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SFO Given Green Light to Complete Plea Agreement With BAE

An additional development from the U.K. to report. A previous post (see here) discussed the efforts of Corner House Research and Campaign Against Arms Trade, two British non-profits, to derail the SFO’s plea agreement with BAE.

Earlier this month, a U.K. High Court prohibited the SFO “from taking any steps in its prosecution of BAE” “until the determination of the application for permission to apply for judicial review or further order.”

As is being reported today, the permission to apply for judicial review has been refused. In a two-page order, the judge wrote that: “it is only in the most exceptional case that the court will think it right to interfere with a prosecutorial decision such as this;” that the SFO “applied the guidelines … properly” and that the SFO’s decision to resolve the matter in the way it did was not “unlawful.”

According to this release, Corner House and Campaign Against Arms Trade “are taking legal advice on whether or not to appeal the decision.”

A spokesperson for one of the groups said that “we are obviously disappointed by the Judge’s decision to refuse permission,” and that the ruling “implies that the law allows a giant company to pay a small financial penalty for ‘accounting irregularities’ rather than be charged and tried in open court on more serious criminal charges.” According to media report, a BAE spokesperson said that this recent decision is “a matter between the two campaign groups and the SFO.”

In a related development (see here), Austrian prosecutors are reportedly continuing to investigate BAE’s agent Alfons Mensdorff-Pouilly. (See here for a prior post).

Potpourri

Back in active blogging “mode” here on the campus of the Sweet 16 bound Butler Bulldogs after an enjoyable few days in Washington D.C. where I participated in Georgetown Law’s Combating Global Corruption Conference. It was nice to see some familiar faces, connect faces to some names I have met through this blog, and to meet new people. The title of my presentation and upcoming paper in the Georgetown Journal of International Law is “The Facade of FCPA Enforcement” and I will post in the coming days a short abstract of the paper as well as my presentation slides.

In the meantime, some items of note.

Africa Sting

Christopher Matthews at Main Justice continues to follow the Africa Sting case and has this report of yesterday’s hearing.

Shearman & Sterling Update

Shearman & Sterling pioneered the concept of keeping track of FCPA enforcement actions in an “FCPA Digest” (see here) and it supplements the digest with occasional “Recent Trends and Patters” update. For the latest, see here from Philip Urofsky & Danforth Newcomb.

FCPA Compliance in Phnom Penh

Looking for additional evidence that the FCPA is indeed a hot topic. How about this article from Phnom Penh Post of Cambodia. As noted in the article, a recent FCPA seminar, hosted in part by the American Chamber of Commerce, attracted more than 100 local business leaders.

I wonder if anywhere in the discussion of Siemens and/or BAE the point was made that neither of these entities were charged with FCPA antibribery violations?

Further, I remain perplexed by the curious (and frequent) tendency of FCPA conferences including representatives from FCPA violators – a regional compliance officer for Siemens Singapore presented at the seminar.

“It’s Not Easy Being Under Investigation for Two Years …”

Panalpina is dealing with some FCPA issues (see here for the prior post).

Now, the company’s shareholders are getting a bit testy.

According to this report, during the company’s annual meeting last week, a shareholder demanded that someone “step up and take responsibility” for the company’s poor performance over the last two years.

According to the report, CEO Monika Ribar said, “[i]t is not easy being under investigation for two years, and [the FCPA investigation] is not making the situation any easier.”

According to the report, COO Karl Weyeneth added: “You can say the whole FCPA and Nigeria situation reflects badly on the management, but the fact is that as long as we are still involved in the investigation we will continue to lose market share, because our customers have internal regulations which prevent them from doing business with companies which are under investigation by the DoJ.” “As soon as this investigation is over, we will win some of this business back. Customers have told us ‘as soon as you have settled the FCPA, we will do business with you again’.”

Time will no doubt tell whether the FCPA investigation is a convenient excuse for company management for poor performance or whether this instance demonstrates the difficulty of running a company and maintaining customer relationships during the lifespan (often times several years) of an FCPA investigation / enforcement action.

*****

The seemingly minor case involving Telecommunications D’Haiti (“Haiti Teleco”) (see here) keeps on giving.

Last Friday, the DOJ announced (here) that Robert Antoine, one of the “foreign officials” (at least according to the DOJ given that Antoine served as the “Director of International Relations of Haiti Teleco” – an alleged state-owned entity), in the far-reaching case pleaded guilty to a money laundering conspiracy charge.

U.S. Attorney Jeffrey Solman (S.D. of Florida) is quoted as saying, “[t]oday’s conviction should be a warning to corrupt government officials everywhere that neither they nor their money will find any safe haven in the United States.”

Such get-tough language is difficult to reconcile with the BAE bribery, yet not bribery circus in which an identifiable Saudi official was widely alleged to have received from BAE over a billion dollars in a U.S. bank account (see here) and in light of this situation.

BAE – The Circus Continues

Just when you think the final circus wagon has left the station, the BAE bribery, yet no bribery circus continues to keep on giving.

