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  • Writer's pictureAshwani Agarwal

Unbeatable Tag Team of Laws: RICO, FCPA, and Antitrust Actions

While on the surface, it might seem at first that RICO, FCPA, and antitrust actions do not have much in common, that is not quite the case. In the last decade, there has been a resurgence in anti-corruption enforcement in the United States, and multiple cases have demonstrated the many parallels that exist between RICO, FCPA, and antitrust laws. Among those most noticeable trends are cases that now combine anti-corruption and antitrust claims as well as a marked increase in international harmonization and enforcement coordination.

Background: Using FCPA as a Predicate for Action under Any Other Statute

Beginning in the late 1970s, the United States Congress began to recognize the need for new legislation for combatting bribery. The result was the FCPA, which made bribing foreign government officials for the purpose of gaining a business advantage a crime. While FCPA enforcement has undergone cycles of waxing and waning over the years, most recently there has been increased attention on FCPA. In particular, FCPA is now most often being used as a basis for pursuing other actions.

The prospect of using FCPA as a predicate for pursuing action under other statutes is not outside the realm of possibility. In fact, a state or federal statute can easily provide a remedy for private parties who may have sustained injuries under a wrongful act. As such, an FCPA violation potentially could be used as the proposed wrong cited as the trigger for the right of action.

Civil RICO

Over the years, there have been multiple attempts to utilize an alleged FCPA violation as grounds for pursuing a civil RICO jurisdiction. If such an attempt proves to be successful, this strategy results in the ability to avoid the issue of a lack of direct right of action pursuant to FCPA. Even so, such efforts have a history of failing at the pleading stage. With that said, no viable reason exists why an FCPA violation cannot serve as the basis for a predicate to a civil RICO violation.

While the FCPA is not actually included as a predicate offense under 18 U.S.C. § 1961 (1) (B), it is worth noting that bribery in violation of federal law is included under the Travel Act, 18 U.S.C. § 1952.

What Does It Mean to Say, ‘I Take the Fifth Amendment’?

The potential for criminal prosecution is present; witnesses within a private civil action opt to refuse to testify by claiming to take advantage of the protection offered by the Fifth Amendment. In such cases, this could have significant consequences for both sides of the action. On the demanding side, necessary evidence could be restricted, while on the objecting side, a refusal to answer based on the Fifth Amendment could serve as a legitimate basis negative inferences.

Example: RICO and FCPA

Even when a company settles a case related to an FCPA charge, that still may not be the end, as such companies may still be targeted with follow-up securities class actions. One such prime example occurred when HP and a Mexican subsidiary were accused of violating a RICO statute as well as violating California’s Unfair Competition Law. Pemex brought claims of tortious inference and fraudulent concealment as well as injunctions that would prevent any future FCPA violations. According to HP, the suit was related to a matter that had been previously resolved after the company cooperated with the Securities and Exchange Commission as well as the Department of Justice.

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