What’s On Your Mind?
In this month’s installment of the monthly feature, I reached out to academic colleagues who write in the Foreign Corrupt Practices Act space and posed the question – “what’s on your mind.” Set forth below are the responses.
Joseph Yockey (Iowa)
The current state of anti-corruption compliance calls to mind classic Dickens: it’s the best of times, it’s the worst of times.
On one hand, there continue to be exciting compliance developments in the private sector. This includes everything from the emergence of new technologies, like automated customs systems that cut out corrupt middlemen, to new corporate governance strategies, like the appointment of FCPA-specific compliance officers. I’m confident that these strategies aren’t just window dressing. They already seem to be making compliance easier and rates of bribery lower.
On the other hand, though, there’s a nagging sense that something is missing. The downside of relying on private innovation in compliance is that it is just that: private. Unlike the FCPA’s early days, when public-private collaboration was seen as vital to shaping anti-corruption policy, today the state’s focus remains largely set on enforcement. Enforcement is important, but the FCPA is ultimately meant to play a protective role. It is meant to level the global playing field and combat the social harms of corruption.
When understood in this way, it becomes clear that federal anti-corruption efforts need to go beyond enforcement to include cooperation with the many well-meaning firms that are already making important progress in the area of compliance. Part of this cooperation might include talking with market actors about the challenges they face on the ground so that enforcement efforts can evolve to fit the dynamic environments in which these firms often operate. It might also include taking a broader view of the supply and demand sides of bribery by stepping up efforts to collaborate with foreign officials and NGOs to find ways to reduce the overall frequency of bribe demands.
In any case, my research will continue to expand on my belief that federal authorities must do much more than wield a big enforcement stick. They must commit to getting their hands dirty to root out the systemic causes of corruption at home and abroad. They must commit to meaningfully help firms craft compliance programs that are responsive rather than reactionary. They must fully embrace the fact that the FCPA serves both a punitive and a protective function.
Until they do, I fear the FCPA will continue to bear the patina of a failed regulatory experiment.
Dean Paul McGreal (Dayton)
Just before writing this post, I submitted a course proposal to teach my Corporate Compliance and Ethics elective again in Spring 2014. So, naturally, my mind is occupied by thoughts of leniency or amnesty for business organizations that have an effective compliance and ethics program. Unlike the UK Bribery Act 2010, the United States Foreign Corrupt Practices Act does not provide an affirmative defense for an effective compliance and ethics program. An organization facing FCPA charges, then, can only benefit from its compliance and ethics program in other ways.
First, an organization could receive leniency, up to and including declination, for an effective compliance and ethics program. Of course, this option is a matter of prosecutorial discretion, leaving it to the government’s judgment whether the organization did everything it could to prevent the bribery, and so was the victim of a rogue employee. Making matters worse, it is difficult to determine when such leniency has occurred, what effect the organization’s compliance and ethics program had in particular cases, or what aspects of the program merited the leniency. Practitioners must sift press releases, deferred and non-prosecution agreements, and luncheon speeches to infer guidance. This murky state of affairs does not adequately arm compliance and ethics officers to do their best for their organizations.
Second, an organization could receive credit under the organizational sentencing guidelines for an effective compliance and ethics program. This only happens, however, if an organization is convicted and sentenced, and the court reduces the culpability score on that basis. This lucky organization will still be fined, and the conviction itself will likely harm the organization’s reputation and ability to do business. This route is largely academic, though, as organizations almost uniformly settle FCPA cases.
Third, creative defendants can resuscitate an argument for judicial recognition of a compliance defense. Several years ago, a litigant argued that federal criminal vicarious liability is properly interpreted to include such a defense. The Second Circuit rejected this position, and the argument has not been asserted recently.
In the end, a compliance defense must await congressional action. This issue, however, is not on the current legislative agenda, leaving organizations without that additional incentive for the foreseeable future.
Juliet Sorensen (Northwestern)
The Fifth Conference of States Parties to the United Nations Convention Against Corruption will take place in Panama City in November. With more than 150 signatories, the UNCAC aims to further anti-corruption efforts by requiring criminalization, asset forfeiture, mutual legal assistance and technical training in areas related to corruption and graft. However, the UNCAC is only as strong as its signatories. How many signatories have implemented laws required by the UNCAC? How many of those are enforcing those laws? Meaningful compliance with the provisions of the UNCAC is but one important topic that should be addressed in Panama City in November.
Friday Roundup
A roundup of comments made yesterday by Charles Duross (DOJ FCPA Unit Chief) and Kara Brockmeyer (SEC FCPA Unit Chief) at the ABA’s National Institute on the Foreign Corrupt Practices Act in Washington, D.C.
Resources
Duross stated that the DOJ has “20 full-time prosecutors” focused on the FCPA, an “embarrassment of riches” in terms of resources compared to the past he said. He indicated that the DOJ’s FCPA unit also makes frequent use of Assistant U.S. Attorneys, particularly in litigated cases. Duross countered the notion that his unit sits “back on our hands” waiting for the next case to come in. He stated that DOJ FCPA attorneys are “actively encouraged to follow-up on leads” and cited the BizJet enforcement action as an example where the case involved a voluntary disclosure, individuals cooperating, and charging individuals under seal (see here for a prior post).
