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Friday Roundup

By on April 3, 2015 in Asset Recovery, Bourke, Extradition, FBI, FCPA Inc., Foreign Nationals, Foreign Official, SEC, Victims
Roundup2

Looking for talent – got talent, FBI announcement, Bourke related, to FCPA Inc., and for the reading stack.  It’s all here in the Friday Roundup.

Looking for FCPA Talent?  Got Talent

If your firm or organization is looking for either a summer associate or full-time lawyer with a solid foundation in the FCPA, FCPA enforcement, and FCPA compliance, please e-mail me at fcpaprofessor@gmail.com. I teach one of the only FCPA specific law school classes in the country (see here) and my Southern Illinois University law students who excelled in the class have, I am confident in saying, more practical skills and knowledge on FCPA topics than other law students.

I can recommend several students and I encourage you to give them an opportunity.

FBI Announcement

The FBI recently announced the establishment of international corruption squads.  In pertinent part, the release states:

“The FCPA … makes it illegal for U.S. companies, U.S. persons, and foreign corporations with certain U.S. ties to bribe foreign officials to obtain or retain business overseas. And we take these crimes very seriously—foreign bribery has the ability to impact U.S. financial markets, economic growth, and national security. It also breaks down the international free market system by promoting anti-competitive behavior and, ultimately, makes consumers pay more.

We’re seeing that foreign bribery incidents are increasingly tied to a type of government corruption known as kleptocracy, which is when foreign officials steal from their own government treasuries at the expense of their citizens. And that’s basically what these foreign officials are doing when they accept bribes in their official capability for personal gain, sometimes using the U.S. banking system to hide and/or launder their criminal proceeds.

The FBI—in conjunction with the Department of Justice’s (DOJ) Fraud Section—recently announced another weapon in the battle against foreign bribery and kleptocracy-related criminal activity: the establishment of three dedicated international corruption squads, based in New York City, Los Angeles, and Washington, D.C.

Special Agent George McEachern, who heads up our International Corruption Unit at FBI Headquarters, explains that the squads were created to address the national and international implications of corruption. “The FCPA allows us to target the supply side of corruption—the entities giving the bribes,” he said. “Kleptocracy cases allow us to address the demand side—the corrupt officials and their illicit financial assets. By placing both threats under one squad, we anticipate that an investigation into one of these criminal activities could potentially generate an investigation into the other.”

Corruption cases in general are tough to investigate because much of the actual criminal activity is hidden from view. But international corruption cases are even tougher because the criminal activity usually takes place outside of the U.S. However, members of these three squads—agents, analysts, and other professional staff—have a great deal of experience investigating white-collar crimes and, in particular, following the money trail in these crimes. And they’ll have at their disposal a number of investigative tools the Bureau uses so successfully in other areas—like financial analysis, court-authorized wiretaps, undercover operations, informants, and sources.

Partnerships with our overseas law enforcement counterparts—facilitated by our network of legal attaché offices situated strategically around the world—are an important part of our investigative arsenal. The FBI also takes part in a number of international working groups, including the Foreign Bribery Task Force, to share information with our partners and help strengthen investigative efforts everywhere. And we coordinate with DOJ’s Fraud Section—which criminally prosecutes FCPA violators—and the Securities and Exchange Commission—which uses civil actions to go after U.S. companies engaging in foreign bribery.

Our new squads will help keep the Bureau at the forefront of U.S. and global law enforcement efforts to battle international corruption and kleptocracy.”

Bourke Related

This October 2013 post highlighted a Democracy Now program that attempted to re-script the Frederic Bourke FCPA enforcement action.

Democracy Now returns to the story in this recent interview with former U.S. Senator George Mitchell.  Mitchell, like Bourke, invested in the Azeri project at issue, but unlike Bourke was not prosecuted.

Set forth below is the Q&A:

Democracy Now: Do you believe [Bourke] is a whistleblower, and do you believe that he should be exonerated.

Mitchell: Well, I believe that he should not have been convicted in the trial, in which conviction did occur. I think it was a very unfortunate circumstance, and as you describe it, regrettable from Rick Bourke’s standpoint.

Democracy Now: Do you believe he should now be exonerated, to be able to clear his name fully?

Mitchell: Well, yes, but I’m not sure what process would occur. He was tried, convicted. The conviction was upheld on appeal. But, as I said, I repeat, I do not believe he should have been convicted in the first place.

