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The FCPA in 2015 – What Will It Look Like?

The Dow Jones Global Compliance Symposium (see here for details) is set for March 31st and April 1st in Washington DC at the Park Hyatt Washington.

I am pleased to be participating in a panel discussion on March 31st titled “The FCPA in 2015 – What Will It Look Like?”

Moderated by Dionne Searcey (Legal Correspondent – Wall Street Journal), other panelists will include: Mark Mendelsohn (Paul Weiss); Peter Jaffe (Chief Ethics & Compliance Officer, AES); and Frederic Miller (PricewaterhouseCoopers).

Other panels or interviews at the Symposium will focus on the FCPA and related issues as well.

Joe Palazzolo (Dow Jones and Wall Street Journal Corruption Currents) will speak with Stephen Reynolds (SVP & General Counsel, Alcatel-Lucent) in a keynote interview titled “Moving Forward: Alcatel-Lucent’s Anti-Corruption Program.” See here for prior posts on the December 2010 Alcatel-Lucent FCPA enforcement action.

Georg Kell (Executive Director, UN Global Compact) will be interviewed on “Stamping Out Corruption: The Role That Corporations Can Play.”

Dionne Searcey will speak with Commissioner Dabney Friedrich (U.S. Sentencing Commission) in a featured interview expected to cover how new and evolving corporate and anticorruption regulations are being enforced.

David Wessel (Economics Editor, Wall Street Journal) will speak to former U.S. Senator Arlen Specter in a keynote interview titled “FCPA Enforcement: How to Comply. If No Compliance, Then Jail Time, Not Just Fines.” As highlighted in this previous post, Senator Specter chaired the November 30, 2010 Senate Judiciary Subcommittee hearing on “Examining Enforcement of the Foreign Corrupt Practices Act.”

Jean Eaglesham (Senior Reporter, The Wall Street Journal) will speak with Lorin Reisner (Deputy Director, Enforcement Division, Securities & Exchange Commission) in a keynote interview expected to cover the SEC’s enforcement of the Foreign Corrupt Practices Act.

Cassell Bryan-Low (Reporter – Wall Street Journal) will speak with Vivian Robinson (General Counsel – U.K. Serious Fraud Office) in a featured interview titled “The U.K. Bribery Act: Dispelling the Myths.”

In addition, other events or interviews at the Symposium are sure to touch upon FCPA issues as well.

July Fireworks?

Discussing this, it seems to me, has a “the police have a traffic ticket quota to meet” quality to it. In any event, notwithstanding the Technip and Veraz Networks enforcement actions this week, and notwithstanding the fact that twenty-two individual defendants were indicted in the Africa Sting case (an event which causes a spike in the “statistics”), FCPA enforcement has slowed down thus far this year compared to the past few. For possible reasons why see this recent post from Richard Cassin at the FCPA Blog.

To recap, so far this year, there has been the “Kyrgyzstan, Thailand, Tobacco, and Piranha Fishing” SEC enforcement action (see here), the Daimler “bribery, yet no bribery” DOJ/SEC enforcement action (see here), the Innospec “we can’t afford to pay the full amount” DOJ/SEC enforcement action (see here), the BAE “non-FCPA, FCPA like” DOJ enforcement action (see here), the “Africa Sting” DOJ indictments (see here), and the NATCO “extortion can still lead to FCPA books and records and internal control issues” SEC enforcement action (see here).

With much pre-enforcement action news of late (see here among other posts), will July be the month in which the FCPA fireworks fly?

Last July saw many FCPA fireworks as the following enforcement actions were announced: Control Components Inc. (see here), Nature’s Sunshine Products, Inc. (see here), Helmerich & Payne Inc. (see here), and Avery Dennison (see here).

While waiting for the figurative fireworks, enjoy the real stuff.

Until next week, a Happy Fourth of July weekend to all! To my non-U.S. readers, a swell few days to you as well!

World Bribery & Corruption Compliance Forum

I am pleased to serve as Chair of the World Bribery & Corruption Compliance Forum in London, September 14-15th.

As indicated on the conference brochure (here) speakers will include the U.K. Attorney General, and representatives from the U.K. Serious Fraud Office, the U.S. Department of Justice, the Securities and Exchange Commission, the OECD, the World Bank, Transparency International, Trace International as well as global business compliance professionals and legal practitioners.

Readers of the FCPA Professor Blog are entitled to 20% off the conference fee by using the above brochure and additional savings will be earned by booking by July 2nd.

It Can Be Done

This post is about a non-FCPA case.

Yet, the attributes of this case apply to many FCPA cases.

A large corporate entity allegedly engages in criminal conduct.

The corporate entity agrees to a plea agreement, one that does not adequately reflect the seriousness of the conduct at issue.

Nevertheless, pursuant to the plea agreement, the corporate entity agrees to pay an eye-popping fine.

The DOJ issues a press release peppered with get-tough, accountability, wake-up call type of language.

The plea agreement gets filed with the court and the court rubber stamps the plea agreement.

Case closed.

This is what happened is the BAE bribery, yet no bribery case. That is what happened in the Siemens bribery, yet no bribery case. (Daimler was offered a deferred prosecution agreement, thus, it didn’t even have to plead to anything).

But that is not what happened in this case.

Rather, a federal court judge rolled up his sleeves, used the tools at his disposal, and rejected a plea agreement hashed out between the DOJ and the corporate entity because it was not “in the best interests of justice” and did “not serve the public’s interest” because it did not adequately address the “criminal conduct at issue.”

Kudos to Judge Donovan Frank (D. Minn.).

Judges assigned to future FCPA cases would be wise to follow his example.


