21091: (Arthur) U.S. court of appeals: watch those customs duties (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Tttnhm@aol.com

Friday, April 02, 2004
U.S. court of appeals: watch those customs duties
http://www.telepark.de/clubhaiti/archive/2004_03_28_charch.html

As Dr. Magiot, character in The Comedians, Graham Greene's 1965 novel set in
Haiti remarked back then: "It is astonishing how much money can be made out of
the poor with a little ingenuity." The U.S. Court of Appeals for the Fifth
Circuit has ruled that illicit payments made by a U.S. company to foreign
customs officials to reduce the company’s tax and customs burdens may violate the
U.S. Foreign Corrupt Practices Act (the "FCPA"). The court’s reasoning in the
"U.S. v. Kay" case may force many U.S. companies to rethink and scrutinize how
their staffs interact with foreign government officials.

On July 30, 2002, the Securities and Exchange Commission filed a civil
injunctive action against two former officers of American Rice, Inc., Douglas A.
Murphy (CEO) and David G. Kay (VP Marketing), alleging that they authorized over
$500,000 in bribery payments to Haitian customs officials during 1998 and
1999. They reduced American Rice's import taxes by approximately US$ 1.5 million.
A third individual, Lawrence H. Theriot, a Washington lobbyist who liked to
joke that rice is "4% protein and 96% politics", allegedly assisted Kay and
Murphy by monitoring the bribery scheme.

Potentially the greatest significance of the court’s decision is not the
specific determination that bribes to reduce customs duties and taxes can be
caught by the FCPA but the court’s view that the FCPA, until now a rather toothless
tiger, has a broad and sweeping reach.

On December 31, 2003 American Rice announced that it had completed its merger
with SOS Cuetara USA, Inc., a majority owned subsidiary of SOS Cuetara, S.A.,
an international branded food company whose shares are publicly quoted in
Spain. [Source: Mondaq / SEC / HP]