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Decision In GE Whistleblower Case Creates An Odd Dynamic

As noted in this prior post, in February Khaled Asadi (previously employed by G.E. Energy (USA) LLC (“GE Energy”) as its Country Executive for Iraq, located in Amman, Jordan) filed a civil complaint (here) in the Southern District of Texas against G.E. Energy.   GE Energy is a wholly-owned subsidiary of General Electric Company (“GE”).

The complaint alleged that G.E. harassed and pressured Asadi to vacate his position, and ultimately terminated him after he informed his supervisor and G.E.’s Ombudsperson “regarding potential violations of the Foreign Corrupt Practices Act committed by G.E. during negotiations for a lucrative, multi-year deal with the Iraqi Ministry of Electricity.”  The substance of Asadi’s complaint was that “on or about June of 2010 Mr. Asadi was alerted by a source in the Iraqi Government that GE had hired a woman closely associated with the Senior Deputy Minister of Electricity (Iraq) to curry favor with the Ministry while in negotiation for a Sole Source Joint Venture Contract with the Ministry of Electricity. (According to the complaint, the Joint Venture Agreement between GE and the Ministry of Electricity was signed in Baghdad on December 30, 2010 and the exclusive materials and repairs provision was estimated to be valued at $250,000,000 for the seven year agreement.)

Asaid asserted a claim for whistleblower retaliation under Dodd-Frank which created a private cause of action for whistleblowers subject to retaliatory discharge and permits relief including reinstatement and back pay for a whistleblower who prevails in federal court.

Recently, U.S. District Court Judge Nancy Atlas granted GE’s motion to dismiss Asadi’s amended complaint (see here for the memorandum and order).  In short, Judge Atlas noted that the definition of “whistleblower” under Dodd-Frank is an individual who provides information “to the SEC” and that because Asadi did not claim to report GE’s alleged FCPA violations to the SEC, but rather to his supervisor and to GE’s ombudsperson, Asadi “does not fit within Dodd-Frank’s definition of a whistleblower.”

As to Asadi’s claim that he could still qualify as a whistleblower “even if he did not make a report directly to the SEC … because his disclosures were ‘required’ or ‘protected’ under SOX and the FCPA,” Judge Atlas did not reach the issue of whether he could qualify as a whistleblower on these grounds because his “claims fails on other grounds.”  Specifically, Judge Atlas found, relying on the Supreme Court’s 2010 decision in Morrison v. National Australia Bank Ltd., that “the language of the Dodd-Frank Anti-Retaliation Provision is silent regarding whether it applies extraterritorially” and that therefore there is a “presumption that the Provision does not govern conduct outside the United States.”  Judge Atlas then concluded that Dodd-Frank’s Anti-Retaliation Provision does not extend to or protect Asadi’s extraterritorial whistleblowing activity.

In dicta, Judge Atlas noted that Asadi argued that because the FCPA “is clearly intended to apply extraterritorially, the [Anti-Retaliation] Provision also must extraterritorially.”  However, Judge Atlas stated that “because the facts alleged by Asadi do not fit within the Anti-Retailation Provision, the Court need not, and does not, address Asadi’s argument that the FCPA extends the territorial reach of the Provision.”  Nevertheless, Judge Atlas did note that “although Asadi has alleged that his internal disclosures at GE pertained to bribery of foreign officials, he has cited the Court to no provision of the FCPA that ‘protects’ or ‘requires’ his internal report of the alleged bribery.”

For more on Judge Atlas’s decision, see here from Reuters.

Although not a case of precedent, if the reasoning of Asadi is followed by other courts, the odd result could be that Dodd-Frank’s Anti-Retailiation Provisions do not apply extraterritorially, even though foreign nationals can potentially be awarded whistleblower bounties under the law.  I guess this is what can happen when Congress passes provisions which apply generically to any securities law violations without thinking through, on a micro level, the intersection of such provisions.

