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Friday Roundup

“Piling on” roundup, from the docket, across the pond, complete lack of perspective, scrutiny alert, say what, and for the reading stack. It’s all here in the Friday roundup.

“Piling On” Roundup

FCPA Professor has provided the most extensive, real time coverage and commentary of the DOJ’s recent so-called “piling on” policy. See prior posts here [1], here [2] and here [3].

From the Docket

As highlighted in this prior post [4], in November 2017 the DOJ announced that Chi Ping Patrick Ho (of Hong Kong, China) and Cheikh Gadio (of Senegal) were criminally charged with conspiring to violate the FCPA, violating the FCPA, conspiring to commit international money laundering, and committing international money laundering.

In April, Ho filed this motion to dismiss [5] certain of the FCPA and money laundering charges. In pertinent part, Ho argues that “the government has ignored the fundamental distinction between the provisions of the FCPA applicable to domestic concerns and those applicable to non-domestic concerns” by so-called double-charging Ho under both the dd-2 and dd-3 portions of the statue.

Recently, the DOJ filed this response brief [6]. In pertinent part, the DOJ argues:

“The defendant contends that because he is charged with violating, and conspiring to violate, the FCPA’s domestic concern statute, he cannot simultaneously be charged with violating, and conspiring to violate, the FCPA’s territorial jurisdiction statute.  He is wrong for two independent reasons. First, the two FCPA statutes are not mutually exclusive as to this defendant. And second, even if they were, the Government is permitted to charge in the alternative and to submit alternative theories to the jury.”

As I shared with Law360 [7]:

“For starters, the DOJ calling the three prongs of the FCPA (dd-1, dd-2, and dd-3) different statutes is very odd. Once again, and similar to the DOJ’s defeat on this same general issue in the Hoskins matter (currently on appeal to the Second Circuit), the DOJ’s position ignores legislative history in which Congress clearly delineated the expected application of the various prongs of the FCPA. Rather than confront this legislative history, the DOJ encourages the court to ignore it. Yet, if there is one common thread in the paucity of actual FCPA judicial decisions it is the frequency in which courts find meaning in the legislative history to interpret the FCPA.”

Across the Pond

The U.K. House of Lords announced [8]:

“The House of Lords has … appointed an ad hoc Select Committee to consider and report on the Bribery Act 2010. The Committee will be taking evidence throughout the summer and autumn, and will be reporting in 2019.

The Bribery Act 2010 created two basic crimes of giving and receiving bribes, and covers a number of new issues for example the crime of bribery of foreign public officials. Before the 2010 Act the law of bribery had not been substantially changed for nearly a century. The Act also created the important new offence of failure by a commercial organisation to have in place adequate procedures to prevent persons associated with them from undertaking bribery.

The Act applies only to conduct after its entry into force on 1 July 2011. Although there are still prosecutions under the earlier legislation for conduct prior to July 2011, nearly all corrupt conduct is now prosecuted under the Bribery Act.

The Chairman of the Committee, Lord Saville of Newdigate, said:

“Seven years since it came into force, and with the majority of bribery cases being prosecuted under the Bribery Act 2010, now is the opportune time for post-legislative scrutiny. The Committee will examine the effectiveness of the Act, whether there has been stricter prosecution of corrupt conduct, a higher conviction rate, and a reduction in such conduct.

“There is confusion and uncertainty about the Act, amongst SMEs in particular. The inquiry would seek to raise awareness and understanding of the Act.

“The Committee will be publishing a call for evidence in June, and will welcome submissions from any person, organisation or business with experience of the Bribery Act 2010. We urge any interested parties to contribute to the inquiry. Evidence sessions are expected to begin ahead of summer recess.”

Lack of Perspective

The more some FCPA commentator write, the more their lack of perspective is apparent. This recent [9] blurb in Compliance Week by Thomas Fox is titled “D&B Shows the Right Way to Handle An FCPA Probe” and states:

“Dun & Bradstreet (D&B) in late April resolved a long-standing FCPA investigation with some excellent results. The first was that it received a declination from the Justice Department from prosecution of any criminal matters. It resolved a civil violation with the Securities and Exchange Commission for $9.2 million consisting of a penalty and interest and disgorgement of illegally obtained profits.”

Excellent results?

As highlighted in this prior post [10]:

Hardly an “excellent result” unless one is in the “everything is awesome [11]” group.

About that so-called DOJ declination? Instead, how about asking what viable criminal charges did the DOJ actually decline? As highlighted in this prior post [12], based on the information in the public domain the answer appears to be none.

[13]

Scrutiny Alert

Vantage Drilling

Vantage Drilling has been under FCPA scrutiny since Summer 2015 (see here [14] for the prior post). As highlighted in this prior post [15], in August 2017 the company disclosed:

“[The company] has received a letter from the United States Department of Justice (the “DOJ”) acknowledging Vantage’s full cooperation in the DOJ’s investigation concerning possible violations by Vantage of the Foreign Corrupt Practices Act (the “FCPA”), and indicating that the DOJ has closed its investigation without any action.”

Recently the company disclosed [16]:

“We have continued our cooperation in the investigation by the SEC into the same allegations and engaged in negotiations with the staff of the Division of Enforcement of the SEC to resolve their investigation. We have reached an agreement in principle with the staff relating to terms of a proposed offer of settlement, which is being presented to the Commission for approval. While there can be no assurance that the proposed offer of settlement will be accepted by the Commission, the Company believes the proposed resolution will become final in the second quarter of 2018. In connection with the proposed offer of settlement, we have accrued a liability in the amount of $5 million.  If the Commission does not accept the proposed offer of settlement and the SEC determines that violations of the FCPA have occurred, the Company could be subject to civil and criminal sanctions, including monetary penalties, as well as additional requirements or changes to our business practices and compliance programs, any or all of which could have a material adverse effect on our business and financial condition.”

ZTE Corp.

According to this report [17]:

“An investigation by Fairfax Media has found ZTE [a Chinese telecom company that has been in the news recently] not only paid $US12.8 million ($17 million) in bribes to secure one contract in West Africa, but had a designated internal department and multiple layers of management to approve these payments, according to a former insider. Documents show the bribes were meticulously recorded and ran to more than 20 per cent of one contract’s value, helping to explain how ZTE rapidly became the world’s third largest supplier of telecommunications equipment by 2012.”

Say What?

There is plenty of strange things written about the FCPA, but this one might be in a league of its own. In this piece [18] titled “Trump’s Withdrawal From Iran Deal is a Mistake,” Rachel Marsden states:

“Trump’s decision is a slap in the face to America’s Western allies, many of which are home to multinational companies that have started doing business in Iran since the ratification of the nuclear deal. Trump’s reimposition of sanctions against Iran means that these companies have to worry about violating the U.S. Foreign Corrupt Practices Act, risking prosecution and billion-dollar fines.”

I have read this multiple times and still at a loss to decipher Marsden’s FCPA concerns. (Moreover, for what it is worth, the largest FCPA settlement of all-time is $800 million).

Reading Stack

Eric Carlson (Covington & Burling) frequently writes informed and insightful things about FCPA compliance topics in China. See here [19] for his latest “The Risky World of Real and Fake Chops, Seals and Stamps.”

*****

As noted here [20] by Global Investigations Review: “Patrick Stokes, a former FCPA unit chief at the DOJ, says he’s concerned by the government’s use of increasingly broad tolling agreements.”

I’ve said it many times [21] on these pages. Critiquing various aspects of FCPA enforcement is easy – one just waits for a former enforcement official to say the same thing!

Elevate Your FCPA Research

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Elevate Your Research [22]