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Checking In On Seng’s Appeal

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As highlighted in this prior post, in July 2017 (after a long trial) a federal jury convicted Ng Lap Seng of two counts of violating the FCPA, one count of paying bribes and gratuities, one count of money laundering and two counts of conspiracy “for his role in a scheme to bribe United Nations ambassadors to obtain support to build a conference center in Macau that would host, among other events, the annual United Nations Global South-South Development Expo.”

This prior post previewed Seng’s appeal and this prior post highlighted Seng’s opening brief. The FCPA issues on appeal concern the FCPA’s corrupt intent and obtain or retain business elements.

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Next Up For The Second Circuit – An Opportunity To Construe The FCPA’s Corrupt Intent And Obtain And Retain Business Elements

Judicial Decision

Fresh off its recent decision in U.S. v. Hoskins (see here and here for prior posts), the Second Circuit has another Foreign Corrupt Practices Act appeal on its docket.

This July post previewed the FCPA (and related) appeal of Ng Lap Seng who was convicted of two counts of violating the FCPA, one count of paying bribes and gratuities, one count of money laundering and two counts of conspiracy “for his role in a scheme to bribe United Nations ambassadors to obtain support to build a conference center in Macau that would host, among other events, the annual United Nations Global South-South Development Expo.”

Recently Seng formally filed this appellate brief. The FCPA issues on appeal concern the corrupt intent element and the obtain or retain business element. There is an abundance of information in the legislative history regarding these topics, the open question is whether Seng’s lawyers will fully take advantage of it.

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A Preview Of Seng’s Appeal

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Foreign Corrupt Practices Act appeals are not as rare as Halley’s Comet, but nevertheless rare. Thus, when an FCPA appeal occurs and an appellate court is presented with the opportunity to construe the law, almost be definition, it is a big deal.

As highlighted in this prior post, in July 2017 after a long trial a federal jury convicted Ng Lap Seng of two counts of violating the FCPA, one count of paying bribes and gratuities, one count of money laundering and two counts of conspiracy “for his role in a scheme to bribe United Nations ambassadors to obtain support to build a conference center in Macau that would host, among other events, the annual United Nations Global South-South Development Expo.”

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A Case Study In Risk Aversion Or What Happens When Defendants Fight Back

fightback

[This post is part of a periodic series regarding “old” FCPA enforcement actions]

Previous posts here and here highlighted the 2001 DOJ/SEC FCPA enforcement action against KPMG Siddharta Siddharta & Harsono (KPMG-SSH) and Sonny Harsono and Baker Hughes regarding alleged improper payments in connection with an Indonesia tax assessment. All of the defendants resolved the enforcement actions without putting the DOJ/SEC to its burden of proof (the risk aversion portion of this post).

However, also in 2001 the SEC charged Eric Mattson (the former CFO of Baker Hughes) and James Harris (the former Controller of Baker Hughes) with Foreign Corrupt Practices Act offenses based on the same substantive allegations. Unlike the other defendants, as highlighted in this post, Mattson and Harris fought back – a process that resulted in a federal court judge dismissing the FCPA charges against them.

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Issues To Consider From The Qualcomm Enforcement Action

Issues

This prior post went in-depth as to the recent $7.5 million Qualcomm Foreign Corrupt Practices Act enforcement action based on alleged improper hiring and other practices in China.

This post continues the analysis by highlighting various issues to consider.

Timeline

Qualcomm’s FCPA scrutiny was, at least partially, related to September 2010 formal order of private investigation from the SEC that arose from a “whistleblower’s” allegations made in December 2009 to the audit committee of the Company’s  Board of Directors and to the SEC. As Qualcomm previously disclosed, “the audit committee completed an internal review of the allegations with the assistance of independent counsel and independent forensic accountants. This internal review into the whistleblower’s allegations and related accounting practices did not identify any errors in the Company’s financial statements.”

More directly related to the FCPA scrutiny, according to Qualcomm’s previous disclosures: “On January 27, 2012, the Company learned that the U.S. Attorney’s Office for the Southern District of California/DOJ has begun a preliminary investigation regarding the Company’s compliance with the Foreign Corrupt Practices Act (FCPA), a topic about which the SEC is also inquiring.”

Thus, from start to finish Qualcomm’s FCPA scrutiny lasted between 4-6 years (depending on one’s interpretation of the above disclosures).

If the SEC wants the public to have confidence in its FCPA enforcement program, it must resolve instances of FCPA scrutiny much quicker. Whether its nearly 6 years or merely 4 years, this long time period is simply inexcusable.

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