COPYRIGHT FOR ILLUSTRATION BELONGS TO RICHARD T. BISTRONG.
At my sentencing hearing, Judge Richard Leon stated that he had no doubt that I had been ultimately deterred, and added "Have you made a turn in the
road for the better? There is no question about that either. But I have to be
concerned about others, others out there right now who are aware of this case,
who are aware of other cases in this arena and who may think they can pull
conduct of a similar nature or maybe even more egregious than that you engaged
in, they need to understand, they need to be concerned that if they are caught,
and even if they cooperate, they are going to do jail time because in this
arena, that is the ultimate deterrence.”
-Judge Richard Leon, US District Court,
Washington DC, at the Sentencing Hearing of Richard Bistrong, July 31, 2012.
Deterrence.
Like
bribery, there is no shortage of writing on the subject of deterrence, but what
I fail to see is any perspective from those, like myself, who have ultimately
been deterred by incarceration. So instead of waiting, I will share my own
views on this subject. But first, in the context of the FCPA, what is the goal
of deterrence? I will share Professor Andy Spalding’s view in the FCPA Blog as,
“we want to deter the defendant from repeated bribes (specific deterrence), and
put other companies on notice so that they will bribe less (general
deterrence).” So, from the viewpoint of an individual who was sentenced and
incarcerated, does it work?
I
think there are a number of components to that question as I share my own
experience. First, could I have been deterred during the time of my illegal
conduct: no. Second, does my own
experience as representing the personal consequences of crime help to deter
others: not sure.
Back
to Professor Spalding, who in Part Two of his series on deterrence defines the
decision making process and theory as:
“based on utility calculations. A would-be
bribe payor weighs the utility of paying a bribe against the disutility of
punishment. And how does he assess that disutility? As the theory goes,
he considers three variables: the likelihood of being caught, the severity of
the punishment, and its swiftness. He weighs those three factors against
all he stands to gain from the bribe and makes a rational decision. “
You had me at the “likelihood of being
caught.”
Using
Professor Spalding’s guide, I never got past the first variable in my own
conduct. As I described in my recent posts on “rationalizing bribery,” and as I
have shared via my participation in a number of anti- corruption symposiums, I
knew what I was doing at the time was ethically wrong and illegal, and there is
no justifying that conduct; however, more importantly for this discussion, at
that time I did not think I was going to get caught. No matter how many FCPA affidavits I may have
signed, it made no impact, as I did not think I was going to face any
consequences for my conduct.
As
to the why, well, perhaps my own rationalizing variable of “no witnesses to
corrupt transactions,” had the greatest impact on my thinking. As Peter Henning recently shared in a NYT DealBook article, “unanswered is the question of whether the United States
government can successfully pursue individuals for misconduct in a large
organization based outside the country.” In many ways, his question very much
pertained to my own thinking as to why I could engage in overseas corruption
without any consequences. From the perspective of an individual, dealing with
corruption far from the C-Suite, consideration of US law enforcement in a
remote location with no witnesses is not exactly an active concern. An
illusion, but one which was easy to rationalize.
What About Others?
During
the years of my own bribery conduct (2001-2006) there was not the level and
publicity around FCPA enforcement actions as we have seen in the last five
years (2009-2014). Thus, I think it is safe to say that awareness with respect
to anti-bribery enforcement, especially among front line international business
personnel is certainly a great deal higher in present times. But does that lead
to greater deterrence? I think that is still a difficult question to answer, as
while enforcement is certainly higher, there are also forces out there which
support continued corruption. I think those factors include my own “perfect
storm” of incentive compensation, procurement instability, no witnesses, and the illusion of no victims. I think there
is also a strong element of “that is just the way things are done in my
territory,” and “it is not even illegal in my territory,” which also supports a
continuation of corruption over deterrence.
I
look at the unrelenting wave of FCPA enforcement cases, and putting aside the
debate on personal versus corporate enforcement, it is clear that bribery is
continuing on the front line of international business, especially in regions
with reputations for corruption. So, given the continued rise in cases and the
continued publicity around enforcement, is deterrence taking hold? I guess that
remains a rhetorical question, but is there anything that can be done to
magnify the consequences of corruption in order to increase the value of
deterrence to those on the front line of international business?
