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Friday Roundup

Elevate, further to the clustering phenomenon, transparency, dismissed, and incomplete. It’s all here in the Friday roundup.

Elevate

Learning a new topic or elevating your knowledge and practical skills in a topic is not just for formal students in formal educational settings. Professionals in the workplace can also benefit from back to “school” experiences.

For professionals in the FCPA space – or wishing to join the FCPA space – the FCPA Institute serves this objective and has “graduated” approximately 200 hundred diverse professionals since its launch in 2014.

The next FCPA Institute will take place in Nashville on May 3-4th. See here [1] to learn more and to register.

Further to the Clustering Phenomenon

As highlighted in previous posts here [2], here [3], and here [4], there are relatively few individual FCPA enforcement actions, but in the few actions there are (often small actions involving individuals associated with privately held business organizations) there is a noticeable clustering phenomenon in which a discrete set of core facts are used to bring several individual actions.

One such example has involved a long-standing (going back to 2015) bribery scheme (see here [5], here [6], and here [7] for prior posts) in which various individuals were criminally charged with FCPA and related offenses based on alleged payments to John Ashe (an individual who previously held various positions at the U.N. including serving as the Permanent Representative of Antigua to the U.N. and President of the U.N. General Assembly) and others in connection with a U.N. sponsored conference center in Macau, China and to influence business interactions with Antiguan government officials.

Most prominently, as highlighted in this July 2017 post [8], after a four week trial a federal jury convicted Ng Lap Seng of two counts of violating the Foreign Corrupt Practices Act, 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 and in connection with the same core conduct, another individual enforcement came to light by way of this Superseding Information [9] charging Julia Vivi Wang, a U.S. citizen, with conspiracy to violate the FCPA, a violation of the FCPA, and tax offenses. As alleged in the information, Wang “agreed to pay and offer money and other things of value to foreign officials in the Caribbean … in exchange for and to influence the taking of official action and to secure an improper advantage for Chinese businesses and business people looking to do business in the Caribbean.”

As highlighted in this New York Times article [10], Wang recently pleaded guilty.

[11]

Transparency

“Greater transparency benefits everyone. The Criminal Division stands to benefit from being more transparent ..” (DOJ Assistant Attorney General, April 17, 201 [12]5).

The DOJ often talks a good game when it comes to transparency in its FCPA enforcement program, but when given opportunities to actually demonstrate it, well that’s another matter. (See prior posts here [13], here [14], here [15], and here [16] among others).

Kudos to Dylan Tokar (a reporter for the publication Just Anti-Corruption) and his lawyers for this recent decision [17] in a long-standing Freedom of Information battle with the DOJ regarding monitor selections in FCPA enforcement actions. In pertinent part, the court was called upon to decide “whether DOJ’s decision to withhold … the names of the individuals nominated but not selected to be monitors … was permissible” under certain FOIA exemptions. The DOJ argued “that releasing the names of these individuals, or the release of information that would allow the public to identify them, would be an “unwarranted invasion of personal privacy.” The court disagreed and stated:

“while DOJ has demonstrated that these individuals have more than a de minimis privacy interest in their anonymity, the public interest in learning these individuals’ identities outweighs that privacy interest, and therefore, the individuals’ names and firms must be released.”

Dismissed

In the aftermath of FCPA scrutiny or enforcement, opportunistic plaintiffs’ lawyers representing shareholders frequently use core FCPA conduct to bring securities fraud claims and/or derivative actions. Such FCPA-related civil claims rarely survive the motion to dismiss stage and the latest example concerns Embraer which resolved an FCPA enforcement action in 2016 (see here [18] and here [19] for prior posts).

In this recent opinion [20], a judge in the S.D. of New York dismissed a class action complaint asserting various securities law violations against Embraer, its former CEO and President, and CFO. In short, plaintiff (Employees’ Retirement System of the City of Providence, Rhode Island) alleged that during the class period “Embraer made false or misleading statements about and/or failed to disclose violations of the FCPA.”

The reasons for dismissal were several including, as stated by the court, “companies do not have a duty to disclose uncharged, unadjudicated wrongdoing” and “because Embraer’s code of ethics is inherently aspirational, it cannot be that every time a violation of that code occurs, Embraer will be liable under federal laws.”

For additional coverage, see here [21] from the always astute Kevin LaCroix at the D&O Diary Blog.

Incomplete

This recent guest post [22] on the FCPA Blog concerning the “benefits” of voluntary disclosure is very incomplete (and thus flawed).

Settlement amounts in an actual FCPA enforcement action are often only a relatively minor component of the overall financial consequences that can result from FCPA scrutiny or enforcement. The wide-ranging “ripple effects” are pre-enforcement action professional fees and expenses (typically a multiple of the actual settlement amount), post-enforcement action professional fees and expenses, a hit on market capitalization and credit ratings, lost or delayed business opportunities, related civil litigation, etc.

None of these “ripples” are factored into the above-mentioned analysis concerning the “benefits” of voluntary disclosure.

To read more about this “ripples” see here [23] and here [24].

Elevate Your FCPA Research

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Elevate Your Research [25]