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The Asadi decision is believed to be just the second judicial decision concerning the intersection between D0dd-Frank’s whistleblower provisions and the FCPA.  See this prior post for the decision in Nollner v. Southern Baptist Convention, Inc. (M.D. Tenn., April 3, 2012).

Friday Roundup

Credit when credit is due, no fear despite fear based marketing, a further Section 1504 development, and individual prosecutions in Canada, it’s all here in the Friday roundup.

Credit When Credit is Due

In this previous February 2012 post, I called out the DOJ for its deficient and misleading FCPA website in that the website did not inform the public of the DOJ’s setbacks in the Africa Sting cases, the O’Shea case, the Wooh case and the Lindsey Manufacturing cases.  I ended the post by saying that the DOJ’s FCPA website ought to be improved and ought to keep citizens informed of all FCPA developments – not just those that cast the DOJ in a favorable light.

I am happy to dole out credit when credit is due and can now report that Wooh’s entry (here), O’Shea’s entry (here), the Lindsey related entry (here) and the numerous Africa Sting related entries have all been updated to reflect the final disposition of those cases.

Few Companies Concerned About the U.K. Bribery Act

Despite marketing campaigns that were often based on fear and overblown rhetoric, one year into the U.K. Bribery Act few companies have changed their compliance programs as a result and even fewer are concerned about an enforcement action being brought against their organization, according to this recent poll by Deloitte Financial Advisory Services.  Specifically 24% of respondents answered “yes” to the following question – “in July 2012, one year after the UK Bribery Act enforcement began, will your company have changed its anti-corruption program to comply” and 9% answered “yes” to the following question – “one year after UK Bribery Act enforcement began, is your company concerned about a UK action being brought against your organization.”

That is pretty much what I predicted in this January 3, 2011 post that states as follows – “I don’t see how companies already subject to the FCPA and already thinking about compliance in a pro-active manner, have much to worry about when it comes to the U.K. Bribery Act …”.

Even so, the silly marketing continues as evidenced by this post “Don’t Be Lulled by a Dearth of UK Bribery Act Convictions” which begins as follows.  “Be warned that the UK Bribery Act is considered to be the world’s most restrictive and far-reaching anti-corruption law to date. This measure differs in many key aspects from the US Foreign Corrupt Practices Act.”

A Further Section 1504 Development

This recent post provided an update on Section 1504 of Dodd-Frank, the so-called Resource Extraction Issuer Disclosure Provisions, an ill-conceived “miscellaneous provision” tucked into Dodd-Frank at the last minute that will substantially increase compliance costs and headaches for numerous companies that already have extensive FCPA compliance policies and procedures by further requiring disclosure of perfectly legal and legitimate payments to foreign governments.

In a further update, last week several House members wrote to SEC Chairman Mary Schapiro “regarding the status of the long-delayed final rule making.”  In the letter, the House members state that the Commission “has had more than enough time to consider and respond to all of the substantive comments from industry, civil society, investors and others” and that the “issue is too serious to allow further delay.”

Canada Prosecutions

Recent media articles (see here from the Globe and Mail and here from the Canadian Press) report that “two former executives of SNC-Lavalin Group Inc. have been charged with corrupting foreign officials” under Canada’s FCPA-like law, the Corruption of Foreign Public Officials Act.  Ramesh Shah (a former Vice President) and Mohammad Ismail (a former Director of  International Projects) allegedly “offered payment to secure contracts for supervision and construction of the Padma Bridge and an elevated expressway in Dhaka, Bangladesh.”

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A good weekend to all.

An Update On Section 1504

Approximately two years ago, Congress passed and President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act.  As noted in this previous post, tacked to the end of the massive Dodd-Frank bill at the last minute was a “miscellaneous provision” titled Section 1504 “Disclosure of Payments by Resource Extraction Issuers.”  Prior to being tucked into Dodd-Frank, the substance of Section 1504 languished in the Senate.  (See here for a prior post regarding S. 1700 introduced in the Senate in September 2009).

As I noted in the prior posts, bribery and corruption are bad, but that does not mean that every attempt to curtail bribery and corruption is good or represents sound public policy.

