Issue link: http://read.dmtmag.com/i/132424
Fashion Blunders LEGAL LINE Fashion, or lack of it, on the red carpet during the endless TV awards, in the courts, in a foreign country, or otherwise, is often a subject for sarcasm at the hands of the media and sometimes our friends and acquaintances. Remembering the Rome meeting, we were always able to spot the (non-IDA) Americans tourists down in the Eternal City by their hoodies, Nikes, shorts, "cat hats" and other telltale signs. The germ of the lesson here is the concept of respecting the laws and customs of other countries, whether in a personal or business setting. This was apparently lost on one of the world's most prominent fashion icons, Ralph Lauren. His fashion faux pas was bribing some folks in Argentina to look the other way when customs and legal matters raised their ugly heads. Now, before anyone starts thinking that I am throwing stones at the Argentines, that is simply not so. Every government in every country has some bad apples. The point here is that succumbing to the lure of an easy way with some quiet backhanding is your responsibility, not the recipient's. The sum and substance of the situation was that unnamed "subordinates" in one of Ralph's many companies paid off multiple levels of governmental officials to look the other way when Lauren's company imported luxury products for sale to the well-todo in Argentina. This was not a beer and empanada snack, it was the systematic payment of cash IDA UNIVERSAL May-June 2013 and gifts of luxury goods totaling nearly $600,000. This was not only illegal, but the scheme used Lauren's customs broker as the go-between to further bury the payments, and distance Lauren's company from direct scrutiny. Why do this? In Argentina, as in many countries, a web of laws and regulations "protect" local industry - ranging from punitive tariffs to outright bans on importation of some goods. While "protectionism" as a concept may be thought by some to be intrinsically bad, it was and is the law in Argentina, and in many other countries, even the U.S. How could this happen? And who prosecutes the "violation?" Interestingly, it was NOT the Argentine government, but the U.S. government, that caught and fined Lauren. How can they do that? It all happened in a foreign country and involved a foreign subsidiary of a U.S. company. The arm of the law is long in this situation, and it is called the Foreign Corrupt Practices Act (FCPA for short). What is this long-reaching and somewhat hard to understand law? Why is it a crime or civil penalty situation in the U.S. to do something that may not be either illegal or enforced in a foreign land. The answer is that the U.S. has made it both a crime and an "administrative penalty" situation for U.S. citizens and companies to engage in a whole host of practices in another country, regardless of the laws and practices of that country.This is serious business and effectively imposes U.S. law Robert W. McIntyre IDA Association Legal Counsel and regulations on U.S. citizens as they do business in other countries under that country's laws and regulations. It is not only punitive, but is often inconsistent with foreign law. However, if you are a U.S. citizen, a U.S.-based company, a foreign national, or foreign company doing on-site business in the U.S., you are subject to this law. What can happen if you get caught? First, you have to pay the U.S. government the full value of any payments or "gifts" plus interest from the date of the incident. Second, there are civil penalties based on severity, knowledge, concealment, cooperation and period of time the conduct occurred, along with fines and jail time, in some cases. The obvious next question is how to stay out of trouble with this Act and the Feds. Several measures can be taken. The most obvious is DON'T DO IT in the first place, but that assumes perfection in humans that does not exist. After the obvious , the next best action is to institute a formal company program of education, procedures and selfreporting if your internal "police" find evidence of violations and Continued on page 60 11