As noted in the prior post, while each is entitled to his/her own opinion about the Bourke case, the fact is – the case received more judicial scrutiny than arguably any other FCPA enforcement action.

To FCPA Inc.

It happens so often it is difficult to keep track of, but I try my best.

In the latest example of a DOJ FCPA enforcement attorney departing for FCPA Inc., Sidley Austin recently announced that James Cole (former DOJ Deputy Attorney General) ” has joined the firm in Washington, D.C. as a partner in its White Collar: Government Litigation & Investigations practice.”  As stated in the release, ““[Cole’s] experience at the highest levels of law enforcement will enable him to counsel our clients facing the most difficult and complex challenges.”  Cole’s law firm bio states that he will focus “his practice on the full range of federal enforcement and internal investigation matters, with a particular emphasis on cross-border and multi-jurisdictional matters.”

While at the DOJ, Cole frequently articulated DOJ FCPA positions and enforcement policies.  (See here for example).

For the Reading Stack

From Professor Peter Henning in his New York Times Dealbook column – “Lawmakers Focus on How the SEC Does Its Job.”

From Miller & Chevalier attorneys – “DOJ is Losing the Battle to Prosecute Foreign Executives.”  An informative article regarding the DOJ’s struggles to prosecute foreign nationals for a variety of offenses (antitrust, FCPA, etc.).

An informative article here in the New York Law Journal by Marcus Asner and Daniel Ostrow  titled “A New Focus On Victims’ Rights in FCPA Restitution Cases.”

An interesting read here from the Wall Street Journal regarding China National Cereals, Oils and Foodstuffs Corp (Cotfco), a state-owned enterprise.

“In a few short years, Cofco has spent a couple billion dollars quietly buying up Australian cane fields, French vineyards and soybean pastures in Brazil, helping it become one of the world’s largest food companies. Now, Cofco is exploring deals in the world’s biggest exporter of agricultural commodities: the U.S.”

Weekend assignment:  are Cofco employees Chinese “foreign officials” under the 11th Circuit’s Esquenazi decision?

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A good weekend to all and “On Wisconsin.”

Re-Scripting The Bourke Case

By on October 28, 2013 in Bourke, Multimedia, Whistleblowers

Frederic Bourke, “another whistleblower put in prison by the Obama administration.”

So begins this recent lengthy depiction of the Bourke case on Democracy Now.  Over the course of the approximate 45 minute video, the viewer is lead to believe that it has been a miscarriage of justice that Bourke is currently in a minimum security prison after being found guilty of, among other charges, conspiring to violate the FCPA.

Yes, I agree (as highlighted in this prior post) that the Bourke case is arguably the most complex and convoluted case in Foreign Corrupt Practices Act history.

Yes, the presiding judge in the Bourke trial – Judge Shira Scheindlin (S.D.N.Y.) – did reject the DOJ’s 10 year sentencing recommendation in sentencing Bourke to 366 days in prison.

Yes, Judge Scheindlin did comment at the sentencing hearing that – “after years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crook or a little bit of both.”  This comment did not exactly leave one with warm fuzzy feelings regarding the case.

However, the facts and enforcement theories at issue in Bourke have also received the most judicial scrutiny in the history of the FCPA – something seemingly glossed over in the lengthy Democracy Now video.

There was extensive pre-trial motion activity resulting in several written decisions by the S.D. of N.Y. as well as the Second Circuit (see 493 F.Supp.2d 693, 541 F.3d 166, and 582 F.Supp.2d 535), reconsideration of pre-trial rulings (see 2008 WL 5329960), and a written decision denying Bourke’s request for a judgment of acquittal (see 638 F.Supp. 2d 348).

In July 2009, Bourke was found guilty after a six week trial by a federal jury of conspiracy to violate the FCPA, among other charges.  There was a post-trial reconsideration of the motion to deny a judgment of acquittal (664 F.Supp.2d 369).

From there, Bourke’s case went to the Second Circuit and the primary issue on appeal was Bourke’s knowledge of the alleged bribery scheme in connection with the privatization of Azerbaijan’s alleged state oil company.  The issues on appeal were dissected in prior posts here and here.