Case in point is Section 1504.  In short, Section 1504 will substantially increase compliance costs and headaches for numerous companies that already have extensive FCPA compliance policies and procedures by further requiring disclosure of perfectly legal and legitimate payments to foreign governments. As I’ve noted before, Section 1504 is akin to “swatting a fly with a bazooka” and is an attempt to legislate an issue that was sensibly put to rest in the mid-1970′s when Congress held extensive hearings on what would become the FCPA.

Here is some background.  The FCPA as enacted in 1977 contained (and still contains) an outright prohibition on improper payments to “foreign officials” to obtain or retain business (the anti-bribery provisions) as well as books and records and internal control provisions – but not disclosure provisions.  The original versions of what became the “FCPA” (i.e. the “Foreign Payments Disclosure Act” and other similar bills) started out with disclosure provisions, including provisions requiring all U.S. companies to disclose all payments over $1,000 to any foreign agent or consultant and any and all other payments made in connection with foreign government business.

As to these disclosure provisions, many people, including, most notably Senator Proxmire (D-WI – a Congressional leader on what would become the FCPA), were concerned that the disclosure obligations were too vague to enforce and would require the disclosure of thousands of payments that were perfectly legal and legitimate.  Proxmire said during congressional hearings, “I would think they [the corporations subject to the disclosure requirements] would want some certainty. They want to know what they have to report and what they don’t have to report. They don’t want to guess and then find themselves in deep trouble because they guessed wrong.”

The final House Report (see here) on what would become the FCPA is even more clear. It states (when discussing the various disclosure provisions previously debated, but rejected):  “Most disclosure proposals would require U.S. corporations doing business abroad to report all foreign payments including perfectly legal payments such as for promotional purposes and for sales commissions. A disclosure scheme, unlike outright prohibition, would require U.S. corporations to contend not only with an additional bureaucratic overlay but also with massive paperwork requirements.”

In this prior post, I analogized that Section 1504 is like having to report one’s speed on the highways even though there are speed limits in place.

I previously stated as follows.  “The FCPA already criminalizes improper payments made to the ‘foreign government’ recipients targeted in Section 1504 to the extent those payments are made to “obtain or retain business.”  Do we really now need a law that requires ‘Resource Extraction Issuers’ to disclose all such payments, even perfectly legitimate and legal payments?”

In passing Dodd-Frank , Congress apparently said yes to this question (although I wonder if most voting in favor of Dodd-Frank even knew the miscellaneous provision was tagged onto the bill).

Pursuant to Dodd-Frank, the SEC issued proposed rules (see here) in December 2010.

And that’s pretty much where things stand at the moment even though the SEC originally planned to adopt final rules between January – March 2011  – as noted in this previous post.  The long delay in SEC final rules implementing Section 1504 is perhaps further evidence as to the folly of this ill-conceived legislation.

A few updates to pass along regarding Section 1504.

As noted in this recent release, Oxfam America (an international relief and development organization) recently filed a complaint (here) against the SEC “for unlawfully delaying the issuance of a Final Rule implementing” Section 1504.

The release states as follows.  “Congress set a deadline of April 17, 2011, for the SEC’s promulgation of the final rule that is needed to bring Section 1504 into effect. The SEC has now missed this statutory deadline by one year and one month. Oxfam America notified the SEC on April 16, 2012 that it would file suit if the regulatory agency did not issue a final rule within 30 days. […] Unfortunately, the SEC’s pattern of delay gives no assurance that it will ever promulgate a Final rule without the involvement of this Court.” As noted in the release, “Oxfam America is represented in this matter by Baker Hostetler LLP, one of the largest law firms in the US, and EarthRights International, an organization dedicated to defending human rights and the environment through legal actions and other strategies.”

Thereafter, as noted in this story from The Hill, “oil companies are seizing on a White House executive order that promotes international regulatory harmony to seek an exemption from upcoming federal rules that would force energy producers to disclose payments to foreign governments.”  This May 18th letter to the SEC from the American Petroleum Institute, states that “if the Commission were to issue a final rule that requires reporting even when it conflicts with foreign laws, such a rule would cause exactly the type of unnecessary competitive harm that the Executive Order seeks to avoid.”

