How Federal Crackdown on Bribery Hurts Business And Enriches Insiders

Forbes ^ | 5/6/2010 | Nathan Vardi

[Saije]

In 2007 Weatherford International, an oil service firm with roots in Houston, discovered it might have a bribery problem on its hands--one or more of its employees might have paid bribes in Europe. Weatherford, following legal custom, notified the Justice Department office responsible for enforcing an anti-bribery law, whose assistant chief was William (Billy) Jacobson. It also hired...Fulbright & Jaworski to conduct an investigation, which found more potential bribery in West Africa. Weatherford promptly reported that to the feds, too. By that time Jacobson had left Justice to join Fulbright as a partner and started doing compliance work for none other than Weatherford. Then, in 2009, Jacobson left Fulbright to become general counsel at Weatherford, a job that in 2008 carried compensation of $4 million.

For Fulbright the investigation was quite profitable, and it's still going on. In just over two years Weatherford paid Fulbright and other firms $106 million for the bribery probe and other investigations. (Weatherford says Jacobson has been "walled off" from the bribery investigation and that he makes less than $4 million.)

Nice work if you can get it--and to the tune of billions of dollars, lawyers, accountants and consultants, many with past ties to the Justice Department, are getting it. In the last few years, as the feds cranked up enforcement of the 33-year-old Foreign Corrupt Practices Act, a thriving and lucrative anti-bribery complex has emerged. Whether it's having any impact on reducing bribery is another matter. Instead, companies can find themselves getting extorted in foreign lands, only to get extorted again by Washington. It works generally like this: A company that suspects bribery overseas hires a battery of lawyers, accountants and investigators who may then report any findings to Justice in hopes of some undefined leniency. More likely, the company pays out huge fines...

[Saije]

Everything in this country is a racket. Pitchforks and torches, I can see the appeal. But then we'd just be crazy tea party loons who don't know our place.