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Amazon has been the centre of an alleged bribery issue lately with the Confederation of All India Traders (CAIT) taking the lead on the matter. Taking the issue forward even more the CAIT on Thursday send a memorandum to Gary Gensler, the Chairman of The United States Securities and Exchange Commission which is the regulatory body of Foreign Corrupt Practices Act (FCPA) federal law of USA. The CAIT had also sent a similar memorandum to David Last, who is the Chief of Fraud section of FCPA as well as Charles Cain who is the Chief of FCPA unit in Securities and Exchange Commission (SEC).
In the memorandum that was titled: “Representations for investigation of Amazon under the Foreign Corrupt Practices Act”, Praveen Khandelwal, the National Secretary General of CAIT, addressed and urged the United States Securities and Exchange Commission, Washington DC, USA, to conduct a fair investigation into the matter.
Khandelwal stated multiple instances where similar circumstances of bribery of foreign officials have occurred in India and in Africa as well. He also highlighted that in those past cases the SEC had been very proactive with its efforts to rectify the issue. He, therefore, requested that the same effort be put towards the current case regarding Amazon. Despite the fact that Amazon is conducting its own internal investigation into the matter, it was the CAIT’s purview that this was not a fair or unbiased approach as it claims that Amazon had allegedly ‘mistreated’ whistleblowers in the past.
The CAIT Memorandum to the Gary Gensler, Chairman of the United States Securities and Exchange Commission: (Issued September 23, 2021)
1) We would like to request your kind attention to be directed towards the news that broke regarding the alleged bribing of government officials in India by Amazon Inc. This news story was first reported by a reputed and reliable news agency and was titled ‘Amazon whistleblower alleges India lawyers bribed officials’ on 20th September 2021. Through the details mentioned in the news story, we are of an opinion that a grave violation of the Foreign Corrupt Practices Act has taken place and such an action must be immediately investigated. The said newspaper report is annexed herewith as Annexure A.
2) Per our understanding of the FCPA, we understand that it has an extra territorial jurisdiction and it is unlawful for any enterprise authorizes the bribing of foreign government officials to obtain or retain business even outside USA i.e. there is an embargo to make corrupt payments.
3) We would like to make a representation that this alleged conduct of Amazon warrants an immediate inquiry from the US Securities and Exchange Commission and Department of Justice to conduct an independent and fair inquiry.
4) We understand that there have been similar situations in the past wherein joint ventures/enterprises which used the resources of their lawyer and other agents to bribe government officials in African countries were penalized under FCPA. Further, payment of bribes by a third part (in this case, allegedly a lawyer) on behalf of the enterprise (Amazon) does not absolve Amazon from civil or criminal liabilities mentioned under the Foreign Corrupt Practices Act.
5) In terms of the precedents set by the SEC, we would also like to bring forth the case of Beam Suntry Inc. which used third party distributers to make illicit payment to government officials in India, Embraer which paid money to its agent and falsified its accounting records in India and Pride International Inc. which bribed judicial officers to influence customs litigation in India. These cases show that the SEC has taken a proactive approach towards MNCs who have tried to misappropriate funds and violate the provisions of the FCPA. We would like to request a similar level of thorough investigation to be taken up against the alleged malpractices of paying bribes through legal advisors and consultants by Amazon Inc. in India.
6) We would also like to shed light on the Resource Guide to the U.S. Foreign Corrupt Practices Act drafted and circulated by the U.S. Securities and Exchange Commission. This guide mentions that one of the common red flags associated with third party interactions which result in violation of the FCPA includes excessive commission to third part agents or consultants. We would like to highlight that the same news story also cited that one of the independent counsels appointed by Amazon claimed that Amazon was his biggest client that he would receive upwards of Rs. 20 crores (INR 2 billion) from them per year. The complaint made by the whistleblower specifically stated that this money was being funneled under the aegis of legal expenses by Amazon to pay bribes to government officials. This red flag is clearly highlighted in the current case, and we would like to seek your intervention to investigate this Amazon.
7) Furthermore, we would also like to bring to your attention that even though this alleged conduct is being investigated by Amazon, the history of Amazon mistreating whistleblowers makes it tough for a fair enquiry to take place on their behalf. We thereby pray to you to take up a fair and thorough investigation against Amazon for this alleged violation of provisions of the FCPA and uphold the sanctity of this legislation.
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