Bribery and Corruption In Telecommunications- Prosecutions Under the Foreign Corrupt Practices Act

This paper reviews bribery and corruption cases in the telecommunications sector where they have been violations of the Foreign Corrupt Practices Act (FCPA). The Act applies to a very broad class of payments, both in money and in kind, made to officials of foreign governments, including the directors and employees of regulatory agencies and state-owned entities (e.g., manufacturers and carriers). The FCPA is explicitly extraterritorial in scope and expansive in its application, including any transaction that involves a US citizen, any company registered in or trading on a stock exchange in the USA or where funds pass through a bank or agent in the USA. The effectiveness of the FCPA has recently been reviewed by the US Senate. In addition to use of the FCPA, there have been some related executive orders and administrative actions. Given the very high value of privatizations and operating licenses (especially for oligopolistic cellular wireless network services) there are obvious temptations to solicit and to offer bribes in cash or in kind. The Organisation for Economic Cooperation and Development (OECD) has identified certain economic sectors in which the public procurement of supply contracts is “particularly prone to corruption”, these include armaments, mining and telecommunications. Additionally, the rates charged by some carriers for the termination of international calls, often far above the real costs, creates opportunities to offer discounts in return for kickbacks. Low salaries, insecure employment, uncertain political tenure, greed and avarice, compounded by weak or inefficient systems to detect and to prosecute bribery can all increase the temptations to accept illegal payments or benefits in kind. Inefficiencies can take the form of the absence of agencies to investigate and prosecute, inadequate funding for such agencies or protracted delays in the courts, sometimes taking more than a decade to come to trial. In some countries the prosecutorial and judicial systems are subject to political influence, ensuring some measure of impunity from prosecution for those with connections