THE pension fund managers or prospective managers who paid $2,500 each to lunch with Cabinet Minister Dr. Ewart Brown in Washington, DC in 2002 may have breached the US Foreign Corrupt Practices Act (FCPA).

US pension fund investigator Edward Siedle, a former Securities & Exchange Commission (SEC) lawyer, said he had never heard of a case being brought against US money managers for making contributions to a foreign political official but that the relevant FCPA language was clear.

"I have been investigating money management wrong-doing for 22 years now, and from my considerable research of the FCPA, and of 'pay-to-play' schemes, American money managers who made contributions to foreign elected officials in connection with money management contracts may well have run afoul of the FCPA," he said.

"It is a very rare situation, so much so that I have never heard of such a case being brought under the FCPA. Particularly with regard to their foreign dealings, these American money managers had better watch out.

"Here in the US, we typically pursue people under the RICO racketeering statutes, but the issue of US money managers making contributions to foreign elected officials to get or keep money management contracts looks like it could be a violation of FCPA."

The FCPA basic anti-bribery provision makes it "unlawful for a firm (as well as any officer or director) to . . . pay money, or anything of value, to any foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person. (A similar prohibition applies with respect to payments to a foreign political party or official thereof or candidate for foreign political office)", according to a US business information service.

Individuals convicted of offences under the FPCA are liable to fines of up to $200,000, the companies they work for can be fined up to $2 million for violations of the law.

The SEC has been engaged in a year-long study of "pay-to-play" schemes and Mr. Siedle, who remains in touch with former colleagues, expects that release of the study in the next few weeks will lead to strict clarification of the rules regarding pension fund management, and that a number of actions will be taken against specific managers and consultants.

"I was told last week that the study will be out within the next three weeks and I advised the Commission on this 'pay-to-play' investigation they have done," he said.

"They will be announcing their findings and I expect them to bring civil enforcement actions against about a half-dozen or so US pension consulting firms, and I believe that they will propose, at a minimum, a new disclosure rule that will require consultants and money managers to disclose any payments.

"At our recommendation, the SEC started by asking some 30 or 40 consulting firms for information about how they made their money. That's the 'big picture'. Then, from that data, they are going to propose general rules, but they also found specific instances of wrong-doing that they are going to pursue in an enforcement proceeding."

But Mr. Siedle said he had seen the first evidence of an authority taking action to deal with what was seen as a corruption problem.

"I testified before the Louisiana House of Representatives on March 21, before the Committee on Retirement, as did all eight Louisiana pension funds, to find out what the funds were doing about this pension consultant corruption problem.

"The reason I testified is because Louisiana had just adopted a law, Senate Bill 835 in 2004, which requires all money managers to disclose any compensation they pay to consultants, and requires consultants to disclose all compensation they receive from money managers. It's the first law of its kind in the US."

The invitation to the lunch, in Washington, DC on March 11, 2002, specified that Transport Minister Dr. Brown, who is also now Tourism Minister, was a Member of Parliament in the Government of Bermuda, and Dr. Brown described the event as a "fund-raiser". The invitation requested "Contributions: $2,500" with "Checks to be made payable to: Dr. Ewart Brown (PLP)."

It is unlikely that the US officers of Bermuda's pension fund managers or prospective managers in attendance were much concerned about the outcome of an election in Warwick South Central, and more likely that they believed that they paid money to a candidate for foreign political office "for the purpose of obtaining or retaining business" with Bermuda's Public Funds Investment Committee (PFIC).

The invitation by Bermuda's Philadelphia-based pension consultant Tina Byles Poitevien of Fiduciary Investment Solutions Inc. (FIS) to Sam and Harry's, a steakhouse in Washington, DC, was made to representatives of some of Bermuda's pension fund managers at that time, including Cutler & Company, Columbia Partners, Loomis Sayles, and Davis Hamilton & Jackson.

It is believed that they continue to manage portions of Bermuda's pension funds.

"I know for a fact that DHJ has come in for a lot of criticism in the past, in articles in Pensions and Investments and in Texas newspapers," said Mr. Siedle, "for having made political contributions to decision makers.

"But US managers have to file a form called an ADV, and I believe that DHJ has disclosed on that form that they have formed a PAC, a political action committee, which contributes to elected officials who can assist them in getting assignments."

It is understood that the PAC was formed recently as a result of SEC scrutiny of DHJ, and an understanding that DHJ would be forced to disclose all such political contributions.

Calls for comment to Cutler & Co., Columbia Partners and Davis Hamilton Jackson & Associates were not returned by press time.

PLP public relations officer Scott Simmons reported that none of the funds received by Dr. Brown had been forwarded to the Party.

An employee at FIS said Ms Poitevien was "out of the country" but did know where she was travelling, or whether her itinerary included Bermuda.

Shelley Simms Reed, Senior VP Compliance and Business Operations, sent an e-mail response: "In response to your inquiry, please note that there were no fund-raisers for Bermuda public officials other than the one you referenced."

She said later that she believed that FIS had organised the lunch in Washington, but not Dr. Brown's events in Atlanta and Dallas.

In a release earlier this week, Opposition Leader Grant Gibbons said: "The Premier cannot call his Government accountable unless he holds his Cabinet colleagues accountable for unethical practices . . . the Premier should see to it that the money is returned to the investment managers concerned."

Questions were e-mailed to Dr. Brown asking for an estimate of the total amounts raised on his fund-raising trip to Washington, Atlanta, and Dallas in 2002, whether the events in Atlanta and Dallas had also been organised by Ms Poitevien, an estimate of his campaign expenses in Warwick South Central in 2003, and the rationale for US pension fund managers making political contributions to a Bermuda politician, but no answers were received by press time.