Hawwi Edao – ICLR Candidate
With baseball season nearing full-swing, many are anxiously lining up at their local box offices, and hotdog stands to watch their favorite team rise to the World Series. What many do not realize is that their favorite team may be in hot waters this season and not because of the sport itself. Instead, the Major League Baseball (MLB) has been closely linked with international human trafficking and the United States government is cracking down on foreign officials enabling this affair.
The Foreign Corrupt Practices Act (FCPA) bars businesses and entities, such as professional baseball teams in the United States, from paying bribes to foreign public officials in exchange for business.[1] Additionally, the statute requires entities to sustain accurate financial recordkeeping and an adequate system of internal controls that provide reasonable assurances that transactions are executed, and assets are accounted for in compliance.[2]
Since the enactment of the statute in 1977, the FCPA continually shifts intensity when it comes to enforcement.[3] The variability of enforcement comes as no surprise in light of the government’s financial incentive of taking down FCPA-noncompliant entities. In fact, the Department of Justice (DOJ) and the Securities Exchange Commission (SEC) have brought a combined 554 FCPA Enforcement Actions totaling over $12.9 billion in monetary sanctions,[4] including a recent case that collected $853.2 million in penalties alone.[5]
Of the 262 groups linked to FCPA-prohibited business practices, nearly 1 in 3 of them made illegal payments to countries within Latin America.[6] Despite blossoming anti-corruption efforts endorsed by Latin American officials, much of the region remains a top U.S. regulatory concern. In fact, recent reports uncover the possible violations of the MLB’s dealings in Latin America.[7]
In late 2018, news outlets began to report that a federal grand jury was considering whether MLB teams violated the FCPA by paying bribes in exchange for the signing of international players from countries such as the Dominican Republic and Cuba.[8] The development of professional ballplayers is a multimillion dollar industry. Trainers in Latin America are offered illicit payments in exchange for their effort in getting young, teenage boys to sign with professional teams.[9] Unsurprisingly, a significant regulatory concern is that the money can be, and is often, funneled on to foreign officials.[10]
According to news reports, both the “FBI and members of the U.S. Department of Justice’s FCPA unit are involved in the probe.[11]” Just last year, the Atlanta Braves were in hot water with the SEC for unlawful payments to foreign officials in Latin America in connection with talent recruitment.[12] This year, the spotlight has shifted to the Los Angeles Dodgers for potential violations of the FCPA.[13]
Considering the harsh penalties that the FCPA carries—particularly millions (and maybe even billions) of dollars in fines—the investigation into illegal bribery within the realm of professional sports will continue to be closely monitored and heavily scrutinized.
[1]Robert C. Blume, J. Taylor McConkie, Navigating the Foreign Corrupt Practices Act: The Increasing Cost of Overseas Bribery, Colo. Law., August 2007, at 91.
[2] Id. at 95.
[3] See id. at 91.
[4] See Enforcement Actions, Foreign Corrupt Practices Act Clearinghouse [hereinafter FCPAC], http://fcpa.stanford.edu/statistics-analytics.html (last visited Oct. 8, 2018).
[5] Carolina Mandl, Brazil’s Petrobras To Pay $853 Million U.S. Fine In Car Wash Probe, Reuters (Sept. 27, 2018), https://www.reuters.com/article/us-petrobras-lawsuit/brazils-petrobras-to-pay-853-million-u-s-fine-in-car-wash-probe-idUSKCN1M71J1.
[6] FCPAC, supra note 4.
[7] Sue Reisinger, MLB Latino Signings Focus Of Grand Jury Probe, Reports Say; From The Courts, Palm Beach Daily Business Rev., Oct. 4, 2018, at A4.
[8] See id.
[9] Id.
[10] Id.
[11] Id.
[12] Id.
[13] Whitney McIntosh, What We Know About the Department of Justice’s MLB Investigation, SB Nation (Oct 2, 2018), https://www.sbnation.com/mlb/2018/10/2/17929336/mlb-investigation-dodgers-braves-international-players-crimes-department-of-justice-fbi.