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Section 1504 has not been all bad.  As noted in this prior post and as relevant to the current “foreign official” debate, Section 1504 demonstrates that when Congress wants to, it knows how to pass a bill that captures state-owned or state-controlled enterprises (SOEs).   In short, Section 1504 defines “foreign government” to “include [] a department, agency, or instrumentality of a foreign government or a company owned by a foreign government.”  If instrumentality can include SOEs (as the enforcement agencies maintain) why the need for the additional clause “or a company owned by a foreign government” in Section 1504?

Case Law Of Note

Last week, the DOJ got dinged on both coasts in criminal appeals.  Although neither case involved the FCPA, the reasoning of the courts touch upon issues relevant to the recent “foreign official” challenges.  For more on those challenges, the DOJ and defense positions, and the trial court rulings, see here, herehere and here (as well as the embedded links in those posts).

In addition to discussing the two cases with similarities to “foreign official” challenges, this post also discusses a decision from the U.S. District Court in the Middle District of Tennessee that is believed to be the first decision concerning the intersection of D0dd-Frank’s whistleblower provisions and the FCPA.

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In U.S. v. David Nosal, the Ninth Circuit, sitting en banc, affirmed a lower court dismissal of criminal charges under the Computer Fraud and Abuse Act (“CFAA”) filed against David Nosal who used to work for Korn/Ferry, an executive search firm. (See here for the decision).  The issue before the court was how broadly to read the CFAA, particularly its provisions which defines “exceeds authorized access” as “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.”

Without getting into the specific facts of the case here, the court stated that “the government’s interpretation would transform the CFAA from an anti-hacking statute into an expansive misappropriation statute” and that “if Congress meant to expand the scope of criminal liability to everyone who uses a computer in violation of computer use restrictions … we would expect it to use language better suited to that purpose.”  In a footnote, the court noted that Congress did just that in other federal statutes where the key terms were broader.

Thereafter, the court stated as follows.  “The government’s construction of the statute would expand its scope far beyond computer hacking to criminalize any unauthorized use of information obtained from a computer.  This would make criminals of large groups of people who would have little reason to suspect they are committing a federal crime.  While ignorance of the law is no excuse, we can properly be skeptical as to whether Congress, in 1984, meant to criminalize conduct beyond that which is inherently wrongful, such as breaking into a computer.”

The DOJ urged the court to consider the CFAA’s legislative history and pointed to an earlier version of the statute  that was more favorable to its position.  However, the court stated that “that language was removed and replaced by the current phrase and definition” (emphasis in original).

The court then stated as follows.  “The government assures us that, whatever the scope of the CFAA, it won’t prosecute minor violations.  But we shouldn’t have to live at the mercy of our local prosecutor. […] And it’s not clear we can trust the government when a tempting target comes along.” (citations omitted, emphasis in original).

In conclusion, the court stated as follows.  “We need not decide today whether Congress could base criminal liability on violations of a company or website’s computer use restrictions.  Instead, we hold that the phrase ‘exceeds authorized access’ in the CFAA does not extend to violations of use restrictions.  If Congress wants to incorporate misappropriation liability into the CFAA, it must speak more clearly.  The rule of lenity requires penal laws to construed strictly.  When choice has to be made between two readings of what conduct Congress has made a crime, it is appropriate, before we choose the harsher alternative, to require that Congress should have spoken in language that is clear and definite.”  (citations omitted, emphasis in original).

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In U.S. v. Sergey Aleynikov, the Second Circuit reversed the criminal conviction of Sergey Aleynikov, a former computer programmer employed by Goldman Sach who was found guilty by a jury of violating the National Stolen Property Act (“NSPA”) and the Economic Espionage Act of 1996 (“EEA”).  As noted in the opinion (here), Aleynikov argued on appeal that his conduct did not constitute an offense under either statute – namely that the source code at issue was not a “stolen good” within the meaning of the NSPA and that the source code was not “related to or included in a product that is produced for or placed in interstate or foreign commerce” within the meaning of the EEA.