In December 2011, the Second Circuit affirmed Bourke’s conviction of conspiring to violate the FCPA, among other charges.  (see here for the prior post).  In pertinent part, the court held that Bourke enabled himself to participate in a bribery scheme without acquiring actual knowledge of the specific conduct at issue and that such conscious avoidance, even if supported primarily by circumstantial  evidence, is sufficient to warrant an FCPA-related charges.

Specifically, the Second Circuit stated:

“While the government’s primary theory at trial was that he had actual knowledge of the bribery scheme, there is ample evidence to support a conviction based on the alternate theory of conscious avoidance. The testimony at trial demonstrated that Bourke was aware of how pervasive corruption was in Azerbaijan generally.  Bourke knew of Kozeny’s reputation as the “Pirate of Prague.”  Bourke created the American advisory companies to shield himself and other American investors from potential liability from payments made in violation of FCPA, and joined the boards of the American companies instead of joining the Oily Rock board.   In so doing, Bourke enabled himself to participate in the investment without acquiring actual knowledge of Oily Rock’s undertakings. The strongest evidence demonstrating that Bourke willfully avoided learning whether corrupt payments were made came from tape recordings of a May 18, 1999 phone conference with Bourke, fellow investor Friedman and their attorneys, during which Bourke voiced concerns about whether Kozeny and company were paying bribes.  […]  Finally, Bourke’s attorney testified that he advised Bourke that if Bourke thought there might be bribes paid, Bourke could not just look the other way. Taken together, a rational juror could conclude that Bourke deliberately avoided confirming his suspicions that Kozeny and his cohorts may be paying bribes.”

With the Second Circuit appeal pending, Bourke filed motions requesting a new trial based on the theory that a key prosecution witness offered false testimony.  The motion was denied.

As noted in this prior post, Bourke then appealed this denial to the Second Circuit.  The Second Circuit affirmed the trial court decision and rejected Bourke’s request for a new trial.  In short, the Second Circuit concluded that Bourke failed to present newly discovered evidence or that the key trial witness in fact committed perjury.

As highlighted in this prior post, Bourke then petitioned the Supreme Court to hear his case.  In April 2013, the Supreme Court declined to hear Bourke’s appeal.

The Democracy Now program glossed over the extensive judicial scrutiny of the facts and enforcement theories at issue in Bourke in an attempt to re-script the Bourke case as “another whistleblower put in prison by the Obama administration.”

Once again, not the media’s finest FCPA moment.  (See here and here for prior posts on the same subject).

In short, I agree with the DOJ statement (included at the very end of the approximate 45 minute video) which stated:

“After three years of Mr. Bourke’s trying to overturn a jury’s verdict of guilty, his two unsuccessful appeals to the Court of Appeals, and a denial of review by the U.S. Supreme Court, there is not much left say, other than that Mr. Bourke has had every opportunity in numerous forums to make every argument he chose to make, and every challenge to his conviction has been rejected.”

Friday Roundup

By on May 10, 2013 in Antitrust, Asset Recovery, Barclays, Bourke, BSG Resources Ltd, Compliance Defense, Declination Decisions, Deferred Prosecution Agreements, Double Standard, Enforcement Agency Policy, Enforcement Agency Speeches, FCPA Appeals, FCPA Reform, Foreign Official, Monitor, Non-Prosecution Agreement

Enforcement agency speeches, “foreign official” delay, and for reading stack.  It’s all here in the Friday roundup.

Enforcement Agency Speeches

This prior post detailed comments by Mary Jo White prior to becoming SEC Chairman.

Last week, White spoke before the Investment Company Institute on the general topic of the SEC’s role in an increasingly global financial and regulatory system.  She stated as follows (see here) concerning the SEC’s enforcement of the FCPA.

