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Happy Holidays

Got some last-minute holiday shopping on the “to-do” list today?

You may want to consider this for that valued colleague, an item sure to turn heads and earn the recipient a pass from FCPA scrutiny for having a well-communicated FCPA policy.

Looking to spend a little extra on that special someone this holiday season?

You may want to consider this item.

In the spirit of the season, I include a clip from my favorite holiday movie – “A Christmas Story.”

While it is indeed unfortunate when a company becomes the subject of an FCPA enforcement action or when an individual faces the prospect of losing his or her liberty because of an FCPA violation, I must confess I do feel a bit like Ralphie in “A Christmas Story” every time an FCPA enforcement action is released.

Clueless as to what I am talking about – here is the clip.

It goes something like this.

The FCPA enforcement action is released by the DOJ or SEC.

I immediately seek seclusion so that I can de-code the messages in the otherwise bare-bones, conclusory DOJ non-prosecution or deferred prosecution agreement or SEC complaint and consent decree.

The family is calling and I am needed elsewhere.

I yell out, “just a minute.”

I am close to cracking the code and the messages therein.

The calls persist, but I’m getting closer and the tension is mounting.

I’m almost there.

And then … the message.

The enforcement officials have concluded, yet again, that employees of state-owned or state-controlled enterprises are “foreign officials!”

***

Thanks for reading, all the best this Holiday season, and be sure to stop back in a few days.

The Investigative Agency That Prefers Not to Investigate

The Serious Fraud Office (“SFO”) in the United Kingdom is similar to the U.S. DOJ.

According to the SFO’s website (here), it “investigates fraud and corruption.” Elsewhere on the website (here) it notes that the SFO is the “lead agency” in the U.K. “for investigating and prosecuting cases of domestic and overseas corruption.” Elsewhere on the website (here) is a specific page as to how the SFO “investigates and prosecutes” and the page notes that a thorough investigation “often includes examining vast quantities of documents which have often been left in a deliberately obscure and fragmented form.”

All sounds rather intense from an investigative standpoint.

Problem is, the SFO recently stated that it would prefer not to investigate bribery and corruption cases!

As discussed elsewhere (see here), the SFO recently made public additional guidance as to its July 2009 memo titled “Approach of the Serious Fraud Office to Dealing with Overseas Corruption.” (See here for my prior post on this memo).

While it is commendable for a government agency to provide more guidance to those subject to a law, the following sentence in the SFO letter (see here) caused me to pause (let alone read multiple times):

“Our very strong preference is that all investigative work should be carried out by the professional advisers [of the company disclosing a potential issue] and that it is not necessary for the SFO to conduct any investigation itself.”

Have we seriously come to the point (on both sides of the Atlantic) where the government agencies tasked with investigating and prosecuting bribery and corruption cases no longer view it as their responsibility to investigate the factual circumstances supporting the charges?

Happy Birthday!

I was born in 1977.

Yet for most of my life, I was neglected and nobody cared or talked about me.

However, about ten years ago, my caretakers suggested that I change my look (get a new haircut, change my wardrobe, those sort of things).

Boy did that help.

In some circles at least, I am now the most popular person in the room.

Lawyers travel to the far reaches of the globe just to determine if I am relevant, corporations publicly disclose potential dates with me, there are seminars and training sessions about me, lawyers run to Washington D.C. (my birthplace) to tell my caretakers how relevant I am (when in fact I may not be relevant at all) … and, I even hear there are a few blogs devoted to me.

Who am I?

Why of course I am the FCPA and today is my 32nd birthday!

*****

On December 19, 1977, the FCPA was enacted. On December 20, 1977, President Carter signed the FCPA into law.

Hosting an FCPA birthday party?

Here is the signing statement to read just before the candles are placed on the cake. After cake, instead of a game of “pin the cash-filled suitcase on the foreign official” how about a discussion as to whether the enacting Congress and President Carter would even recognize certain enforcement theories which have become a hallmark of current enforcement of the FCPA.

Lighthouses and Buoys – Part II

Earlier this week, the DOJ announced (see here) the indictment of John Warwick, the former President of Ports Engineering Consultants Corporation. Warwick is charged (see here) with conspiracy to pay bribes to former Panamanian officials to obtain contracts to maintain lighthouses and buoys along Panama’s waterways. The substance of the allegations against Warwick are substantively similar to the previous charges against Warwick’s co-conspirator Charles Jumet (see here for the prior post). As noted in that post, Jumet pleaded guilty.

*****

I hate to be a Grinch this time of year, but why does DOJ continually use the term “foreign government official” in its charging documents when that term/element doesn’t even appear in the FCPA? (see para. 1 of the indictment). For more on the incorrect/inconsistent use of this key FCPA term see here.

A Double Standard?

A government official (and his wife) tour a foreign vineyard and castle and spend an afternoon at a ski resort in the Alps. A company can’t foot the bill directly, so it funds a group that then picks up the tab.

Another government official is flown across the world to help close a business deal for a large corporate financial backer (and friend).

Sounds like some potential FCPA issues, right?

Wrong.

Why?

Because the government officials involved are not “foreign officials,” but rather U.S. government officials. (See here for the recent story in the NY Times. The WSJ also recently ran a similar story here – although less focused on privately funded travel).

For those interested in other examples, you will want to visit LegiStorm.com (here) a web site that allows one to search such trips by U.S. official, sponsor, most active sponsor, most expensive trips, etc.

This raises the question of whether there is a double standard.

Will a U.S. company’s interaction with a “foreign official” (however that term is interpreted) be subject to more scrutiny and different standards than its interaction with a U.S. official?

Do we reflexively label a “foreign official” who receives “things of value” from private business interests as corrupt, yet when a U.S. official similarly receives “things of value” from private business interests we merely say “well, no one said our system is perfect”?

The U.S. has a domestic bribery statute (18 USC 201) (see here) which has similar (yet not identical) elements to the FCPA. Should not there at least be some level of intellectual and enforcement consistency with these statutes?

No doubt many of the trips identified by LegiStorm had a core, legitimate purpose. However, often times payment of a “foreign official’s” travel expenses also have a core, legitimate purpose. The FCPA enforcement action most “on-point” is the 2007 action against Lucent (see here and here).

It’s just not payment of a “foreign official’s” travel expenses which seem to be subject to a double standard, but also corporate donations as well. It’s common knowledge in this country that corporate interests donate, either directly or indirectly, to political campaigns, political action groups, or other causes to curry favor with politicians (or shall I say “participate in the political process”).

Yet, if a company makes even a bona fide charitable contribution abroad, they will be subject to FCPA scrutiny. The FCPA enforcement action most “on-point” is the 2004 action against Schering-Plough (see here) involving a donation to a legitimate Polish castle restoration foundation where the founder/president of the foundation was also the director of a government health fund which provided money to hospitals throughout Poland for the purchase of pharmaceutical products.

All interesting issues/questions to ponder in what seems to be another example of how FCPA enforcement has indeed because the unique creature that it is. (See here for a prior post on this issue).

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