As SayUncle is reporting, an executive at Smith & Wesson is facing a federal indictment, along with 22 others. I wouldn’t toss the suggestion that this could be politically motivated lightly, but what has my suspicious is what they are charged under:
The indictments charged the individuals, including Smith & Wesson vice president for sales Amaro Goncalves, with violating the Foreign Corrupt Practices Act and conspiracy to commit money laundering involving the sale of items including guns and body armor, among other things.
The Foreign Corrupt Practices Act essentially makes it a crime to bribe foreign officials. My understanding from people involved in international business, is that bribery of foreign officials is pretty much par for the course if you want to do business in certain countries, like China, Russia, or most of the third world. That would lead me to believe that Smith & Wesson is hardly alone if some of their business practices involve bribing foreign officials. You can’t really do business in many places of the world without paying bribes.
Maybe I’m off base here, and prosecutions under the FCPA are a lot more common than I thought, which would mean this isn’t a case of selective prosecution at all. But it’s hard for me to believe this isn’t a commonly flouted law, which would cause me to wonder what, in particular, motivated the feds to bring charges in this case.
UPDATE: More info here, courtesy of The Firearms Blog. The arrests were made at SHOT? Not politically motivated at all! No, sir. It would appear to be that revenge may be at least a partial motivator, though:
As part of the FBI sting operation, an unidentified business associate who was a former executive for an arms manufacturer arranged a meeting between the arms sales representatives and undercover FBI agents who posed as representatives of an African country’s minister of defense.
And evidence this type of operation is indeed unusual:
Breuer said the investigation was the largest action ever undertaken by the Justice Department against individuals in an FCPA case. He also said it marked the department’s first large-scale use of undercover techniques in an FCPA investigation.
“We’re steadily pushing this unacceptable practice out of the business playbook by prosecuting companies and individuals who ignore the law, as well as by working with our international counterparts in their efforts to prevent and prosecute foreign bribery,” Breuer said.
He said the Justice Department currently has 140 open FCPA investigations. Kevin Perkins, assistant director of the FBI’s criminal investigative division, said 20 agents were working on FCPA cases full time.
I wonder if this was a way to go after the firearms industry in a way that we couldn’t rightly complain, because they are breaking the law, after all. Unfortunately just about everyone is a federal criminal these days. Perhaps this marks the feds cracking down on this practice in general. I’m sure it will do wonders for the economy and job creation if our corporations are unable to do business in large chunks of the globe because the feds won’t let them pay bribes.
Now, I am not sure having only done cursory investigation, but the sting operation that snagged these folks seems to go something like this:
Agent: If you want to do business, you must add 20% to the quote, with that money going to our ministry of defense…
Indicted: Okay. We will add that to the quote.
The way I see it, every country and culture has different ways of doing business. If you thumb your nose at their way of doing business, then it’s insulting and they won’t do business with you. So, in the interest of global multiculturalism, companies should respect other cultures’ business practices.
Also, if some backwater African nation wants to add a tax/tariff on the goods it purchases, then that’s their nation’s law, not ours. The sting agent asked for the additional charge. The companies involved did not try to bribe any official… they were agreeing to a customer’s demands.
My understanding of FCPA is that you can bribe somewhat, it just has to be relatively small amounts and usually considered “grease payments.” Basically, the scenario is if you need a building permit for your plant but the official in charge hints that the only way to get it in any reasonable time frame is to give him $20,00 cash, that’s ok. It’s when you sling really large amounts of money that you get in trouble.
Well, when you lay down with the devil, you get burned.
Bribes may be part of “business as usual” in some countries, but there’s a reason it is illegal for American companies to bribe foreign officials. The biggest reason is that that bribery money, when paid to petty tyrants in third world countries, is often used to further suppress liberty. Worse still, that type of money has on occasion been used to fund terrorist organizations. In addition to making the American arms industry look like a bunch of crooks, this type of activity routinely (if unwittingly) puts money in the hands of people who use it to wage war on us and our allies.
Do not defend these executives. Even if it doesn’t seem like a big deal, it most definitely is.
Unfortunatly Gregory, this is how business is done in most of the world. If the US is to remain competitive, this law must be repealed or at least not enforced.
Word is the investigation started 2.5 years ago.
Nearly all multinationals have internal policies against this sort of thing, but the policies are only there to give the impression of compliance.
Sounds political to me.
ParatrooperJJ – Our ability to compete in the worldwide arms market won’t matter if we continually undermine the rule of law in developing nations. The stability of trade depends on the stability of the other nation’s government. The stability of their government depends on its legitimacy. When you actively undermine their legitimacy by encouraging corruption, you are hurting trade.
The old, “but everyone else is doing it” excuse doesn’t float. You have to consider the long-term view with regard to developing nations. Not only our trade, but our national security, depend on worldwide stability. Much of Africa is currently balancing on the fine line between “we love the west and want to develop a stable democracy” and “we hate the west and want to establish a muslim caliphate”. Anything we do to encourage the former is good for our nation.
I’m not arguing that some US arms dealers bribing one minister of defense is going to bring the world crashing down around us. I also doubt this is a case of Obama wanting to take a shot at us gun clingers. The law is good law, and intensified investigation and prosecution is good as well.
Besides, this isn’t the first or last time this law will be used. It has already happened a few times under the Bush administration, if my memory serves me correctly, with contractors working in Iraq/Afghanistan.