“Of course, misrepresentations and other unlawful actions travel in both directions across borders, which is another reason why our partnership with our regulatory counterparts abroad is so important.  Among the most prominent concerns in this regard is bribery by U.S. companies overseas, which not only undermines international markets and governments but also simultaneously undermines the reporting and disclosure integrity of our own markets.  Thus, strong and fair enforcement of the Foreign Corrupt Practices Act, which forbids U.S. companies from bribing foreign officials, has been and will continue to be a priority for us. Our first objective is to help companies avoid FCPA violations by educating them. And so our staff along with our colleagues at the Department of Justice recently published a comprehensive Guide to the FCPA to give clear guidance and clear up some myths.  Of course, the other side of education is deterrence.  Deterrence can mean strong enforcement actions with tough disgorgement and penalties.  But it can also mean the tangible benefits that come with cooperation – as demonstrated by the Non-Prosecution Agreement with Ralph Lauren Corporation we announced in April. In this particular case, the corporation’s Argentine subsidiary paid bribes to government and customs officials to improperly secure the importation of their products into the country.  The bribes occurred during a period when the U.S. parent company lacked meaningful anti-corruption compliance and control mechanisms over its foreign subsidiary.  The misconduct came to light as a result of the company’s efforts to improve internal controls and compliance.  And the company immediately reported the problem to the SEC and provided exceptional assistance to our investigation. Successful FCPA cases also increasingly require assistance from foreign law enforcement authorities.  That is why we recently partnered with the DOJ and FBI in conducting a foreign bribery training program that provided intensive training to 130 foreign investigators and prosecutors from 30 countries, many on which the SEC staff relies for mutual legal assistance in FCPA cases.”

Yesterday, Daniel Suleiman (DOJ Deputy Chief of Staff for the Criminal Division) spoke at the Minnesota Bar Association’s Annual International Business Law Institute.  (See here).  Suleiman offered “some views from the U.S. Department of Justice on the topic of anti-corruption enforcement” and “what the Justice Department is doing in the area of criminal enforcement to fight corruption at home and abroad.”  He stated, in pertinent part, as follows.

“I think of our anti-corruption efforts as falling into three principal buckets:  number one is criminal prosecution; number two is assisting foreign countries to build up their judicial, prosecutorial, and investigative institutions; and number three is the pursuit, through civil actions, of the proceeds of foreign official corruption.  I will discuss each of these buckets in turn.

First and foremost, the Criminal Division is a litigating operation.  We investigate and prosecute cases.  Our corruption prosecutions are of two kinds:  we prosecute corruption by domestic officials, and we prosecute foreign bribery offenses under the Foreign Corrupt Practices Act, or FCPA.”

[…]

“[W]e have an incredibly strong team of prosecutors who focus exclusively on enforcing the FCPA.  Depending upon how familiar you are with FCPA enforcement, you may know that the Criminal Division is the entity in the United States with primary responsibility for criminal enforcement of the Act.  It is Justice Department policy that no FCPA prosecution can be brought without authorization from the Criminal Division, which distinguishes FCPA prosecutions from most other kinds of federal criminal cases.  The Securities and Exchange Commission, which is a few blocks up the street from us, has primary responsibility for the Act’s civil enforcement.”

“Foreign bribery enforcement has for a long time been an important aspect of U.S. policy.  The FCPA was enacted roughly 35 years ago, around the same time that our Public Integrity Section was created to focus on public corruption prosecutions, and it was the first effort of any nation to specifically criminalize the act of bribing foreign officials.  The statute was enacted in the wake of the Watergate scandal, but it took more than 20 years for the Act to become a strong enforcement tool.  And, over the past several years, the Justice Department has substantially increased its enforcement of the Act.”

“One important aspect of our FCPA enforcement involves, of course, our corporate resolutions.  We have collected billions of dollars in criminal fines and penalties to resolve FCPA investigations against companies doing business abroad, including BizJet International Sales and Support Inc., a Lufthansa subsidiary; Alcatel-Lucent; Johnson & Johnson; and many others.”

“But another, critically important aspect of our enforcement regime involves holding individuals responsible for FCPA offenses.  There is no greater deterrent to corporate crime than the prospect of prison time.  As many have recognized, if people don’t go to prison, then enforcement can come to be seen as merely the cost of doing business.  In the past four years, the Criminal Division’s FCPA Unit has obtained over three dozen criminal convictions of individuals, including of people who have been sentenced to as many as 15 years in prison.”

“We are as active today in this area as we have ever been.  In the past month alone, we have announced charges against several key defendants in ongoing, active FCPA investigations.  In mid-April, in a case that we are prosecuting with the U.S. Attorney’s Office in Manhattan, we secured the arrest of a defendant in connection with an alleged bribery scheme to secure mining rights in the Republic of Guinea.  In a separate case, which we are prosecuting with the U.S. Attorney’s Office in Connecticut, we also secured the arrest last month of a defendant in connection with an alleged bribery scheme to secure power contracts in Indonesia.  And just two days ago, together with the U.S. Attorney’s Office in Manhattan, we announced charges against two broker-dealer employees and a senior Venezuelan banking official for engaging in a multi-million dollar bribery scheme.”

