On Foreign Bribery, Justice Is Out to Lunch

[Robert Weissman <rob@essential.org>]

When it comes to prosecuting corporate crimes, Bill Clinton's Justice
Department is a tiger against the smaller corporate violators, but a pussy
cat when it comes to facing down the giant criminals. 
     
The overwhelming majority of environmental corporate criminal
prosecutions, for example, are brought against relatively small companies.
Does this mean that smaller companies are committing more environmental
crimes than bigger companies?  Probably not.
     
It probably means, instead, that big companies have the resources to
hire the well-connected corporate defense lawyers who know how to get a
case dismissed, or settled as a civil or regulatory matter. 
     
In some areas where big business dominates the field -- as in the
field of bribery foreign governments -- the Justice Department is just out
to lunch.
     
Lawyers handling foreign bribery cases report there has been a sharp
increase in business over the past couple of years. 
     
Homer Moyer Jr., a partner at the corporate defense law firm of
Miller & Chevalier, told us last year he has had "more work in this area"
in recent years "than in my previous 16 years of practice." 
    
Why then aren't newspapers full of stories about how U.S.  companies
are bribing overseas? 
     
Because the Justice Department is burying the cases. 
     
Moyer likens his practice of defending corporations against charges
of bribery to an "iceberg."
     
"Very little of this practice is publicly visible," Moyer said. "Many
of these cases are resolved informally, without publication of consent
decrees -- many are just dismissed." 
     
For years, Justice Department officials have claimed that they have
large numbers of cases in the pipeline. But the pipeline gets clogged up
by high-priced corporate defense attorneys. 
     
When an enforcement action results, information that is made publicly
available is often sketchy because defense counsel "negotiate what
information can be released," Moyer says. 
     
In the summer of 1974, when allegations of widespread bribery of
foreign governments were being played up in the U.S.  media, the
Securities and Exchange Commission (SEC) offered a deal to corporate
America -- come clean with information about your bribes, and we give you
some leniency. About 500 corporations disclosed questionable practices to
the SEC. The Justice Department prosecuted about 100 of those cases. 
     
The massive corruption probe forced Congress in 1976 to pass a law
that outlaws U.S. companies or individuals from bribing foreign government
officials. 
     
So, has the law worked? Well, there have been very few -- less than
20 -- criminal prosecutions under the law since it was passed more than 20
years ago. 
    
All experts agree that the law has forced U.S. companies to change
the way they do business. But have they just learned how to better conceal
their wrongdoing? Or does Moyer's experience indicate that the Justice
Department just isn't prosecuting cases when they should? 
     
Only the Justice Department and defense attorneys know for sure. But
a case reported by the Cincinnati Enquirer earlier this month will tell
much about Clinton Administration and foreign bribery. 
      
The year-long investigation by the Enquirer found that Chiquita
Brands International Inc., the world's largest banana company, is engaged
in a range of questionable business practices. 
     
The paper found that Chiquita secretly controls dozens of supposedly
independent banana companies. It does so through elaborate business
structures designed to avoid restrictions on land ownership and national
security laws in Central American countries. The structures also are aimed
at limiting unions on its farms. 
     
Reporters Mike Gallagher and Cameron McWhirter also reported Chiquita
and its subsidiaries are engaged in pesticide practices that threaten the
health of workers and nearby residents, despite an agreement with an
environmental group to adhere to certain safety standards. 
     
And the paper reported that Chiquita allegedly made business
decisions in Latin America to cover up a bribery scheme involving company
and subsidiary employees and helped foreign growers try to evade taxes. 
     
The bribery incident allegedly involved paying government officials
in Turbo, Colombia, to help the company's Colombian subsidiary Banadex
obtain use of a large government storage facility, the paper reported.
     
According to the report, company records and high-level sources
within the company described how, after learning of the scheme, company
officials allegedly took action to hide it. 
     
SEC investigators have issued subpoenas to Chiquita seeking documents
reflecting how Chiquita obtained access to the Colombian government-owned
storage space. 
     
Chiquita issued a one page statement broadly denying the allegations
in the 18-page Enquirer report. As for the allegations of bribery, the
company issued a statement through its lawyers stating that "Chiquita's
policy is not to make illegal payments to any government officials." 
     
But sources told the Enquirer that two Chiquita executives have been
forced to resign as a result of the brewing scandal. 
     
The Chiquita scandal is a perfect test case for the Clinton Justice
Department. Carl Lindner is well known as a big contributor to both
Democrats and Republicans.
     
He has spent at least two nights at the Clinton White House. 
Campaign reform activists in Washington see Lindner, chairman of the board
and CEO of Chiquita, as a CEO who has effectively bought his way into the
power corridors of Washington. 
     
The SEC is investigating these very public allegations.  But where is
the Justice Department? Will this be just another case that gets clogged
in the pipeline? 

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter. Robert Weissman is editor of the Washington, D.C.-based
Multinational Monitor. 

(c) Russell Mokhiber and Robert Weissman

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