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FCPA Allegation Against McCain Fundraiser

Posted on October 24, 2008 by Doug Cornelius
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Republican fundraiser Harry Sargent III is subject to a suit from Supreme Fuels that Sargent’s company International Oil Trading Company made illegal payments to Jordanian officials. IOTC has an exclusinve license to move military fuel through Jordan.

IOTC’s response, according to the NBC News Investigates story:

. . .in an email to NBC News, a spokesman said that there were no bribes and only a legitimate “fee” paid to the government of Jordan. “What Supreme [Fuels] calls a ‘bribe’ was a required fee for importing and transporting military fuel through Jordan,” a spokesman for Sargeant and IOTC said. “The fee was paid to an official agency of the Jordanian state and thoroughly documented. This and any other related charge have been shared with the Department of Defense (and to Congress) as part of our transparent disclosure of any and all costs related to the fuel delivery process.”

Under the Foreign Corrupt Practices Act, payments to agencies of a foreign government are not illegal. The FCPA is only applicable to payments to foreign officials. Foreign governments are free to extort as much money as they can. It is the personal gain by a government official that is a problem.

The other unusual part of the suit is that it is filed by a private party. There is no right for a private party to bring suit under the FCPA. Only the DOJ and SEC have the power to enforce the statue. The party is suing under RICO.

The leading case on private actions under FCPA is Lamb v. Philip Morris, Inc. (6th Cir. 1990) 915 F.2d 1024, cert. den. (1991) 498 U.S. 1086:

Since we find that no private right of action is available under the Foreign Corrupt Practices Act of 1977 (FCPA), 15 U.S.C. Secs. 78dd-1, 78dd-2, we affirm the dismissal of the plaintiffs’ FCPA claim.

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