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COMMERCIAL BRIBERY IN THE UNITED STATES AND CALIFORNIA: PENALTIES UNDER
THE LAW
INTRODUCTION:
Payment of monies
or favors to government or business people to obtain favors is a common
event throughout the world and, indeed, is considered an acceptable if
not necessarily acknowledged part of business or governmental activity
in at least a third of the world and perhaps half of the developing
world. Sorely underpaid, many middle and lower governmental officers in
Africa and South America routinely must make ends meet by such transfers
and gifts in Asia are considered polite as well as necessary for one
engaged in business.
The
Foreign Corrupt Practices Act, (“FCPA”) is a unique law
of the Untied States in that it seeks to impose criminal liability for
acts in other jurisdictions that may not even be illegal in other
nations, and is perhaps the best example of the American response to
such activity. Commercial bribery is not only discouraged: it is
illegal. And the punishment, both under the FCPA and the other Federal
and California laws, is both severe and often imposed.
This Article shall
assume that the reader has already reviewed our web article on the
Federal Corrupt Practices Act and will concentrate on Federal and
California law prohibiting and punishing those who engage in
bribery…whether offering it or receiving same…in the commercial setting.
THE
BASIC LAW:
Both California
and the Federal government have powerful statutes that prohibit and
punish bribery in the commercial setting. (This is usually considered a
separate and different crime than bribing a governmental official.) In
the commercial setting, which can roughly be defined as business and
trade in all its various aspects, the amount of the penalty depends
largely on the amount of the sums offered and/or accepted as the bribe.
The reader should
review our article on
Criminal Law in the United States
to obtain both the basic criminal procedure of a trial and the burden of
proof imposed upon the United States federal and state governments to
obtain a criminal conviction.
STATE LAW:
Assuming monies
are either offered or received to perform favors in a commercial
setting, in California the accused can be alleged to have committed the
crime of commercial bribery pursuant to California Penal Code
section 641.3. Commercial bribery involving bribes in an amount
exceeding more than one thousand dollars ($1,000.00) is punishable by
imprisonment in the county jail or state prison for 16 months, two, or
three years. In addition restitution of the sums lost due to the
criminal violation can be ordered. The accused could also be alleged to
have to have committed grand theft
under California Penal Code section 484 with penalties of
imprisonment and restitution.
California
criminal law divides offenses into three major categories: felonies,
misdemeanors and infractions. Felonies include most violent crimes
against persons such as murder as well crimes against property such as
burglary and theft depending on the value of the property involved and
other nonviolent crimes such as bribery, embezzlement, fraud or computer
crime often termed “white collar crime”. Felonies are crimes for which
a person may be sentenced to imprisonment in state prison (usually for
more than one year.) Misdemeanors are lesser crimes for which the
penalty may be imprisonment in a county jail (usually for one year or
less) and infractions are offenses generally not punished by
imprisonment at all.
“White collar
crime” is a common term involving crimes that are nonviolent, have
cheating or “dishonesty” as a common basis and are often committed by
persons who are professionals or entrepreneurs under cover of or as part
of legitimate business activities.
1.
Commercial Bribery by Employees
California Penal
Code section 641.3 was enacted in 1989 and according to California
White Collar Crimes Criminal Sanctions And Civil Remedies, 2004,
Matthew Bender & Co, Inc. at section 8.200 contains a broadly worded
commercial bribery prohibition.
Section 641.3 (a)
provides that “[A]ny employee who solicits, accepts, or agrees to
accept money or anything of value from a person other than his or her
employer , other than in trust for the employer, corruptly and without
the knowledge or consent of the employer, in return for using or
agreeing to use his or her position for the benefit of that other
person, and any person who offers or gives an employee money or anything
of value under those circumstances , is guilty of commercial bribery.”
The elements of
the offense of employee commercial bribery are (1) employee solicits,
accepts, or agrees to accept a thing of value from another a person
other than his/her employer agreeing in turn to use his/her position for
the benefit of that person (2) the thing of value solicited, received,
offered or given must be an amount of money or have a monetary value of
more than $100 or the section does not apply (3) the violation must
occur without the knowledge or consent of the employer and (4) the act
must be entered into “corruptly” requiring a specific intent to injure
or defraud the employer (Penal Code section 641.3(d)(3).
This commercial
bribery statute is based on the notion of
fiduciary duty
between a business entity and its employees. The breach of that
duty to the injury of the employer based on the acceptance of a thing of
value is unlawful.
Section 641.3( c)
provides that “[C]ommercial bribery is punishable by imprisonment in the
county jail for not more than one year if the amount of the bribe is one
thousand ($1,000) or less, or by imprisonment in the county jail, or in
the state prison for 16 months, or two or three years if the amount of
the bribe exceeds one thousand dollars ($1,000.00).”
This is a “wobbler
criminal offense” as it is chargeable as a misdemeanor or felony
with the later penalty providing for a determinate sentence of 16
months or 2 or 3 years. The punishment is restricted to a misdemeanor
penalty (1 year in local custody) where the thing of value given as a
bribe has a market value of one thousand dollars ($1,000.00) or less.
In addition to the
misdemeanor or felony sentence, possible civil damage provisions of
Civil Code section 3281 allowing damage to person injured by
unlawful act may also apply. Essentially, this allows the person
damaged to seek damages by filing suit in the civil court. See our web
article on
Embezzlement.
Additionally, as
with all criminal violations, victims have a right to restitution of
sums lost (Cal.Const.) Art. 1, section 28(b). Such restitution must be
ordered in every case of victim loss from criminal activity (Penal
Code section 1202.4(a) and (f)).
2.