On February 25, 2010, medical device manufacturer Guidant LLC, a wholly-owned subsidiary of Boston Scientific Corporation, was charged with criminal violations of the Federal Food, Drug, and Cosmetic Act (see here). According to the information, “Guidant concealed information from the U.S. Food and Drug Administration regarding catastrophic failures in some of its lifesaving devices.”

The DOJ release states, in part, “our message is clear: we will vigorously prosecute individuals and organizations who put profit over public health and safety by violating the law.”

On April 5, 2010, Guidant LLC (an entity that was formed two weeks before the DOJ filed the information) entered pleas of guilty to criminal violations of the Food, Drug, and Cosmetic Act (see here). Pursuant to the plea agreement, Guidant agreed to pay $296 million in criminal penalties.

The DOJ’s release states, in part, “Guidant’s guilty plea […] is about accountability,” “This successful prosecution serves as an important wake up call…,” and “The guilty plea […] should serve as a reminder and deterrent to those who would break the laws …”.

Enter Judge Frank.

The “type” of plea agreement at issue in the Guidant case was a Rule 11(c)(1)(C) agreement – the same “type” of plea agreements at issue in Siemens and BAE cases. In a Rule 11(c)(1)(C) plea agreement, the DOJ agrees that a specific sentence or sentencing range is the appropriate disposition of the case and such a recommendation is binding on the court once the court accepts the plea agreement.

Judge Frank noted that “normally, a court accepts or rejects a plea agreement at a plea hearing” (see here for his Memorandum Opinion and Order).

However, as reflected in Frank’s order, “whether to approve or reject a plea agreement is a matter confided to the sound discretion of the trial court” and a plea agreement can be rejected if the agreed upon sentence is inappropriate or if the resulting agreement is not in the best interest of justice.

Among other things, Judge Frank noted that the victims of Guidant’s conduct contend “that Guidant, as a company, does not respect the criminal justice system and should be required to do more than simply pay fines as a consequences for its criminal behavior.”

Judge Frank was also troubled by the lack of a presentence investigation report – he noted that the plea agreement “specifically states that a presentence investigation report is not necessary because the plea and sentencing hearings, together with the record and the Plea Agreement, ‘will provide the Court with sufficient information concerning Guidant, the crime charged in this case, and Guidant’s role in the crime to enable the meaningful exercise of sentencing authority by the Court…” However, Judge Frank noted that a presentence investigation report would have be useful in determining the appropriate sentence.

[A presentence report was waived in both the Siemens (here) and BAE (here) agreements]

Judge Frank is not the only federal court judge to recently reject a plea agreement or SEC settlement.

Judge Jed Rakoff (S.D.N.Y.) did it last September in the SEC v. Bank of America case. Among other things, Judge Rakoff noted that the SEC – BofA settlement left the distinct impression that it was a “contrivance designed to provide the SEC with the façade of enforcement and the management of [BofA] with a quick resolution of an embarrassing inquiry…” He further noted that the settlement “suggests a rather cynical relationship between the parties” in that “the SEC gets to claim that it is exposing wrongdoing on the part of [BofA] in a high-profile merger” and “[BofA’s] management gets to claim that they have been coerced into an onerous settlement by overzealous regulators.” According to Judge Rakoff, “all this is done at the expense, not only of shareholders, but also of the truth.” [In February 2010, Judge Rakoff did “reluctantly” approve a revised SEC – BofA settlement yet stated that the settlement, “[w]hile better than nothing,” was still “half-baked justice at best.”

Judge Cormac Carney (C.D.Cal.) did it last September in the case of Dr. Henry Samueli, the co-founder and former chief technical officer of Broadcom, who pleaded guilty to criminal charges for making false statements in testimony before the SEC relating to its investigation of the alleged stock-options backdating at Broadcom. Under a grant of immunity, Samueli testified as a government witness at the trial of another Broadcom executive and after hearing Samueli testify Judge Carney vacated Samueli’s prior guilty plea and dismissed the criminal charges against him. Judge Carney noted that there was “no evidence … to suggest that Dr. Samueli did anything wrong, let alone criminal.” “Yet,” Judge Carney noted, “the government embarked on a campaign of intimidation and other misconduct to embarrass him and bring him down” including crafting “an unconscionable plea agreement pursuant to which Dr. Samueli would plead guilty to a crime he did not commit and pay a ridiculous sum of $12 million to the United States Treasury.”

As the above (and other) examples demonstrate, plea agreements can be rejected by trial court judges either because they are “too soft” or “too hard.”

Yet, to my knowledge, no FCPA plea agreement has ever been rejected by a trial court judge.

Some probably should not.

Some probably should.

Judges assigned to future FCPA cases would be wise to follow the above examples, roll up their sleeves, use the tools at their disposal, and critically analyze whether the plea agreement, given the allegations in the charging documents, serve the “public’s interest” and adequately address the “criminal conduct at issue.”

Some FCPA plea agreements (not to mention, non and deferred prosecution agreements) are “too hard” in that it is debatable whether the conduct at issue even violates the FCPA. Some FCPA plea agreement – most notably the BAE and Siemens plea agreements – are “too soft.”

Both contribute to the facade of FCPA enforcement and, in many cases, federal court judges have tools at their disposal to expose the facade of FCPA enforcement.

It can be done.

Quiz Time

With two weeks left in the semester and final exams thereafter, hypotheticals are dancing in my head.

But this question is no hypothetical.

In 2009, there were three FCPA trials – Frederic Bourke, William Jefferson, and Gerald and Patricia Green.

So here is the question.

What is the common thread in these three FCPA enforcement actions – a fact which speaks to the great difficulty individual FCPA defendants generally have in mounting a legal defense?

Please feel free to comment on this blog or otherwise send me your answer (perhaps there is more than one correct answer).

I am a quick grader, so stay tuned for the answer tomorrow.

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