This one is for all you rock and roll mavens out there. Can you name the only instrumental song which was banned from radio play? That is correct, a song with no lyrics was banned as being “too subversive”. It is of course, Link Ray’s Rumble. According to the blog post “Hear the Only Instrumental Ever Banned from the Radio: Link Wray’s Seductive, Raunchy Song, “Rumble” (1958)”, “The song was banned from radio stations in New York and Boston for fear it might actually incite gang violence—the first and only instrumental song to be banned from the air.” It was actually named after a scene from Act I of the theater version of West Side Story where the gangs did indeed ‘rumble’ but in dance form. Could Rumble lead to regime change?
Just listen to it today, as it “remains the most dangerous-sounding instrumental blues vamp ever recorded, unmatched in its raw, slinky cool until, perhaps, John Lee Hooker’s Endless Boogie or the Velvet Underground’s White Light/White Heat.” Moreover, “unlike Lou Reed, Wray didn’t need lyrics about heroin addiction and sadomasochism to freak out the parents and turn on the kids. All he needed was his fuzzed-out guitar, soaking in reverb and tremolo, and a rhythm section with the minimalist instincts of Bo Diddley’s band”. The guitar riff was also the forerunner of “later guitar gods of the 1960s, Clapton, Hendrix and Page.”
I thought about Link Wray and Rumble and its banishment from the airwaves because of its ability to incite late 1950s teenagers to violence in the context of the Foreign Corrupt Practices Act (FCPA), compliance and regime change. This is not Saddam Hussain regime change where the US government invades a country to throw out the old boss. This is a democratically elected-peaceful transfer of power. However, it now appears that regime change now means corruption investigations which impact not only the FCPA but also US companies. Every compliance officer needs to aware of this new reality. Take three recent regime changes and what they have meant.
South Africa
South Africa did not elect a new political party but the ruling party, the African National Congress (ANC), forced out the former President, Jacob Zuma, and replaced him with a new President, Cyril Ramaphosa. The corruption in South Africa was beyond endemic, with the Gupta family having engaged in one of the most outright forms of state capture seen in recent years. The new President created a Commission of Inquiry into State Capture, Corruption and Fraud in the Public Sector to investigate allegations that the Gupta family illegally influenced political decisions to their advantage. This Commission was empaneled in August 2018 and was given a six-month term to complete its mission. However, in October 2018, only after two months work, its term was extended to 18 months.
Malaysia
The (alleged) corruption of former Prime Minister Razik Najib was as stunning as it was blatant. Paired with Jho Low, he, his wife and immediate family used the country’s sovereign wealth fund, 1Malaysia Development Berhad (1MDB) as their collective personal piggy bank, literally stealing billions. The Strait Times reported, “Najib had pleaded not guilty to charges of criminal breach of trust, money laundering and abuse of power over the suspected transfer of RM42 million (S$14 million) into his bank account from SRC International, a former 1MDB unit…The prosecution has submitted over 3,000 pages of documents, including the minutes of meetings of SRC International, and is calling 50 witnesses to testify during the entire trial. The seven counts are slated to be the first set of charges to be tried in court out of the 42 levelled against Najib in the case – described as “the worst kleptocracy scandal ever” – linked to 1Malaysia Development Berhad (1MDB). On July 4 last year, the 66-year-old MP from Pahang state claimed trial to a charge of abuse of power and three counts of criminal breach of trust (CBT) for allegedly misappropriating RM42 million in funds belonging to SRC International.”
Several prominent companies have come to grief over their work with and for Najib and 1MDB. Goldman Sachs is the most public entity which is ensnared in the scandal, with the Malaysian government demanding some $6bn in reparations from the US investment firm. In addition to Goldman Sachs, at least two international accounting firms, KPMG and Deloitte, are also in the crosshairs for their work for 1MDB.
Brazil
In 2018 Brazil elected a new President, Jair Bolsonaro, who won a sweeping victory in Brazil’s presidential election, defeating Fernando Haddad of the Workers’ Party. His election was directly due to the corruption of the prior regime and investigations which began with Operation Car Wash. It has now reached up to the highest levels of the current government with the President’s son under investigation.
Yet even outside the original area of Operation Car Wash, Petrobras, Odebrecht and all rest; the country is reeling from the scandal involving the deadly dam collapse in southeastern Brazil. Vale is under investigation, as well as the inspection firms and other professionals around the failure of the mining dam that sat above Brumadinho. In January, it collapsed and unleashed a tidal wave of waste and mud that engulfed homes, businesses and residents in its path. It has killed at least 157 people; 182 are still missing.
Do you need to look forward? How about Venezuela? Will the US intervene militarily to effect regime change or will the people of Venezuela depose the current President Nicolás Maduro? If Maduro does fall, where do you think the new government will look to immediately rebuild the country’s coffers? First, they will go after the monies stolen from the country by Maduro and his cronies, they may then go after all the companies who have done business with the Maduro regime and perhaps the most corrupt national oil company ever, Petróleos de Venezuela, S.A. (PdVSA).
There are US law firms and lawyers who have already filed suits claiming US companies and individuals conspired with corrupt PdVSA officials to pilfer the company and the country. These civil lawsuits are but a mere hint of what could come under a new regime in Venezuela.
The bottom line is that every Chief Compliance Officer (CCO) must now watch local politics much more closely. If you are doing business in a high-risk country and there are new leaders brought in through democratically elected regime change, your company had better be ready for a robust corruption investigation. Certainly if Malaysia, South Africa and Brazil are any indication, prosecutors from nations with new regimes may well share their findings with the US Department of Justice (DOJ). This means that regime change could lead directly to a FCPA investigation, where the disclosure was by a foreign government and not the company self-disclosing. If there is no self-disclosure, a company is not eligible for the declination under the 2017 FCPA Corporate Enforcement Policy.
For you rock and roll mavens out there simply consider these types of regime changes are not like The Who song “Won’t Get Fooled Again” where at the end we “meet the new boss, same as the old boss.” This new boss will come after you. While you are at it, take a listen to Rumble.
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