Without getting in to the specific facts of the case here, the Second Circuit began its discussion by noting that “Aleynikov’s challenge requires us to determine the scope of the two federal statutes” and that “federal crimes are solely creatures of statute.”  The court stated that “due respect for the prerogatives of Congress in defining federal crimes prompts restraint in this area, where we typically find a narrow interpretation appropriate” and held that Aleynikov’s conduct did not constitute an offense under either the NSPA or the EEA.

As to the EEA, and of note, the Court looked to the statute’s legislative history and found that a key provision did not appear in various draft of the bill and that therefore the words of the final bill that was enacted into law “were deliberately chosen.”  As to the DOJ’s argument that the EEA had a broad sweep, the Court stated that one would expect to see such wording in the statute.  Citing a prior Supreme Court decision, the Court stated as follows.  “And ‘when choice has to be made between two readings of what conduct Congress has made a crime, it is appropriate, before we choose the harsher alternative, to require that Congress should have spoken in language that is clear and definite.”

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Recently, Judge Aleta Trauger (M.D. Tenn.) issued a decision (here) in Nollner v. Southern Baptist Convention Inc. that is believed to be the first judicial decision concerning the intersection of D0dd-Frank’s whistleblower provisions and the FCPA.

The basic facts are as follows.  Ron and Beverly Nollner responded to a job post by The International Mission Board of the Southern Baptist Convention Inc. (“IMB”) (a wholly-owned subsidiary of Southern Baptist Convention Inc.)  to perform missionary related work on the church’s behalf in New Delhi, India – specifically to manage construction of a new office building.  After accepting the positions and arriving in New Delhi, the Nollners allege that the “situation was not what had been promised.”  Among other things, the Nollners allege that they “became aware of a host of troubling information” including that “the contractor and architect were paying bribes to local Indian officials with money furnished by the defendants for that purpose.”  The Nollners alleged that “Mr. Nolnner reported his grave concerns about potential bribery to the defendants’ employees, [but] that they seemed unbothered, if not complicit.”  Thereafter, two of Mr. Nollner’s superiors allegedly asked him to resign and when he refused he was terminated.

Among other things, the Nollners brought a retaliatory discharge claim under Dodd-Frank claiming that they were terminated for, among other things, reporting and/or refusing to participate in bribes and other illegal payments.  As to the Dodd-Frank claim, the Nollners allege that its whistleblower anti-retaliation provisions protected them against retaliation for reporting the defendants’ violations of the FCPA.

The court began by noting that Dodd-Frank “only protects [an] employee against retaliation if the federal violation falls within the SEC’s jurisdiction.”  The court then stated that “the jurisdiction of the SEC with respect to FCPA violations is limited only to civil actions to enforce violations by issuers, but does not encompass FCPA violations by domestic concerns, which are subject to exclusive DOJ enforcement.”  (emphasis in original).  The court then stated as follows.  “Here, because the defendants are not issuers, only the DOJ – not the SEC – has jurisdiction over them with respect to FCPA violations.”  Accordingly, the court held, even assuming the allegations to be true, that the “Nollners may not maintain [Dodd-Frank] retaliation claims premised on their reporting of potential FCPA violations by the defendants.”

In addition, the court stated that the “FCPA does not itself protect whistleblowers; it contains no anti-retaliation provisions and affords no private cause of action” (relying on Lamb v. Philip Morris, Inc. 915 F.2d 1024 (6th Circ. 1990)).  The court stated that “it falls on Congress to protect individual FCPA whistleblowers who are not otherwise protected from retaliation under state or federal law for disclosing FCPA violations.”

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In regards to the reference in Nollner that the jurisdiction of the SEC with respect to FCPA violations is limited only to civil actions to enforce violations by issuers, this is generally true, although in recent years the SEC has brought FCPA enforcement actions against non-issuers (see here for the Panalpina enforcement action and here for the Snamprogetti enforcement action).