[…]

“Finally, I want to tell you about a relatively new Justice Department initiative.  About three-and-a-half years ago, Attorney General Holder gave a speech in Qatar, at which he pledged to increase the United States’ commitment to recovering foreign corruption proceeds.  Since that time, the Criminal Division has led the charge in developing what we refer to as the Kleptocracy Asset Recovery Initiative.”

“The initiative’s purpose is to identify the proceeds of foreign official corruption – in other words, the spoils – forfeit them through civil actions, and, to the extent possible, repatriate the forfeited funds for the benefit of the people harmed. In most criminal prosecutions, a court can order forfeiture, upon conviction, as part of the defendant’s sentence.  Often, however, it may be impractical or impossible to bring a criminal prosecution against a particular person – because that person is immune from prosecution, for example, beyond our jurisdiction, or otherwise unavailable.  In these circumstances, we have begun bringing civil forfeiture actions to recover the stolen property.”

“We have brought several Kleptocracy cases in the past couple of years, and forfeited millions of dollars in corrupt proceeds.  The most high-profile of our Kleptocracy cases to date involves two civil actions we have brought against approximately $70 million in assets allegedly belonging to a government minister in Equatorial Guinea who is also the son of that country’s president.  According to court papers, despite an official government salary of less than $100,000 per year, this minister amassed wealth of over $100 million.  Among the items we are seeking to forfeit are nearly $2 million worth of Michael Jackson memorabilia (including the white glove), a Gulfstream G-V jet worth $38.5 million, and a $30 million house in Malibu.  These are hard, and hard-fought, cases, but we believe strongly that foreign officials who amass wealth through corruption should not be permitted to use the United States as a haven for their ill-gotten gains.”

“Foreign Official” Delay

Oral argument in the “foreign official” challenge pending in the 11th Circuit – originally scheduled for later this month, has been postponed until the week of October 7th.

This is a historic appeal in that it will be the first instance in which a circuit court directly confronts the enforcement theory that employees of alleged state-owned or state-controlled entities are “foreign officials” under the FCPA (see here for a prior post, including embedded links).

Scrutiny Alerts

For more on Barclay’s scrutiny, on both sides of the Atlantic, see this recent article in Middle East Monitor concerning the bank’s relationship with the Abu Dhabi government, including Sheikh Mansour, the deputy prime minister of the United Arab Emirates.

Samuel Rubenfeld (Wall Street Journal Risk & Compliance Journal) has the latest (here) regarding BSG Resources Ltd. a Guernsey-based company in the news after Frederic Cilins, a French citizen associated with the company, was recently arrested and accused of attempting to obstruct an ongoing investigation into whether a mining company paid bribes to win lucrative mining rights in the Republic of Guinea.  (See here for the prior post).  As noted in the WSJ article, BSG recently released this detailed statement concerning its conduct in Guinea.

Reading Stack

Several articles of interest to pass along from last week’s Corporate Crime Reporter conference.  This article details comments made by Denis McInerney (DOJ Criminal Division Deputy Assistant Attorney General) regarding non-prosecution and deferred prosecution agreements.  This article details comments made by McInerney concerning my suggested two-step reform plan (see here for the prior post) and also details McInerney’s response to my question concerning the definition of a declination.  Articles here and here concern corporate monitors.

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Over the years, Bloomberg’s David Glovin has written some excellent articles concerning Viktor Kozney, Frederic Bourke, et al.  With Bourke soon to report to prison, Glovin pens another great article here.

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This prior post discussed the NY Times recent “With Bags of Cash, CIA Seeks Influence in Afghanistan” story and how the story put our stark double standards in the headlines once again.  More recently, the NY Times reports (here) as follows. “[Afghan President] Karzai said he had called a meeting […] with the CIA’s Kabul station chief. “I told him because of all these rumors in the media, please do not cut all this money, because we really need it,” he said. “We want to continue this sort of assistance, and he promised that they are not going to cut this money.”  For more on the situation, including the views of others, see here from Alison Frankel’s On the Case column.

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See here from Josh Goodman (an attorney at the Federal Trade Commission) titled “The Anti-Corruption and Antitrust Connection.”

*****

A good weekend to all.

