law enforcement investigative actions. The number of FCPA issues that the Department of Justice finds out about itself, on its own, are relatively few in number.”

[Update July 12, 2017 7:12 pm: After going to press, we received an email from Mike Koehler: “I went back into some of my donation records.  In 2013, the Chamber of Commerce did contribute $1,000 to my FCPA Professor website. Thus, the statement I made in the interview ‘The U.S. Chamber of Commerce has never contributed to me or my web site’ was not accurate.] 

[For the complete q/a format Interview with Mike Koehler, see 31 Corporate Crime Reporter 27(12), July 3, 2017, print edition only.]


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