Friday Roundup

The SEC’s annual whistleblower report, a new FCPA map, taking FCPA reform too far, confessions of an FCPA “Mendelhead,” is too much FCPA training a bad thing, and Nigeria’s sovereign wealth fund … it’s all here in the Friday roundup.

SEC Whistleblower Report

The Dodd-Frank Act enacted in July 2010 contained whistleblower provisions applicable to all securities law violations including the Foreign Corrupt Practices Act.  In this prior post from July 2010, I predicted that the new whistleblower provisions would have a negligible impact on FCPA enforcement.  As noted in this prior post, my prediction was an outlier (so it seemed) compared to the flurry of law firm client alerts that predicted that the whistleblower provisions would have a significant impact on FCPA enforcement.

Whatever your view, I noted that the best part of the new whistleblower provisions were that its impact on FCPA enforcement can be monitored and analyzed because the SEC is required to submit annual reports to Congress.  Recently the SEC released (here) its annual report for FY2011.  However as noted by the SEC, “because the Final Rules [implementing the whistleblower program] became effective August 12, 2011, only 7 weeks of whistleblower tip data is available for fiscal year 2011.”

Appendix A to the report lists by subject matter “the 334 whistleblower tips received from August 12, 2011 through September 30, 2011.”   However, the SEC noted as follows.  “Of course, the Commission also receive [Tips, Complaints, and Referrals (“TCRs”] from individuals who do not wish or are not eligible to be considered for an award under the whistleblower program.  The data in this report is limited to those TCR’s that include the required whistleblower declaration and does not reflect all TCRs received by the Commission during the fiscal year.”

As the SEC notes “as a result of the relatively recent launch of the program and the small sample size, it is to early to identify any specific trends or conclusions from the data collected to data.”

In any event, a chart titled “Whistleblower Tips by Allegation Type” in the SEC report shows that 3.9% of the 334 tips involve the FCPA.  The SEC report is also an informative read as to the SEC’s implementation of the whistleblower award program and how it processes whistleblower tips.

The SEC whistleblower report from FY2010 is here.

FCPA Map

The Mintz Group (an international investigative services firm that specializes in FCPA and integrity due-diligence that also assists corporate counsel and outside counsel with investigations related to potential or alleged FCPA violations) recently released here a dandy interactive map allowing users to scroll over countries and learn of FCPA violations in those countries, as well as industry specific FCPA data.

Taking FCPA Reform Too Far

Writing recently at the Cato Institute’s blog (see here), Walter Olson commented “the Foreign Corrupt Practices Act:  clarification is not enough.”  Olson stated as follows.  “The Foreign Corrupt Practices Act, enacted in 1977 and the subject of a high-profile federal enforcement campaign in recent years, is a feel-good piece of overcriminalization that oversteps the proper bounds of federal lawmaking in at least four distinct ways, any of which should have prevented its passage. It is extraterritorial, purporting to punish overseas misdeeds which deprive no Americans of liberty or property and whose punishment is better left in the hands of authorities elsewhere. It is vicarious, inflicting massive liability on businesses and unknowing higher-ups over the actions of rogue local subsidiaries, salespeople and facilitators. It is punitive, menacing its targets with twenty-year prison terms and inflicting huge penalties over less-than-huge misbehavior. And finally, it is vague, leaving companies to guess at the proper line between tolerated payments (e.g., gratuities to speed up visa and license issuance in developing countries) and improper “bribes,” and even such basic questions as who counts as “official.” In the face of a mounting outcry from the business community, the Obama administration has now finally conceded that there is some validity to this last point, and Criminal Division chief Lanny Breuer says the Department of Justice will develop guidelines to provide greater clarity as to what it believes the law does and does not forbid. Better than nothing, but why not consider the case for wider reform or even repeal?”