As I posted earlier this week (here), debarment issues clearly drove resolution of this prosecution as demonstrated by the DOJ’s sentencing memorandum. That post also noted that the U.S. Attorneys’ Manual specifically states that “where the corporation was engaged in fraud against the government […], a prosecutor may not negotiate away an agency’s right to debar or delist the corporate defendant” – a relevant fact given that both the DOJ release announcing resolution of the BAE matter, as well as the sentencing memorandum, expressly state that BAE “defrauded” the U.S.

Today’s circus act has to do with the magician’s uncanny ability to make things disappear and concerns the State Department’s treatment of BAE’s license applications.

The FCPA Blog today (see here) profiles a DefenseNews article (here) and notes that the” first debarment notice posted on the State Department’s website Monday was withdrawn and a second notice was changed at least once and then also withdrawn.”

Defense News quoted a Washington trade lawyer as saying:

One notice Monday, another one Tuesday, and now they’re both down. Which is it, guys? What State has done sends a terrible message. It makes it seem like State does not have a handle on what it wants to do – or that it’s being manipulated by outside interests.

***

For Christopher Matthews’ (Main Justice) first-hand account of how the judge, prosecution and defense all carefully avoided talking about the FCPA bribery element in the room at Monday’s hearing, see here. Matthews notes that BAE’s lawyer specifically requested “that the record reflect that BAE did not know payments would be used for bribes, only that there was a high probability they might be used in that fashion.”

BAE – U.K. Court to SFO … Not So Fast!

Yesterday’s post concerned the final act in the BAE circus in the U.S. (see here). As promised, today we venture across the Atlantic to the U.K., a country which has played host to many acts in the BAE bribery, yet no bribery circus.

Yesterday, a U.K. High Court prohibited (see here) the Serious Fraud Office (“SFO”) “from taking any steps in its prosecution of BAE” “until the determination of the application for permission to apply for judicial review or further order.” For press coverage (see here).

Here is the relevant background.

In mid-February, Corner House Research and Campaign Against Arms Trade, two British non-profits, wrote to Richard Alderman, the Director of the SFO, asking him to revoke the plea bargain agreement it had entered into with BAE. (See here and here).

The groups argue “that the Director of the SFO has acted unlawfully as the guidance under which the Director must operate makes clear that once the decision to prosecute has been taken, the charges agreed in any plea agreement must reflect the seriousness of the offending concerned.”

The letter details the SFO’s statements leading up to its February 5th settlement with BAE as well as SFO guidance “specifically designed to apply to plea discussions of the type engaged in by the SFO with BAE” and argues that the SFO’s decision to resolve the BAE matter in the way it did was both “unlawful” and “irrational.”

The SFO guidance relevant to plea negotiations identified in the letter is similar to the factors U.S. prosecutors are to consider in resolving corporate criminal issues pursuant to the Principles of Federal Prosecution of Business Organizations found in the U.S. Attorneys’ Manual (see here).

The SFO refused to reconsider its decision and on February 26th, the groups (see here) “lodged papers at the High Court asking for an injunction (see here) to delay the [SFO] from seeking court approval for its controversial plea bargain settlement with BAE Systems pending the outcome of a Judicial Review.” The groups also “lodged papers requesting the Judicial Review (see here) at the same time.”

By way of summary, the groups:

“contend that the proposed settlement is unlawful because the SFO did not follow the correct prosecution guidance (including its own guidance) on plea bargain;”

“argue that the agreement does not reflect the seriousness and extent of BAE’s alleged corruption, and does not provide the court with adequate sentencing powers; and

“hold that the SFO unlawfully concluded that the factors weighing against prosecuting BAE on bribery and corruption charges outweighted those in favor of prosecution.”

The groups also requested judicial review of the “SFO’s decision to discontinue its prosecution of [BAE’s agent] Count Alfons-Mensdorff-Pouilly.”

As indicated in a prior post (here), the SFO withdrew its filed criminal charges against BAE’s agent days after criminally charging him (presumably based on evidence that the following did indeed occur) with “conspiracy to corrupt” and for “conspiring with others to give or agree to give corrupt payments […] to unknown officials and other agents of certain Eastern and Central European governments, including the Czech Republic, Hungary and Austria as inducements to secure, or as rewards for having secured, contracts from those governments for the supply of goods to them, namely SAAB/Gripen fighter jets, by BAE Systems Plc.”

The Statement of Facts and Grounds in support of the request for judicial review is substantively similar to the above referenced initial letter in that it details the SFO’s statements leading up to its February 5th settlement as well as the SFO guidance “specifically designed to apply to plea discussions of the type engaged in by the SFO with BAE” and argues that the SFO’s decision to resolve the BAE matter in the way it did was both “unlawful” and “irrational.”

According to this release, “[t]he injunction is in force until the Court has decided whether or not to give permission to Campaign Against Arms Trade and The Corner House to apply for a judicial review of the settlement. It will make this decision by March 20, 2010.”

Clearly the “standing” requirements for challenging an agency action in the U.K. are different than in the U.S. Under U.S. law, mere taxpayer status is generally not enough to challenge an agency action, rather a plaintiff must allege unique, personal injury fairly traceable to the conduct at issue. If anyone is conversant on the U.K. standing rules relevant to the SFO challenge, please consider this an invitation for a guest post.

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