When Alaska Sen. Ted Stevens was convicted in October on seven counts of failing to properly report gifts and services he received in connection with a home renovation, it was merely the latest iteration of a very old story. The attempt to influence politicians, whether by out-and-out bribes or more subtle means, is as old as politics itself.

American history is rife with corruption sagas, from Teapot Dome to Abscam to Rep. Randall “Duke” Cunningham’s 2006 guilty plea to taking at least $2.6 million in bribes. The persistence of such behavior is a testament to simple economics.

“It just doesn’t cost very much to buy a public official,” explains Michael Dockterman, a partner at Wildman Harrold. “We had cases in Chicago in the ’80s where you could fix a murder case for $6,000.”

You may as well file the spectrum of corruption violations–bribery, bid-rigging, kickbacks and the like–under crimes of human frailty. A certain number of officials will always succumb to the temptation to abuse their office, and a certain number of businesspeople will always be ready and willing to tempt them.

That makes corruption a perennial issue for in-house counsel, who are tasked with not only its detection, but also its deterrence. Their efforts go a long way to determining the consequences when violations do occur.

Broad Exposure

The downfall of a public official makes for grand drama, but the equally harsh penalties corporate actors face are often overshadowed in mainstream coverage.

“It could be jail time for individuals–massive fines and even debarment for the company,” says Jeffrey Stone, who leads the trial department at McDermott Will & Emery. “If you’re a health care company and you lose your Medicare provider number, it’s pretty tough to exist.”

Corruption presents an exceptionally broad range of exposure for companies and individuals. The crimes they can be charged with run the gamut–including bribery, extortion, conspiracy and other violations of the Hobbs Act, FCPA, RICO, antitrust or tax laws. (Civil penalties for SEC and banking violations can also come into play.) Dealing with any public official, from the lowliest small-town alderman to the highest reaches of federal government, presents potential for violation.

As a practical matter, the feds handle most corruption cases. Very few municipal governments are empowered to bring corruption charges because the partisan considerations are overwhelming. State attorneys general are likewise susceptible to cries of political motivation, despite the fact that state laws generally define fraud and bribery. So U.S. Attorneys usually lead the way, using mail and wire fraud charges to gain jurisdiction.

Once a violation is uncovered, liability can spread within the corporation like cancer. Under RICO, for example, commercial bribery is a predicate offense. If they can find two instances of bribing a public official, prosecutors can bring a racketeering claim. Under current sentencing guidelines, the resulting liability can go all the way up to the CEO and the board of directors.

“If a high-level corporate official is involved, there is a presumption that the board knew what was going on and was willfully indifferent and therefore is susceptible to prosecution itself,” Dockterman says.

Gray Areas

When corruption scandals erupt, the public tendency is to perceive them as black-and-white offenses–with the corrupt politico, the mercenary lobbyist and the fat-cat-CEO generally being the stock characters. The reality, however, is usually not so pat.

“Money stuffed in a paper bag passed under the table at a dimly lit restaurant? That’s pretty gross,” Stone says. “The government is not going to have a hard time convincing a jury. But absent something as clear as that, people will discuss nuances, and that’s the nature of the beast. Whenever there’s murkiness in regulations–you can give money to a political action fund, but not to [a politician] personally–that makes it a lot more difficult to know where the lines are.”

Even the Stevens case, which hinged on the valuation of goods and services provided (he paid $160,000 for a renovation said to be worth $250,000), is not totally cut-and-dried. The senator, who lost a closely contested re-election bid in November, maintains his innocence.

There is no shortage of flagrant pay-offs to cite (see “Roll Call”), but the majority of corruption cases involve less blatant scenarios. Was a large donation to a politician’s pet charity quid pro quo? Was a vacation package properly valued? Was paperwork misfiled by accident or design? As such, prosecutors look closely at corporate culture and patterns of behavior when deciding whether to indict.

Culture is Key

“The first thing investigators look at is whether the corporation’s culture contributed to the violation,” Dockterman says. “You have to have an effective compliance program–that means education, punishment and constant risk assessment.”

A corruption violation may be as simple as a single manager fudging the details under a government contract to meet a sales target. If the incident is isolated and, more importantly, uncovered by internal review, it is unlikely to lead to severe penalties for the company. Mistakes do happen. If, however, such behavior is widespread and the company seems to turn a blind eye, watch out. And as with any criminal investigation, attempts to mislead investigators will quickly make matters worse.

“Experienced lawyers know that the way to take the sting out of an allegation is to deal with it head on,” Stone explains. “Now, there’s nuance to that. You don’t necessarily walk in and tell the government everything that you’ve discovered that has gone wrong if you don’t think the government is likely to find that out. On the other hand, if the government is likely to explore an issue, ignoring the totality of the circumstances is playing with fire.”

The most effective general counsel succeed in creating a culture in which awareness is high, messages are consistent and close calls get reviewed. That requires a sincere commitment from the top of the company. Counsel trying to establish appropriate compliance without that honest commitment are in for tough sledding, Stone says.

“I am sure that there are general counsel who look for other jobs because they are not comfortable with the tenor and trend of the organization.”