Modern Slavery and Corruption – Legal Analysis of Relevant Laws and Their Application

Modern Slavery and Corruption – Legal Analysis of Relevant Laws and Their Application

Modern Slavery and Corruption – Legal Analysis of Relevant Laws and Their Application

Over the last two decades, United States regulators have had incredible success using the Foreign Corrupt Practices Act (“FCPA”) as a tool to combat foreign corporate corruption. Because corruption is a critical part of the human trafficking chain, the FCPA can potentially be used as a tool to combat human trafficking as well.

From its inception, the Foreign Corrupt Practices Act (“FCPA”) has been a pioneering statute with the potential to disrupt corrupt networks around the globe. When Congress passed the FCPA in 1977, it became “the first ever law governing the conduct of domestic companies in their interactions with foreign government officials in foreign markets.” Since then, and particularly in the past two decades, the FCPA has had an unprecedented effect in regulating corporate corruption, with ripple effects reaching to board rooms in the United States and remote regions across the globe.

Three key characteristics of the FCPA have been crucial to its effectiveness at addressing foreign corporate corruption. First, U.S. prosecutors have made FCPA enforcement a top priority. In turn, compliance departments of multinational corporations have responded by similarly prioritizing their global FCPA compliance programs. Second, the FCPA regulates global conduct of many international corporations, including those listed on U.S. exchanges via its provisions for “extraterritorial jurisdiction.” Third, the FCPA provides for expansive liability, including conduct where companies and individuals do not engage in direct bribery, or where senior management fails to maintain reasonable internal accounting controls necessary to detect and prevent bribery and other unauthorized payments.

These three characteristics make the FCPA an attractive enforcement tool for combatting international criminal activity tied to corruption, including human trafficking in ASEAN nations. Corruption fosters the human trafficking chain, and bribes paid to facilitate human trafficking in these countries, or false entries entered in a company’s books and records may constitute FCPA violations. Thus, although the FCPA has never been applied in the human trafficking context, initiating FCPA enforcement actions against these bribes could potentially disrupt the human trafficking chain and encourage a rise in human trafficking compliance efforts. Indeed, as commentators have noted, “the U.S. government can and should do more, including using the Foreign Corrupt Practices Act and other federal statutes to clamp down on all companies that turn a blind eye to trafficking by their subcontractors and other agents.”

However, as discussed in Section III., infra, U.S. enforcement authorities may not be able to prosecute multinational corporations under the FCPA based upon tenuous links to corrupt payments, and may not be willing (or may jurisdictionally be unable) to dedicate enforcement resources to prosecuting individual traffickers in foreign countries. In those instances, U.S. statutes specifically criminalizing human trafficking may prove to be a more effective enforcement tool. As discussed in Section IV., infra, the Trafficking Victims’ Protection Act (“TVPA”) is a U.S. statute specifically designed to combat human trafficking. Because the TVPA shares some of the FCPA’s key characteristics—both apply to conduct outside the United States and impose liability on corporations and individuals who do not directly engage in the misconduct— an increased focus on TVPA prosecutions, informed and supported by successful FCPA enforcement efforts, may ultimately prove to be a successful combination for combatting human trafficking. There are also local anti-corruption and Anti-Trafficking Laws that can be used by foreign authorities to fight against these harms on their own soil. Appendix A catalogues these local laws by country, and also offers an analysis of how these local anti-corruption laws could be used as a tool against human trafficking.

The U.S. government’s prioritization of FCPA enforcement has been crucial to its success in combatting global corruption. Like many federal regulatory statutes, the FCPA does not grant a cause of action to private litigants. Rather, the United States Department of Justice (“DOJ”) enforces the criminal provisions of the FCPA and the United States Securities and Exchange Commission (“SEC”) enforces the civil provisions. The DOJ and SEC are given substantial discretion in how to use their enforcement resources and, for many years, both agencies have enforced the FCPA as a top “priority.”7 In prioritizing FCPA enforcement, the DOJ and SEC have each dedicated significant resources, including specialized prosecution “units” and investigators, to enforce the FCPA.

The DOJ and SEC have brought at least twenty successful FCPA enforcement actions every year since 2007, and since that time corporations have paid over $6 billion dollars to resolve FCPA charges. Substantial resolutions, such as Siemens’ $800 million settlement in 2008, or Alstom’s $772 million resolution in 2014, have mobilized corporations to ensure that their business practices comply with the FCPA. Similarly, the risk of significant jail sentences, highlighted most recently by the Eleventh Circuit’s affirmance of a fifteen year prison term for an executive convicted of FCPA offenses for bribing Haiti’s state owned telecommunications company,11 have raised the stakes for FCPA enforcement.

Given the current enforcement focus on the FCPA, this paper will first discuss the potential effectiveness of the FCPA as a tool for combatting human trafficking before turning to the TVPA and other enforcement statutes and strategies.

To read the full report click here.