You have to start somewhere.
For
corporations, maybe the integration of the following elements into the training
process might be warranted, as to focus on deterrence.
·
Let your
teams know that you understand the “this is how it is done in my
territory,” and “it is not even illegal in my territory” dynamic and get it out
in the open. However, share the corporate philosophy of this is “not how we do it,” and “it is illegal,” along with engaging your teams on
the prospects of long term value for both the company and the customer through
a business strategy that is in no way “bribe dependent.” Show them the path to
success where business development and compliance are partners.
·
Go
through the process of “rationalizing bribery.” Use my model or your own,
but neutralize each element including procurement instability (if I lose I will
never see this sale again), incentive compensation (compliance as bonus
prevention), no witnesses (I will never get caught) and the illusion of
no-victims (bribery as win-win). Show
your teams first, that you understand how easy it can be to rationalize
corruption and then dissect each element to pull back the distortions and show
the realities.
· Talk
about enforcement actions to your international business teams. Use corporate
and personal indictments as case studies to reinforce to your personnel that
you would not tolerate such behavior, and that there are real consequences to
engaging in overseas bribery. When someone
gets sentenced, again, use it as a teachable moment by keeping the consequences
of corruption on the “front burner” to your teams. Remind them that this is a
real world law with real world incarceration. Talk about international law enforcement
cooperation and that the days of creating an oasis of bribery by staging
conversations far from the C-suite where no one gets caught are over.
·
Take
training to a narrative. When you train your personnel, don’t just stop at
“read this” or “watch this,” and now “sign this.” Ask your front line teams if
they really understand the law. Go beyond the anti-bribery provisions, explain
the conspiracy elements, books and records, facilitation payments, etc and help
them to understand the lines in the sand. Show them that you understand the
pressures they face in the field, and that they are likely to confront risk and
corruption in high-risk regions. Let them know that you are their partner, so help
them to take the time to become familiar with the rules and regulations that
now govern their behavior. Talk about enforcement actions and people who were
incarcerated. Let them know that you will spare no resource in making sure they
are properly trained but will also
spare no resource if they are caught breaking the law.
Is that enough?
I
view most parts of the populous as represented by bell curves, almost
irrespective of issue. I learned about this in poly-sci 101, by S. Peter Regenstreif, one of the masters in this field. In the case of would be FCPA violators, the
same. Thus, using this theory of distribution, I would think that 10-20% of
those on the front line of international business would never violate the law,
with their 10-20% brethren on other side of the curve as going to violate no
matter what training they receive or newspaper reports they read. Myself, I
once occupied the latter and now happily reside in the former. Thus, there are
60-80% of those in the field who are susceptible
to training, messaging, carrots and sticks, and thus, can be successfully deterred.
Accordingly, let deterrence fall on those ears who can digest the consequences
of incarceration, and who will look to peers and supervisors to understand what
tools they need to deploy in order to undertake ethical, lawful behavior.
But, just in case.
For
those who might be reading my post, and who are confronting their own personal
storm of rationalization, inasmuch as my own personal experience might bring
some value, let me share with you my perspective. The loss of liberty, even for
my own fourteen and a half-months, is an awful experience, and no amount of
personal financial or corporate upside is worth that price. While my time at the Federal Camp at Lewisburg
passed without incident, and I used my time to help others with their
educational challenges as a GED and English as a Second Language instructor,
the time away from family and friends can never be replaced. I missed events in
the life of my family from which there are no “re-enactments.”
The
impact of saying good bye to a wife and children knowing that your only
remaining contact will be in a visiting room for an extended period of time is
nothing but traumatic. Trying to “coach” my children through their college and
grad-school application processes via time delayed e-mails and limited phone
calls, was difficult at best. Using up phone minutes before the end of a month
knowing you won’t get to hear the voices of loved ones until they re-up next
month was a gut-wrenching experience. It is not worth it, not even close. I
never thought I would get caught, ever, and had fourteen and a half months to
think about “being above the law” while major life events for my family passed
with me as a spectator from afar. Think about it, please.