Similarly, Scott Greenfield who runs the blog Simple Justice (see here) stated as follows.  “At its core, the FCPA is our government’s way of pretending to be the mean old school marm, telling all the nasty children of the world how to behave.  If it doesn’t appeal to the school marm’s sensibilities, then it’s a crime, and demands a hard smack across the knuckles.  A very expensive hard smack. […]   We may hate corporations, but we need them, and we need them to be productive around the globe.  To tie them down because of vague, child-like notions of fairness that conflict with cultural norms everywhere else is just foolish and counterproductive. Surviving and competing in foreign cultures isn’t wrong, and it shouldn’t be a crime. The FCPA has got to go.”

I respectfully disagree.  While I agree that the FCPA ought to be reformed in certain respects and while FCPA enforcement has become unhinged, I do believe, as I have stated on several occasions including in my November 2010 Senate testimony (here), that the FCPA is a fundamentally sound statute that was passed by Congress for a specific valid and legitimate reason.

Confessions Of An FCPA “Mendelhead”

In response to my recent “luncheon law” post (see here), Howard Sklar (who previously ran anti-corruption compliance for Hewlett-Packard Co.) wrote on his Open Air Blog (here) as follows.  “I used to go to these conferences with the expressed purpose of ‘reading the DOJ tea leaves for this season.’  The ‘used to’ in that sentence is important, but we’ll get to that in a minute. Because ‘reading the tea leaves’ was a crucial part of my risk assessment process. That’s a pitiful state of affairs, but there you are. During that period, several years ago, there really wasn’t anywhere else to go. I would reach out to fellow in-house practitioners and benchmark all the time, and I’d follow Mark Mendelsohn around like a puppy looking for scraps. It was a little sad, really. I know I’m a bit of a geek, and I know Mark Mendelsohn ain’t the Grateful Dead. But there I was, an FCPA Mendelhead.”

Over-Training?

Greg Esslinger (Senior Managing Director at FTI Consulting) recently posted (here) an interesting article on the ABA’s Global Anti-Corruption Task Force website.  Titled “Anti-Corruption Compliance:  Are Employees Becoming ‘Over-Trained’?”  Esslinger writes as follows.  “In response [to this new era of enforcement], companies have begun to provide more and more accessible (read: web-based) anti-corruption and related regulatory training programs.  Predictably, a panoply of vendors have surfaced offering state-of-the-art customizable online training modules, complete with scenarios, live actors, knowledge checks and certifications.  Online compliance training has now become a cottage industry serving a wide array of organizations faced with the daunting task of communicating a Western regulatory concept to tens of thousands of employees across multiple languages, cultures and jurisdictions – again, under the watchful eye of various enforcement bodies.”  In the piece, Esslinger asks “whether repeated online and other mass training will over time actually have the unintended effect of desensitizing employees to, rather than making them more aware and cautious of, bribery and other corrupt activity.”

Training occurs in a variety of legal and non-legal contexts and if anyone is aware of social-science / behavioral research relevant to an “over-training” phenomena please share.

Nigeria Sovereign Wealth Fund

With certain companies reportedly under the FCPA microscope for dealings with sovereign wealth funds (see here for a prior post), its hard not to have the FCPA radars go off when reading this recent article by Azam Ahmed in the New York Times concerning Nigeria’s new sovereign wealth fund.  The article states as follows.  “In an effort to preserve and increase its oil revenue, the country recently established a so-called sovereign wealth fund, following the path of many resource-rich countries. Now, Wall Street titans like Goldman Sachs, Morgan Stanley and JPMorgan Chase are courting top government officials, aiming to grab a piece of a portfolio that could eventually be worth tens of billions of dollars.”  The article further states as follows.  “To grab a piece of the lucrative business, big banks and asset managers have tirelessly cultivated relationships with governments worldwide and added teams dedicated to sovereign wealth funds. In recent months, bankers, lawyers and consultants flew to the Nigerian capital of Abuja to pitch officials on their services. The government chose JPMorgan Chase as one of its advisers on the structuring of the fund.”

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A good weekend to all.

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