Supreme Court Declines To Hear Bourke Case

By on April 16, 2013 in Bourke, Knowledge

It began in 2005 with this indictment against Frederic Bourke and others.

Since then, the case against has had several twists and turns including dismissal of FCPA substantive charges on statute of limitations grounds, reinstatement of the FCPA substantive charges, a superseding indictment which then dropped the FCPA substantive charges in favor of conspiracy to violate the Foreign Corrupt Practices Act, among other charges.  (And that’s just the portion of the case dealing with Bourke, see here for a prior post concerning Bourke’s co-defendant Victor Kozney).

Key events during the Bourke case was the summer of 2009 when Bourke was found guilty by a jury for conspiring to pay bribes to Azerbaijan officials in violation of the FCPA and Travel Act and for making false statements.  In November 2009 (see here for the prior post), Judge Shira Scheindin (S.D.N.Y.) sentenced Bourke to 366 days in prison (followed by three years probation) and ordered him to pay $1 million fine.  At sentencing, Judge Scheindin stated “after years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crook or a little bit of both.”

A Second Circuit appeal followed and prior posts here and here outlined Bourke’s appeal which principally focused on the FCPA’s knowledge element, including the trial court’s conscious avoidance jury instruction.  In December 2011 (see here for the prior post), the Second Circuit affirmed Bourke’s conviction.  Given the nature of the appeal, the Second Circuit decision focused mostly on knowledge issues which are fact specific, although the Second Circuit’s holding on conscious avoidance was noteworthy in terms of FCPA jurisprudence. Essentially the court held that Bourke enabled himself to participate in a bribery scheme without acquiring actual knowledge of the specific conduct at issue and that such conscious avoidance, even if supported primarily by circumstantial evidence, is sufficient to warrant an FCPA-related charges.

Bourke still kept fighting.  He requested a new trial based on newly discovered evidence.  This request was denied by the trial court and affirmed by the Second Circuit in November 2012 (see here for this prior post).

Bourke next sought review by the Supreme Court.  The questions presented for review concerned (i) willful blindness and the request to resolve circuit splits over the doctrine in aftermath of Supreme Court’s decision in Global-Tech (which addressed willful blindness in the context of a civil patent case); (ii) the request to resolve circuit splits over the need for unanimity on a specific overt act; and (iii) issues concerning Federal Rule of Evidence 106 (which states as follows – “iff a party introduces all or part of a  writing or recorded statement, an adverse party may require the  introduction, at that time, of any other part — or any other writing or  recorded statement — that in fairness ought to be considered at the  same time”).

Yesterday, the Supreme Court declined to hear Bourke’s appeal likely ending a case that has lingered since 2005.

As suggested by the above questions presented, while Bourke’s appeal occurred in the context of an FCPA case, the issues the Supreme Court declined to hear are not unique to the FCPA context.  Indeed, aside from the facts of the Bourke case and its procedural history which obviously necessitated reference to the FCPA, there is little substantive reference to the FCPA in the U.S. Opposition Brief (see here).

Friday Roundup

By on November 30, 2012 in Bourke, Central European Distribution Co., Double Standard, FCPA Appeals, Offensive Use of FCPA, Victims

Two years ago today, you just can’t make this stuff up, no new trial for Bourke, more offensive use of the FCPA, and ICE is not melting away.  It’s all here in the Friday roundup.

Two Years Ago Today

Two years ago today, the Senate held a hearing titled “Examining Enforcement of the Foreign Corrupt Practices Act.”  (See here for the full hearing transcript.  I had the pleasure to testify at the hearing (see here for my written testimony).  I went to Capital Hill without an agenda and on behalf of no one but myself.  My testimony represented my beliefs and I was proud of what I said then and I remain proud today.

You Just Can’t Make This Stuff Up

Try as you might, you just can’t make up a better example of the double-standard I frequenlty write about.  (See here for numerous other prior posts).

Our FCPA enforcement agencies are bringing enforcement actions against companies for conduct that includes providing $600 bottles of wine, Cartier watches, cameras, kitchen appliances, business suits, and executive education classes to individuals employed by foreign companies that are allegedly state-owned or state-controlled.  (These are all allegations found in recent FCPA enforcement actions).

Assistant Attorney General Lanny Breuer recently declared (see here) that “we in the United States are in a unique position to spread the gospel of anti-corruption.”

