Our report on the recent filing of a complaint to the US Department of Justice (DOJ) under the Foreign Corrupt Practices Act of 1977 (FCPA) has generated much online comment, both alleging and purveying misinformation in relation to our story.
These are the facts:
• In early 2000, an agreement was signed between Saint Lucia’s then (and now) prime minister and minister of finance, planning and sustainable development, Dr Kenny Anthony, and RSM Production Corporation (RSM), a Texas company, represented by Jack J. Grynberg, its president.
• The agreement purported to grant RSM an “Exploration License” in respect of territorial maritime resources belonging to Saint Lucia amounting to approximately 35,329 km2 (8,726,263 acres) or 56 times the size of the country itself.
• Pursuant to Saint Lucia’s Minerals (Vesting) Act (see image here
), all minerals in, on or under any land in Saint Lucia are vested in and controlled by the Crown (section 3) and only the Governor General may grant a licence to prospect for and/or mine such minerals (section 4). All royalties payable by any such licensee shall be paid to “the Government” (section 5).
• Contrary to the relevant provision of the law, the agreement states that such royalty payments shall actually be paid to the minister and not to the government.
• In or about September 2000, in other words, within some six months of the contract signing, RSM/Grynberg declared that “force majeure
” conditions existed in relation the agreement, thereby suspending indefinitely RSM/Grynberg’s exploration obligations under the agreement and likewise suspending indefinitely any benefit Saint Lucia might have hoped to gain from such exploration.
• The force majeure
claimed by RSM/Grynberg was the belated discovery of one or more apparently hitherto unknown maritime boundary disputes between Saint Lucia and adjacent territories. The term force majeure
is used in contracts to protect the parties in the event that the terms of contract cannot be performed due to causes that are outside the control of the parties, such as natural disasters, that could not be avoided through the exercise of due care. It is beyond belief that Grynberg, as a supposedly experienced oilman, could not or would not have researched and determined the pre-existence of maritime boundary disputes as part of normal and customary due diligence prior to signing the contract, especially as this had previously been an issue in relation to other Caribbean islands.
• In May 2012, RSM Grynberg invoked an arbitration provision in the contract and is claiming some US$500 million in damages from Saint Lucia.
• Dame Pearlette Louisy, the Governor General of Saint Lucia, has stated that she has “no personal or first-hand knowledge of any contract, arrangement or agreement made by any one or entity in or outside government” with Grynberg/RSM. No such contract, agreement or arrangement was ever brought to her attention in her capacity as governor general. Her advice was never sought, and she played no part whatsoever in anything that may have transpired then or at any time subsequently.
• The FCPA was enacted for the purpose of making it unlawful for certain US persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.
• A formal complaint under the FCPA was filed on or about November 15, 2013, with the DOJ in relation to the RSM/Grynberg agreement.
Here is the ongoing misinformation and other comments in this respect, largely appearing on social media sites:
• This is absolutely and without a doubt categorically false and misinformation as it pertains to any complaint of this nature being filed with the US DOJ
We can “absolutely and without a doubt categorically” state that, before publishing the article in question, we had sight of the complaint itself and we have furthermore seen documentary evidence that it has been received by the DOJ.
However, it is not for us to say, and we have not said that the complaint has merit or that the DOJ will commence and pursue an investigation in this respect. Such investigations are only publicized by the DOJ in the event of some legal milestone in any particular case, such as arrests, unsealed indictments, trial verdicts and sentencing. In the meantime, the DOJ will generally decline to comment on such matters.
• The article did not indicate who filed the complaint.
If someone is breaking into your house, does it really matter who calls the police or whether they were qualified to do so?
• Many acts of parliament state payment to “the minister.” Any first year law student knows that the premise of this complaint is moot as “the minister” in constitutional law means “the office” of the minister as a “sub-division” of the “government.”
Clearly, before commenting on it, any “first year law student” ought to have been careful enough to look at the actual act of parliament in question, which in this case does not “state payment to the minister”; it specifically requires payment to the “government”. The RSM/Grynberg agreement, on the other hand, specifies payment to “the minister” instead of to the government as required by the law and even acknowledged in the agreement itself. If the minister is legally a “sub-division” of the “government,” why was it necessary to make the distinction in the contract in the case of royalty payments to the minister but not in the case of other payments to the government contemplated in the same document?
Under the Finance (Administration) Act, public revenue and other monies are to be received by the Accountant General – not any government minister – and paid into the Consolidated Fund.
Further, the law makes it clear that the rights granted by the agreement are under the control of the Crown and may be granted only by the governor general. Under the Interpretation Act, the term “governor general” means the governor general of Saint Lucia and shall include any person or persons administering the government which, by the way, does not include the prime minister or any other minister of government.
Also according to the Interpretation Act, where a function of the governor general under an enactment is to be exercised in accordance with the advice of cabinet, any instrument (with some exceptions) required to be issued in the exercise of that function may be signed by the secretary to the cabinet. Similarly, where a function of the governor general under any enactment is to be exercised in accordance with the advice of a minister acting under the general authority of the cabinet, any instrument (again, with some exceptions) required to be issued in the exercise of that function may be signed by the minister acting under the general authority of the cabinet.
In this instance, the Minerals (Vesting) Act is silent on whether the function of the governor general under that enactment is to be exercised in accordance with the advice of cabinet or in accordance with the advice of a minister acting under the general authority of the cabinet, so how can any minister just arbitrarily decide that he is going to sign for the governor general, thereby bypassing not only the governor general but also the cabinet? In the absence of such direction in the statute itself, the only conclusion is that the Act means the governor general acting in his or her own deliberate judgment, and not pursuant to the advice of the prime minister or the cabinet.
• US law does not have extraterritorial effect
Clearly, whoever believes this doesn’t read, watch or listen to the news. Just two months ago, the Suriname president’s son was arrested in Panama and immediately flown to the US to answer drug trafficking and terrorism charges. Last month, an individual wanted by the US for terrorism was snatched in Libya.
That’s not to say the US is ever going to swoop in and arrest the prime minister of Saint Lucia, but a number of relevant US laws expressly confer “extraterritorial effect”. For example, the Money Laundering Control Act of 1986 gives US district courts jurisdiction over any foreign person.
Foreign persons have also been charged and convicted in US courts under the Travel Act of 1961.
In this particular matter, the name of the law itself – the Foreign
Corrupt Practices Act (our emphasis) should be a giveaway as to its “extraterritorial effect”. Although the law targets US persons that engage in the corruption of foreign officials, as stated in the article, the deputy US attorney general James Cole pointed out just recently that the DOJ uses the FCPA to ensure that foreign
companies and individuals are held accountable (again, our emphasis).
If this is not “extraterritorial effect”, we don’t know what is.