Olympics seen as corrupt payments tar pit

Experts: U.S. companies paying big fees to tap big profits from Beijing games run big legal risk

The slogan for the summer Olympics in Beijing may be One World, One Dream, but the games could turn out to be a nightmare for corporate participants. They hold the potential for a huge amount of litigation arising from charges of bribery and corruption of government officials by U.S. companies.

The Olympics are highly lucrative wherever they are hosted, and this year’s are no exception, with tickets to individual events and the opening ceremonies fetching thousands of dollars online. But the combination of profit potential and governmental involvement has led to bribery charges in the past. And it’s no secret that China has government officials everywhere and a culture particularly inclined to gift-giving.

Similar cases may be brought soon that involve other recent high-profile sporting events. According to a source with ties to the Justice Department, the agency is pursuing two cases involving alleged bribery using tickets to the most recent World Cup and America’s Cup events. The source did not want to be named because the cases have not yet been made public.

Under the Foreign Corrupt Practices Act, payments made to government officials to obtain or retain business constitute bribes, and are subject to criminal enforcement by the Justice Department and accounting-related civil enforcement by the Securities and Exchange Commission. Even if gifts or entertainment are not designed to corrupt an official, prosecutors can easily make the case they were illegal, sources say.

“The Olympics present just such an opportunity for FCPA violations,” said Ellen Zimiles, co-founder of Daylight Forensic & Advisory, a consulting group setting up risk profiles for companies doing business in the country. “The problem is that in China, almost everybody counts as a government official.”

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Foreign Corrupt Practices Act (FCPA): News, Updates and Important Links.