Against this backdrop, the Wall Street Journal reports (here) that President Obama’s fundraising advisers “have urged the White House to accept corporate donations for his January 2013 inaugural celebration rather than rely exclusively on weary donors who underwrote his $1 billion re-election effort.”  Among the justifications put forward by the Obama team according to the Wall Street?  The inauguration is “more of a civic event than a partisan political affair.”

Bourke Development

Perhaps this is finally the end of the FCPA enforcement action against Frederick Bourke.  As noted in this previous post, in July 2009 Bourke was convicted by a jury for conspiring to pay bribes to Azerbaijan officials.  At sentencing, Judge Shira Scheindin (S.D.N.Y.) sentenced Bourke to 366 days in prison, even though she commented that “after years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crook or a little bit of both.”

An appeal to the Second Circuit followed, largely on knowledge issues.  As highlighted in this previous post, in December 2011, the Second Circuit affirmed Bourke’s conviction.  Bourke subsequently requested a new trial based on newly discovered evidence relating to alleged perjury of a key trial witness.  Judge Scheindin denied Bourke’s request.  Bourke then appealed the issue to the Second Circuit.

Earlier this week, in an order (here) the Second Circuit affirmed the trial court decision and rejected Bourke’s request for a new trial.  In short, the Second Circuit concluded that Bourke failed to present newly discovered evidence or that the key trial witness in fact committed perjury.

As noted in this Bloomberg article, Bourke’s lawyers plan to ask the Second Circuit to consider the case again.

Offensive Use of the FCPA

Rarely does one hear of offensive use of the FCPA to accomplish a business objective.  Usually it is the other way around – the FCPA thwarts a business objective such as acquiring a foreign target, not hiring the foreign agent who says he knows a way to get that lucrative contract, etc.

But with increasing frequency, the FCPA is being used offensively (at least it seems).  See this prior post for offensive use of the FCPA in the on-going Wynn-Okada dispute.

Recently Chris Matthews (Wall Street Journal Corruption Currents) has been reporting (here, here, and here) on seemingly offensive use of the FCPA in regards to CEDC Distribution Company, a company that has previously disclosed FCPA scrutiny.  (See here for the prior post).

In short, Russian billionaire Roustam Tariko, the founder of CEDC rival Russian Standard vodka brand and CEDC’s largest shareholder, claimed that CEDC executives themselves were the subject of FCPA investigation.

Tariko’s claims prompted CEDC to issue this letter to shareholders that stated, in pertinent part, as follows.

“As you may be aware, earlier this week, Mr. Roustam Tariko, Chairman of Russian Standard, published a letter to CEDC investors that has created anxiety and confusion in the marketplace.  What you may not be aware of is that Mr. Tariko’s letter was published less than 48 hours after the CEDC Board voted 5 to 3 (the 3 being Mr. Tariko and his Board designees) against Mr. Tariko’s request that he be given total control over CEDC’s operations and finance. This request follows repeated attempts by Russian Standard to remove the interim CEO.  The purpose of this letter is to provide you with (1) an explanation as to why we did not give Mr. Tariko complete control over CEDC last weekend when he asked us to; (2) correct information regarding FCPA matters; (3) a current and accurate picture of the CEDC/RTL Strategic Partnership; and (4) information as to the steps we are taking to address the challenges facing CEDC.”

ICE is Not Melting Away

Previous posts here and here (among others) have the detailed the unsuccessful peition by Instituto Constarricense de Electricidad of Costa Rica (“ICE”) for victim status of Alcatel-Lucent’s wide-ranging bribery scheme.  The petition followed the December 2010 announcement that Alcatel-Lucent and certain subsidiaries agreed to resolve a wide-ranging FCPA enforcement action, including conduct in Costa Rica involving payments to ICE officials.  Even though ICE acknowledged that “three disloyal and corrupt [ICE] Directors and two disloyal and corrupt employees” were the recipients of Alcatel Lucent’s bribe payments, it nevertheless claimed it was a victim because the corrupt activities of Alcatel-Lucent caused the company “massive losses” and “catastrophic harm.”

After several unsuccessful 11th Circuit appeals, ICE has petitioned the Supreme Court to hears it case (see here).  The question presented for review is as follows.  “Whether a crime victim who is denied rights conferred by the federal Crime Victims’ Rights Act has a right to directly appeal the denial of those rights.”

*****

A good weekend to all.

 

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