Guilty plea, scrutiny alerts, absurd and remarkable, and Caldwell to private practice. It’s all here in the Friday roundup.
As highlighted in this January post, the DOJ announced Foreign Corrupt Practices Act, and related charges, against four individuals for their roles in a scheme to pay $2.5 million in bribes to facilitate the $800 million sale of a commercial building in Vietnam to a Middle Eastern sovereign wealth fund.
The prior post highlighted how it was not a typical FCPA enforcement action, in fact it was downright strange in that the bribery scheme was unsuccessful and the third party who was supposed to facilitate the bribery scheme simply pocketed the money for himself.
The DOJ charged Joo Hyun Bahn and his father Ban Ki Sang with conspiracy to violate the FCPA’s anti-bribery provisions, three substantive FCPA offenses, and other criminal offenses as well as San Woo with one count of conspiracy to violate the FCPA. In addition, Malcom Harris, the third party, was criminally charged with one count of wire fraud, one count of conducting monetary transactions in illegal funds and aggravated identity theft.
Earlier this week, the DOJ announced that Harris “pleaded guilty … to wire fraud and money laundering charges for his role in a scheme to bribe a foreign official in the Middle East to land a real estate deal, and to defrauding his co-schemers.”
Goldman / Nomura
It’s not the typical way in which FCPA scrutiny arises, yet Bloomberg reports:
“The head of Venezuela’s National Assembly asked U.S. authorities to investigate a $2.9 billion bond deal involving Goldman Sachs Group Inc. and Nomura Securities Co. saying the transaction fleeced the country for the benefit of political elites. Julio Borges, an opponent of President Nicolas Maduro, addressed letters to the U.S. Securities and Exchange Commission, the Financial Crimes Enforcement Network and Financial Industry Regulatory Authority asking officials to undertake a probe.
In a detailed account of the transaction carried out in late May, Borges says that “it is our understanding that there is enough evidence of wrongdoing for the U.S. government to start an investigation against Goldman Sachs and Nomura” under the Foreign Corrupt Practices Act.”
As highlighted in this prior post, in July 2011 U.K. spirits company Diageo (a company with shares traded on the NYSE) resolved an SEC FCPA enforcement action based in part on conduct in India. Specifically the SEC found that a company subsidiary, through its third-party distributors “made … payments to increase government sales orders of its products, and to secure favorable product placement and promotion within the stores.”
This front-page Wall Street Journal article highlights Diageo’s alleged relationship with Vijay Mallya and his company United Spirits Ltd. in connection with Diageo’s efforts to increase sales in India.
Diageo bought a 55% stake in United Spirits and the article suggests that “Diageo executives … learned payments were being made to political figures in some key Indian states where United Spirits operated.” […] India’s liquor trade is rife with unorthodox practices and allegations of corruption. Political figures in states with monopoly retailing laws often have sought payments to allow drink brands to sell their products there.”
As highlighted in this prior post, in September 2016 Anheuser-Busch InBev, a Belgium brewer with American Depository Receipts traded on the New York Stock Exchange, resolved an SEC FCPA enforcement action. The conduct at issue involved improper payments by an Indian joint venture “to Indian government officials to obtain beer orders and to increase brewery hours.”
Absurd and Remarkable
It is patently absurd to suggest that a company that voluntarily disclosed conduct of an acquired entity beyond any conceivable statute of limitations period received a “superior” result by paying $11.2 million to the DOJ pursuant to a letter agreement.
Yet such is the state of certain FCPA commentary.
It is also fairly remarkable the strides certain FCPA commentators take in trying to spin a narrative.
For instance this post suggests: “The Yates Memo, when read in conjunction with the Frederic Bourke conviction, make clear that senior management, as well as other individuals, are now directly in the DOJ’s sights to prosecute for FCPA violations.”
And now for some facts.
The Yates Memo was released in September 2015 and since then there have been 18 DOJ corporate FCPA enforcement actions. Not a one has involved related DOJ FCPA charges against a company employee, let alone senior management.
In 2009 Frederic Bourke was convicted of FCPA offenses, a conviction that was upheld by the Second Circuit in 2012. The disputed issue involved the FCPA’s third party payment provisions and whether Bourke had “knowledge” that a third party (Victor Kozeny) was making improper payments on behalf of an investment consortium to Azeri officials. In the words of the Second Circuit “The strongest evidence … came from tape recordings of a … phone conference … during which Bourke voiced concerns about whether Kozeny and company were paying bribes.”
How any of these facts fit into the narrative the commentator is trying to spin is an open question.
Caldwell to Latham
Earlier this week, Latham Watkins announced that Caldwell “will join the firm’s San Francisco office as a partner in the White Collar Defense & Investigations Practice in September.”
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