The Wall Street Journal (here) reports that “News Corp. has hired Mark Mendelsohn, a partner in the Washington, D.C. office of Paul, Weiss, Rifkind, Wharton & Garrison LLP.”
From 2005 to 2010, Mendelsohn (here) was Deputy Chief of the DOJ Fraud Section and “was responsible for overseeing all DOJ investigations and prosecutions under the FCPA.” As such, Mendelsohn is widely viewed as the architect of this new era of FCPA enforcement. The WSJ previously noted (here) that “it has been up to the Justice Department – and specifically to Mr. Mendelsohn – to interpret [the “particularly vague” FCPA]” during its era of resurgence. As Dionne Searcey of the WSJ recently noted (here) Mendelsohn “presided over an across-the-board crackdown on corporate corruption abroad, levying record-breaking fines and prosecuting executives for bribery.”
How Mendelsohn (and those he supervised while at the DOJ) interpreted the FCPA was often aggressive, new, and novel. Indeed, in this interview with “The Boardroom Channel” Mendelsohn was asked about the increase in FCPA enforcement actions and candidly stated that “what’s really changed is not so much the legislation, but the enforcement and approach to enforcement by U.S. authorities.”
Prior posts (here and here) discussed News Corp.’s potential FCPA exposure given the London police officer payments at issue and how the conduct fits within the type of FCPA enforcement frequently pursued by the DOJ during this era of the FCPA’s resurgence. Mendelsohn’s DOJ FCPA unit did not invent FCPA enforcement actions involving payments to “foreign officials” to secure general business advantages (as opposed to foreign government contracts as were traditionally pursued), but these type of actions soared under his leadership. Thus, Mendelsohn’s News Corp. representation may now put him face-to-face with the same aggressive enforcement theories he championed while at the DOJ.
Nathan Vardi (who wrote a feature Forbes article (here) in 2010 titled the “Bribery Racket”) wrote yesterday at Forbes (here) “it will be interesting to see how Mendelsohn handles his new assignment.”
Seperately, Bloomberg reported (here) that News Corp’s independent directors have hired Mary Jo White and Michael Mukasey of the law firm Debevoise & Plimpton. While at the DOJ, White participated in FCPA prosecutions and Mukasey (the former Attorney General) recently testified on behalf of the U.S. Chamber of Commerce during the FCPA hearing last month in the House. See here for a summary of his testimony and the hearing.
Mendelsohn’s 2010 departure from the DOJ’s FCPA unit to a private practice career was part of a clear trend of FCPA enforcement attorneys enforcing the law one day and then providing FCPA defense services the next.
In the latest example (see here, here and here for other recent examples), Paul Weiss announced recently (see here) that Bruce Searby, the prosecutor in the DOJ’s successful of Gerald and Patricia Green will be joining the firm’s Washington D.C. office. Mendelsohn stated in the release that the “growing intolerance of corruption … is leading to increasing scrutiny of organizations’ business activities and a greater focus on compliance and prevention” and that Searby’s addition will enable Paul Weiss “to help our clients better navigate the regulatory environment, conduct internal reviews, and, where necessary, respond to inquiries from U.S. and foreign authorities.” Paul Weiss chair Brad Karp noted that “the demand for top-tier legal advice on complying with domestic and foreign anti-corruption legislation has never been greater.”
I agree and that is why I believe it is in the public interest (recognizing the niched nature of both the DOJ and SEC FCPA units) that all FCPA enforcement attorneys should be prohibited when leaving the government from providing FCPA defense or compliance services for a five-year time period. For additional reading see this piece I co-authored.
Others have also recently brought attention to the public policy concerns of the revolving door. In this recent article in Forbes, Harvey Silvergate profiles a non-FCPA DOJ departure to the private sector and how the former DOJ prosecutor is now on the other side of cases the individual “so zealously prosecuted” during his DOJ career. As to the numerous DOJ departures, Silvergate writes as follows. “From an outside perspective, [such moves seem] like a zero-consequence decision: corporations now have lawyers who understand the federal prosecutorial machinery and, importantly, maintain their relationships with former colleagues remaining in government service. And, of course, the federal government will easily enough be able to find replacements among the many eager law school graduates seeking these plum positions. Everybody wins, right? Everybody, that is, except for the justice system as a whole. Underlying the revolving door is a pernicious underbelly of overzealous and often unfair prosecutions, juked conviction stats, and a culture of plea-bargaining that is spiraling out of control, all in order to bring down some of the biggies in the business world. In short, the revolving door is facilitated by a federal criminal justice system geared more for making prosecutors’ reputations on the scalps of private sector companies and executives, than for achieving true justice.” Silvergate correctly concludes by stating that “revolving door between the Department of Justice and white shoe law firms is a phenomenon that deserves more attention by the press and other elements of civil society…”.
On July 12th, the Government Accountability Office (“GAO” – the investigative arm of Congress) released a report (here) titled “Existing [SEC] Post-Employment Controls Could Be Further Strengthened.” As to the SEC’s revolving door, the GAO states that it conducted its study because “this practice raises questions about the potential impact on SEC’s ability to effectively carry out its mission, including the potential for undue influence by former SEC employees on SEC matters or cases.”
On the same day the GAO released its report, the law firm Labaton Sucharow announced (here) that Jordan Thomas (a former Senior SEC attorney who “played a leadership role in the development and implementation of the SEC’s [new] Whistleblower Program”) joined the firm to “launch its Whistleblower Representation Practice.” According to the firm’s release, “Labaton Sucharow is the first and only law firm to recruit a senior SEC attorney to lead a national whistleblower practice focused exclusively on representing individuals who report violations of the federal securities laws.”