Payments and news-gathering: The new First Amendment threat

(from The Wall Street Journal, July 20, 2011)

At least four senators have alleged violations of a law never intended to apply to the press.

By DAVID B. RIVKIN JR. AND LEE A. CASEY

At least four Democratic senators—Frank Lautenberg, Barbara Boxer, Robert Menendez and Jay Rockefeller—have alleged that News Corp. companies may have violated the U.S. Foreign Corrupt Practices Act (FCPA) by paying British police for information. Those salivating at the prospect of an American legal offensive against News Corp. don’t seem to appreciate the implications of deploying the FCPA in this situation: Its inappropriate application to news-gathering raises very significant First Amendment concerns for all U.S. media.

The FCPA was enacted in 1977 in an effort to clean up government contracting, where bribery was then a way of life. U.S. and European companies paid off foreign officials as a matter of course in competing for orders, especially in the military sphere. As the Senate Banking Committee noted at the time, “investigations by the SEC have revealed corrupt foreign payments by over 300 U.S. companies involving hundreds of millions of dollars.” In some countries, such bribes were tax-deductible—just another cost of doing business.

Congress correctly concluded that this was not proper and duly adopted the FCPA, which forbids “payments made to foreign officials for the purpose of obtaining business or influencing legislation or regulations.” Since the late 1990s, however, the Securities and Exchange Commission and U.S. Department of Justice have begun applying the law ever more broadly—to conduct that has little connection to obtaining government contracts or other government benefits, such as product approvals, permits or licenses.

In doing so, they have relied largely on the theory that the FCPA forbids payments to officials as a means of “securing any improper advantage.” Congress added this clause to the statute in 1998, after the U.S. ratified the international Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The Supreme Court has never resolved the meaning of this language, but it is clear that Congress never purported to change the FCPA’s focus. In order for activity to be considered a violation, there must be a forbidden payment made in order to illicitly secure some governmental benefit as a means of obtaining or retaining business; in other words, a “business purpose.”

The FCPA was certainly not intended to police news-gathering, which at some publications involves buying information from individuals in and out of government. Such payments may or may not be unlawful, depending on the circumstances and country involved. The journalistic ethics of such practices—not to mention the value of the information obtained—can well be questioned.

But buying information in this context is not the same as improperly obtaining governmental business, regulatory approvals, or other types of government largess. It is also not at all clear that payments, whose primary purpose was to facilitate news-gathering and bring information to the public, would satisfy the “business purpose” requirement merely because newspapers that broke important stories could also increase their profits.

U.S. courts, including the Supreme Court, have been reluctant to allow the government to use capaciously worded federal statutes in ways that burden activities protected by the First Amendment. The typical questions the courts have posed in such circumstances are whether the statutory prohibition is overly broad, and whether, perhaps, there is a different, more First Amendment-friendly way of accomplishing the government’s goals. When the courts cannot even intelligently undertake this inquiry, because the applicability of a particular statutory requirement to the media was not contemplated at the time of enactment, they have been reluctant to sanction such applications.

This strong judicial sentiment accounts for much of the government’s inability to mount any successful media prosecutions under the 1917 Espionage Act, Intelligence Identities Protection Act of 1982, and other statutes proscribing unauthorized releases of classified information. Even in a context that did not involve government secrets, United States v. Stephens(2010), the Supreme Court found a statute criminalizing depictions of animal cruelty unconstitutional. The court was not satisfied that the statutory scheme properly balanced the “value of the speech” being barred “against its societal costs.” Being perfectly aware of these problems, federal prosecutors have been exceedingly reluctant to mount media prosecutions in situations where First Amendment values were in play.

The same approach has governed how investigations of allegedly criminal activities by the media have been conducted. Indeed, Congress and the executive branch have imposed certain limits on such investigations. For example, in 1980, Congress adopted the Privacy Protection Act, which establishes special rules for the conduct of searches involving journalists and newsrooms. And the Justice Department has included in its manual governing investigations and prosecutions undertaken by United States Attorneys requirements that such investigations not be conducted in a manner that “impair[s] the news-gathering function.”

The Foreign Corrupt Practices Act is subject to differing interpretations, but there is no question that it was drafted to tackle a government-business corruption problem and had nothing whatsoever to do with news-gathering. The Justice Department should keep this in mind.

Messrs. Rivkin and Casey, attorneys based in Washington, D.C, served in the Department of Justice during the Ronald Reagan and George H. W. Bush administrations.

Source: http://online.wsj.com/article_email/SB10001424052702303795304576455950004121120-lMyQjAxMTAxMDEwOTExNDkyWj.html