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Friday Roundup

Scrutiny alerts and updates, sentenced, asset recovery, to FCPA Inc., across the pond, quotable and for the reading stack.

It’s all here in the Friday roundup.

Scrutiny Alerts and Updates

Grupo Televisa

This [1] Wall Street Journal article concerns Grupo Televisa SAB, a Mexican broadcaster with shares traded on the NYSE. According to the article:

“An anonymous letter alleging fraud and corruption by senior executives of Grupo Televisa SAB has sparked an investigation by the world’s largest producer of Spanish language television shows. The letter, which was attached to an email sent in late April to board members of Televisa and U.S. Hispanic network Univision, which is partly owned by the Mexican broadcaster, has prompted Televisa Chairman Emilio Azcárraga to order the investigation into the allegations, the company said. New York-based law firm Wachtell, Lipton, Rosen & Katz is conducting the probe. Both Televisa and the law firm say the investigation is continuing and that so far, the allegations have proved “fictitious and unfounded.”

[…]

Televisa said the email also appeared to have been sent to the U.S. Department of Justice. Televisa lawyers said they had contacted the Justice Department. The Justice Department declined to comment.”

Olympus

In March 2016 [2], Olympus Latin America resolved a $22.8 million FCPA enforcement concerning conduct in Brazil, Bolivia, Colombia, Argentina, Mexico, and Costa Rica.

According to this [3] Japan Times article:

“Olympus Corp. said [recently] its group firm in China was involved in wining and dining a customs official as well as giving gifts to the person but said no illegal act such as bribery had occurred. An internal investigation found that an employee of Olympus (Shenzhen) Industrial Ltd. had spent between 6,000 and 7,000 yuan on such activities, and in 2015 asked the firm to cover the expenses, the Japanese optical equipment firm said. The investigation also discovered that other group firm employees had engaged in similar practices for other Chinese officials.”

For an in-depth look at Olympus activities in China, see this [4] recent NY Times article.

On June 27th, Olympus released this [5] statement.

Cambodia

There is no per se prohibition in the FCPA from doing business with or having direct or indirect business relationships with “foreign officials.” Yet as the NY Times correctly notes in this [6] recent article, such relationships do indeed present FCPA risk. According to the article:

“Relatives of Cambodia’s prime minister, Hun Sen, are amassing personal fortunes through the family’s political influence and have acquired shares in companies in nearly every sector of the economy, according to a report released on Thursday by the human rights group Global Witness. Well-known global brands that operate in Cambodia, such as Apple, Canon and LG Electronics, are among those that have distribution agreements or other business ties with family members of Mr. Hun Sen, according to the group, a nonprofit organization based in Washington that focuses on corruption, human rights and the environment.”

Sentenced

The DOJ recently announced [7] the sentences of two former Louis Berger executives who previously pleaded guilty to FCPA offenses.

Richard Hirsch was sentenced by U.S. District Judge Mary Cooper to two years of probation and fined $10,000.

James McClung was sentenced by Judge Cooper to one year plus one day in jail.

There are no publicly available sentencing documents on the court docket.

Asset Recovery

FCPA enforcement is not the only prong of the DOJ’s bribery and corruption fight.

Asset recovery – part of the DOJ’s so-called Kleptocracy Initiative – is another prong and recently the DOJ announced [8]:

“The Department of Justice … is returning approximately $1.5 million to Taiwan, the proceeds of the sale of a forfeited New York condominium and a Virginia residence that the United States alleged in its complaint were purchased with the proceeds of bribes paid to the family of Taiwan’s former President Chen Shui-Bian.”

In the release, Assistant Attorney General Leslie Caldwell states:

“The Kleptocracy Initiative was established to prevent corrupt leaders from using the United States as a safe haven for their ill-gotten gains. We are committed to rooting out foreign official corruption and preventing corrupt officials from enjoying their spoils in the United States.”

To FCPA Inc.

Consistent with the typical career path of DOJ FCPA enforcement attorneys, former DOJ FCPA Unit Chief Patrick Stokes is joining FCPA Inc. As noted in this Gibson Dunn release [9], Stokes is joining the firm as a partner.

I have long suggested, a prohibition on DOJ (or SEC) FCPA enforcement attorneys with supervisory and discretionary authority from providing FCPA defense or compliance services for five years upon leaving government service.

Indeed, the legitimacy and credibility of the DOJ and SEC’s entire FCPA enforcement programs hinge on this policy proposal being adopted. For additional reading on this topic, see here [10] and here [11].

In the above release, Stokes tenure as FCPA Unit Chief is measured quantitatively (“11 corporate FCPA resolutions with penalties of about $1.3 billion, including the largest criminal FCPA fine and two of the 10 largest criminal FCPA resolutions to date …”). For more on this common metric of measuring DOJ enforcement attorneys, see this [12] prior post.

Across the Pond

Earlier this week, in a short release [13], the U.K. Serious Fraud Office announced:

“The SFO … charged logistics and freight operations company F.H. Bertling Ltd and seven individuals with one count of making corrupt payments, contrary to section 1 of the Prevention of Corruption Act 1906. The SFO alleges that Peter Ferdinand, Marc Schweiger, Stephen Emler, Joerg Blumberg, Dirk Juergensen, Giuseppe Morreale, Ralf Peterson and F.H. Bertling Ltd conspired together and with others to bribe an agent of the Angolan state oil company, Sonangol, to further F.H. Bertling’s business operations in that country. The alleged activity occurred between January 2005 and December 2006.”

Quotable

Prior posts (here [14] and here [15]) for warned “don’t believe the hype” but rather ask what viable criminal charges did the DOJ actually decline in its recent “declination.”

Regarding the first two “declinations” under the DOJ’s FCPA Pilot Program (Nortek and Akamai Technologies), former DOJ FCPA Unit Chief Mark Mendelsohn writes [16], consistent with the posts:

“[I]it is not clear from the available record whether there was a sufficient nexus to the U.S. to support bringing a prosecution consistent with DOJ prior practice, at least raising a question as to whether the DOJ would have brought a case anyway, even absent the factors cited in the letter as supporting declinations.”

Because Nortek and Akamai are U.S. issuers, the FCPA has extraterritorial application to those companies, yet the overall observation is spot-on.

For the Reading Stack

Former Attorney General Michael Mukasey’s recent testimony [17] in a House hearing titled “Executive Overreach in Regulatory Enforcement and Infrastructure” is spot-on. In his testimony, Mukasey talks about many of the same issues as former Deputy Attorney General David Ogden discussed in his recent speech [18] and this FCPA Flash podcast [19]. Again the question is posed: how many articles, speeches or commentary by former high-ranking DOJ officials does it take to realize that the DOJ is frequently misguided?

Gibson Dunn’s “Mid-Year Update on Corporate NPAs and DPAs” is here [20].

*****

A good weekend to all.