Theft
California Penal
Code section 484
is California’s present theft statute and is a generic prohibition that
integrates into one single consolidated crime the previously separate
offenses of larceny, embezzlement, obtaining money by false pretenses
and kindred offenses involving the unpermitted taking of property of
another with the intent of permanently depriving the victim of it.
The definition of theft is the felonious stealing, taking, carrying,
leading, or driving away of the personal property of another, or
fraudulently appropriating property that has been entrusted by the
other. This integration of the previously separate forms of theft did
not merge their somewhat disparate elements but proof of theft by either
simple taking, false pretenses, trick or device, or embezzlement
independently constitutes a violation of section 484 and gives rise to
its sanctions.
The distinction
between petty theft and grand theft is important since
petty theft is a misdemeanor and grand theft is a felony. In petty
theft the value of the property taken must not exceed $400. The taking
by any means of property with a value over $400 constitutes grand theft.
Calculation of the
amount taken or lost does not require proof that the defendant profited
by that amount. It is the market value of the property taken
that is used to determine the amount. The elements for either grand
theft or petty theft are identical except for the value of the property.
The punishment for
grand theft is set forth in California Penal Code section 789
which provides that when the grand theft involves the theft of a firearm
there is imprisonment in the state prison for 16 months,2, or 3 years
and in all other cases imprisonment in a county jail not exceeding one
year or in the state prison.
FEDERAL LAW
1. If the
crime occurs across State lines or involved any type of federal or
federally licensed institution, it can be alleged that, additionally,
federal criminal law would apply. Typical instances are bribes affecting
international or interstate commerce or such institutions as Banks who
are members of the federal reserve banking system or federal savings and
loan institutions. The accused can be alleged to have committed an act
constituting a violation of conflict of interest or bribery
affecting a personal financial interest pursuant to United States
Code, Chapter 11, Section 208. The penalty for violation of
section 208 is up to five years in prison, and/or a fine of $50,000 or
the amount that the person received, whichever is greater.
In terms of
commercial bribery involving banks, the relevant statute is United
States Code, Chapter 11- Bribery, Graft and Conflicts of Interest
Section 208, Acts Affecting a personal financial interest
Section 208
provides that, “whoever, being…a Federal Reserve bank director, officer,
or employee…through decision, approval, disapproval, investigation, or
otherwise in a judicial or other proceeding application, request for a
ruling or other determination, contract, claim, controversy, charge,
accusation, arrest or other particular matter in which, to his
knowledge, he, his spouse, minor child, general partner or employee, or
any person or organization with whom he is negotiating or has any
arrangement concerning prospective employment, has a financial interest,
shall be subject to the penalties set forth in Section 216 of this
title.”
Penalty:
According to
Section 216 of the United States Code, the penalty for a violation
of Section 208 is up to five years in prison, and/or a fine of $50,000
for each violation or the amount that the person received, whichever
amount is greater.
2. United
States Code, Title 18-Crimes and Criminal Procedure, Part I-Crimes,
Chapter 47- Fraud and False Statements, Section 1005- Bank entries,
reports and transactions
Section 1005
provides that, “whoever with intent to defraud the United States or any
agency thereof, or any financial institution referred to in this
section, participates or shares in or receives (directly or indirectly)
any money, profit, property or benefits through any transaction, loan,
commission, contract, or any other act of any such financial
institution, shall be fined not more than $1,000,000 or imprisoned not
more than 30 years, or both.” Note the very broad nature of the
involvement which would be subsumed under this Statute: “participates or
shares in or receives directly or indirectly….(from) any act” would have
the law applying to those even remotely connected to the actual acts
alleged.
CONCLUSION:
Most bribery
situations, in our experience, begin with small “presents” that are on
the borderline between acceptable tokens of courtesy. Instead of merely
paying for business lunches or dinners, or perhaps tickets to a ball
game, a potential vendor or contract partner pays for a weekend trip to
a sporting event or golf tournament. A short time late, the recipient is
giving a short vacation trip or season tickets and then “spending money”
on the trip, etc, etc.
Some dishonest
employees actively seek bribery and make broad hints that some “favors”
are required. Others find themselves sliding into acceptance of favors
that, only a few months before, would have been shocking to them.
One factor is
constant, however: once one begins to accept such favors one is “locked”
into the relationship and feels a mixture of shame and guilt coupled
with enjoyment of the fringe benefit of such bribes and the comfort that
“others must be doing it.”
For employers,
such bribery not only distorts the market and the profit margins, but is
like a cancer within the business, eating away at the ethical
underpinnings of the company and making it impossible for the honest
vendors (and employees) to prosper with the company.
For that reason, a
seasoned business man known to this writer would commit substantial time
and resources in educating his employees as to their ethical
requirements and would be brutal in reprisals when any wrongdoing was
discovered. “I do it to protect myself,” he would comment. “I need to
know my own people are honest and will not let my reputation as a
company be sullied by a few bad apples. My company is an honest one and
will stay that way.”
I well remember
one of his managers who was caught taking a small bribe…a vacation
trip…and who saw his promising career shattered and begged for some
“understanding” of his position. Our client, calmly but coldly, told him
that in accepting the bribe he had forfeited any right to be other than
an example to all the other employees and had the district attorney
called. The manager looked at the owner and commented that it had not
seemed “a big thing” when it began, merely a favor from a friend.
And the owner told
him what I firmly believe: “Friends don’t bribe friends. Criminals do.”
When in the United
States, bribery is a crime and enforcement of the prohibition against it
is a common occurrence. The business methods used in the United States
may not be akin to those abroad but that simply means that those
engaging in business in the United States will have to adjust or face
dire consequences in many instances. |
