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Individual FCPA Charges

One reason to read FCPA Professor is to stay ahead of the curve.

For instance, this October 2015 post highlighted alleged bribery at the United Nations charging John Ashe (described as having various positions at the U.N. including serving as the Permanent Representative of Antigua to the U.N. and recently serving as the President of the U.N. General Assembly) and others with a variety of criminal offenses based on allegations that payments were made to Ashe in connection with a U.N. sponsored conference center in Macau, China and to influence business interactions with Antiguan government officials.

The post noted that although the alleged bribery was charged under 18 USC 666 (theft or bribery concerning programs receiving federal funds) on account of the U.N. receiving U.S. federal government funds, Ashe was likely a “foreign official” under the FCPA given that the definition of “foreign official” includes individuals associated with “public international organizations” and the U.N. has been designated as such an organization.

It was further noted that the alleged payors of the bribes to Ashe were predominately naturalized U.S. citizens subject to the FCPA’s anti-bribery provisions and that the Chinese national defendant was alleged to have engaged in conduct in the U.S. likely sufficient to satisfy the dd-3 prong of the FCPA.

Sure enough.

The actual court filing is not yet listed on the court docket, but according to this Reuters report:

“A revised indictment filed in Manhattan federal court against Ng Lap Seng, a real estate developer from the Chinese territory, and his assistant, Jeff Yin, included new charges that both men violated the U.S. Foreign Corrupt Practices Act.

Prosecutors accuse Ng and Yin of paying more than $500,000 in bribes to John Ashe, a former U.N. ambassador from Antigua and Barbuda who served as General Assembly president from 2013 to 2014. Ashe died in June awaiting trial.

The indictment said Ng and Yin also paid bribes to Francis Lorenzo, a then-deputy U.N. ambassador from the Dominican Republic who pleaded guilty in March to bribery and money laundering charges as part of a deal to cooperate in the probe.

The main goal, the indictment said, was to have both ambassadors to take steps to help obtain the United Nations’ support for a multi-billion dollar U.N.-backed conference center in Macau that Sun Kian Ip Group would develop.”

France Adopts DPAs

My 2010 article “The Facade of FCPA Enforcement” concluded with a section titled “Why the Facade of FCPA Enforcement Matters” which included a part on modeling. In pertinent part, the article stated:

“[T]he facade of FCPA enforcement matters because of the increasing frequency by which other nations are modeling enforcement of their own bribery laws on U.S. enforcement methods and theories. These methods and theories, unless addressed and corrected here in this country, will continue to be replicated elsewhere, perhaps leading to a global facade of enforcement.”

Since then, the U.K. has adopted a deferred prosecution regime (albeit substantially different than the U.S. model). Nevertheless, as highlighted in this Wall Street Journal Risk & Compliance Journal article:

“Corporate lawyers in the U.K. continue to grapple with how to negotiate with the Serious Fraud Office to secure deferred prosecution agreements in ways lawyers with experience in the U.S. process don’t, said David Green, the SFO’s director.“U.S. lawyers who are steeped in [negotiating deferred prosecution agreements] understand that this is the process, it involves a settlement,” said Mr. Green, speaking on the sidelines of the Pinsent Masons’ Regulatory Conference in London on Thursday. “Some English firms are treating the DPA process as litigation, they are trying to score points” when negotiating a penalty and disgorgement of profits.”

God forbid. A lawyer acting as an advocate and not rolling over and playing dead.

Next up in the modeling that was predicted in the 2010 article: France.

As noted in this Baker & McKenzie alert, France recently adopted changes to its anti-corruption framework. Among the changes:

“A new form of French DPA (“convention judiciaire d’intérêt public“) has been introduced allowing companies suspected notably of international or national corruption offences to avoid prosecution and criminal sanctions by entering into an agreement with a court requiring either or both of the following:

  • payment of a public fine (limited to 30% the company’s three-year trailing average annual revenue and determined based on the proceeds of the offence), increased by damages to the victim and certain expenses incurred by the Agency within its mission
  • implementation of an internal compliance program to be overseen by the Agency for three years.

Any such fine and/or compliance program must be approved by a judge in a public hearing. The settlement order and agreement and the fine amount must be published on the Agency’s website. In exchange, charges will be dropped and the company will not be required to make any admission of liability. Such DPAs are reserved for corporate entities, while individual offenders will remain subject to criminal sanctions even if the company enters into a DPA.”

Other countries that are keen to adopt NPAs and/or DPAs (because they are easy and cost-efficient for government) include Canada and Australia.

Scrutiny Alert

As highlighted in this prior post, Fairmount Santrol previously disclosed:

“In December 2015, we were notified by the Securities and Exchange Commission (the “SEC”) that the Company was being investigated for possible violations of the FCPA and other securities laws relating to matters concerning certain of our international operations. We had previously retained outside legal counsel to investigate the subject matter of the SEC’s investigation, and at that time, determined that no further action was necessary.”

Recently the company disclosed:

“As previously disclosed, the Company was notified by the Securities and Exchange Commission (the “SEC”) in December 2015 that the Company was being investigated by the SEC with respect to possible violations of the Foreign Corrupt Practices Act (the “FCPA”) relating to matters concerning certain of the Company’s international operations. On November 3, 2016, the Company was notified by the SEC that the SEC staff completed its investigation regarding possible violations of the FCPA and that the SEC does not intend to pursue enforcement action against the Company.”

The “declination” crowd is likely to use the “d” word in connection with Fairmount Santrol’s FCPA scrutiny. That is why this term is a big, muddy mess. 


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