A Double-Standard Windfall for the Clintons By Shannen W. Coffin And Michael J. Edney
http://www.wsj.com/articles/a-double-standard-windfall-for-the-clintons-1430176314
Mr. Coffin and Mr. Edney, both former senior lawyers with the George W. Bush administration, are partners in the international law firm Steptoe & Johnson LLP.
Corporate gifts to foreign charities have been treated as illegal bribes—resulting in million-dollar penalties.
Anything worth investigating here? Not according to the nation’s chief law-enforcement officer, President Barack Obama, whose spokesman announced Friday that the allegations were little more than the discredited musings of “a conservative author,” unaccompanied by “any evidence” and apparently unworthy of further discussion.
But imagine if similar payments, under similar circumstances, were made by a U.S. company to a charity closely associated with, say, the Nigerian foreign minister. The Justice Department and the Securities and Exchange Commission would be banging on that firm’s doors, asserting serious violations of the Foreign Corrupt Practices Act.
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That’s the law prohibiting U.S. companies from providing anything of value to a foreign official for the purpose of obtaining a favorable action. It is invoked frequently to scrutinize the overseas operations of American businesses. When federal law-enforcement agents even suspect that it has been violated, these companies are overrun with lawyers investigating every trace of alleged wrongdoing. The investigations often end the careers of the company officials allegedly responsible and culminate in fines and payments totaling many millions. One recent settlement was for $772 million. To avoid that fate, American companies spend huge sums on compliance reviews to prevent even the appearance of impropriety.
This antibribery provision is applied to overseas charities as well. The official guide on compliance with the Foreign Corrupt Practices Act states that charitable giving cannot be “used as a vehicle to conceal payments made to corruptly influence foreign officials.”
In separate settlements with the SEC, U.S. pharmaceutical companies Schering-Plough (since merged with Merck) and Eli Lilly paid substantial civil penalties for modest contributions—$76,000 and $39,000, respectively—to the Chudow Castle Foundation, a Polish charity that restores local castles. That foundation’s president was also a government official overseeing local hospital funding, including pharmaceutical purchases. The U.S. government concluded that there was no other purpose for the castle donations than to influence his official decisions. Schering-Plough paid a $500,000 penalty in 2004. Eli Lilly agreed to pay $29.4 million in 2012, though that settlement was for a wide range of practices not only in Poland but elsewhere as well. Neither company admitted guilt.
What counts as corruption abroad is apparently viewed as good citizenship here at home. The Foreign Corrupt Practices Act was an effort to export our domestic anti-bribery laws. Yet no one in the Obama administration, including in the Justice Department, is looking at the conduct surrounding the Clinton Foundation with the same skepticism and drawing the same adverse inferences that have become standard in Foreign Corrupt Practices Act cases. Instead, large donations to the Clinton Foundation by foreign entities with matters pending before the government are regarded as simply the result of an admirable interest in the foundation’s works of mercy.
If only the government agencies enforcing the Foreign Corrupt Practices Act would accept such explanations from the U.S. companies we represent. We would be happy to see federal law enforcement assume honest intentions in American business dealings abroad or take into account the practical difficulties of supervising tens of thousands of employees in far-flung operations.
Even if the federal government chooses not to change its enforcement policies, it still should vigorously investigate the allegations about the Clinton Foundation. Washington cannot credibly demand the most exacting ethical standards of American businesses in their dealings with other countries’ officials while failing to require anything close to that standard at home.
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