According to Brockmeyer, the SEC FCPA Unit “has about three dozen” staff dedicated full-time to the FCPA. This number is in addition to other enforcement attorneys in SEC offices outside of DC who may also work on FCPA cases. Her best guess is that approximately 75% of SEC FCPA cases are handled in Washington, D.C. with the rest of the cases handled by regional offices (such as Fort Worth, Salt Lake City, etc.) with coordination from D.C.
Law Enforcement Partners
According to Duross, domestic law enforcement partners include U.S. Attorneys Offices and the FBI. He also mentioned the IRS as a partner in FCPA cases and indicated that the Haiti Teleco case was an “IRS case from start to finish” and thus it was not surprising that the prosecutions in that case included money laundering charges.
Challenges
Despite an “embarrassment of riches” in terms of resources compared to the past, Duross indicated that the FCPA Unit, like other DOJ offices, “could always use more resources.” He cited the following challenges in bringing FCPA cases: foreign evidence collection, foreign laws concerning data privacy, foreign blocking statutes, and multi-jurisdictional issues. As to the later, Duross stated that with increasing frequency more than one sovereign is involved in bribery and corruption investigations and that this is a “fact of life.” He indicated that the U.S. has encouraged foreign jurisdictions to increase their involvement in this area and that since “we invited them to the party” “we must now deal with it.”
Brockmeyer cited the same general challenges as Duross in terms of enforcing the FCPA.
Case Origins
Brockmeyer indicated that the SEC FCPA Unit tracks its inventory of cases and she shared the following. 30% – 40% of cases come from corporate voluntary disclosures. According to Brockmeyer, the number of voluntary disclosures has been steady compared to prior years, but as a percentage of the overall enforcement pie it is shrinking because the overall enforcement pie is growing. Other sources Brockmeyer identified included whistleblower tips (including more sophisticated and detailed tips), enforcement attorneys reading the news, that a “pretty significant number of investigations” began as “spin-offs” of other investigations, and that “increasing number of referrals” are from foreign law enforcement authorities.”
Duross said that the DOJ FCPA Unit does not formally track its inventory like the SEC but his “general sense” was that voluntary disclosures are less than 50% of the inventory of cases. According to Duross, voluntary disclosure as a source of FCPA cases “is less than people tend to think it is.” According to Duross, the number of voluntary disclosures has remained steady, but most “get declined and nobody ever hears about them.”
Duross said that over the past several years, FBI agents and DOJ prosecutors (outside of the FCPA unit) have become more sophisticated about the FCPA and that more cases are coming to the FCPA Unit’s attention from others in the field who may spot FCPA issues in their other cases. Brockmeyer agreed with this comment and stated that SEC enforcement attorneys handling typical accounting fraud cases are also now looking for indicia of FCPA issues.
Related to the above issue, both Brockmeyer and Duross talked about so-called “industry sweeps” (see here for the prior post).
According to Brockmeyer, an industry sweep is not a situation where an existing case may suggest a wider problem in an industry and lead to investigations of others. Nevertheless, she did indicate that “very occasionally” the SEC does engage in industry sweeps, but “not as often as people think,” where the SEC, in its role as a regulator, sends out “high-level requests for information” to certain industries in which the SEC thinks there are FCPA risk factors. As to the predication leading to such an inquiry, Brockmeyer said that such a sweep can result even if there is no specific tip as to the industry. Nevertheless she stated that the SEC is not going to send out information letters “willy-nilly” because the SEC does recognize that when it sends out letters there are costs to the company’s associated with the request.
Duross agreed that following the evidence in one particular case to perhaps another company is not an “industry sweep,” it is simply following the evidence.
Future
According to Duross, the future of the DOJ FCPA’s unit is “bright,” there is a “tremendous pipeline of cases,” and that his unit continues “to do proactive cases” using all of the resources in its toolkit (i.e. wiretaps, etc.).
According to Brockmeyer, the SEC has become more focused on how compliance programs and internal controls are “intertwined.” She indicated that companies have generally become more sophisticated when it comes to compliance programs, but that much work still needs to be done in monitoring compliance programs and how compliance can impact a company’s overall internal financial controls.
Other Issues
As to the “where else” question (see here for the prior post), Duross suggested that often company lawyers are seeking to over do it through a global search of operations for FCPA issues. He discussed a case in which a company and its professional advisors came to a meeting with a global search plan and he said “no, no, no, that is not what I want.” He indicated that the lawyers and other professional advisors in the room “looked unhappy,” but that the general counsel of the company was happy. (For more on this dynamic, see this prior post).
As to a compliance defense, as I highlight in my article “Revisiting an FCPA Compliance Defense,” the DOJ already recognizes in various ways a de facto compliance defense to the FCPA. Further support for this proposition is found in the following comment from Duross. He indicated that a large company (he did not provide the company’s name – other than it would be recognizable to the audience) was a “serial reporter” of FCPA issues to the DOJ’s FCPA Unit. Duross said that this company has a “good compliance program and system” in place and does “robust” internal investigations when issues arise. Duross said that he and his unit have a “relationship of trust” with this company and its counsel and that “frankly, most of the time” the issue is “not a particularly large issue.” According to Duross this company remediates the issue and then it “goes on its way.”
As to the media, Duross indicated that media reports (domestic and foreign) have led the DOJ to open up FCPA investigations. He stated “what happens in China, doesn’t stay in China.” Duross stated that while the media can be critical of the DOJ’s FCPA unit and its efforts, that is not necessarily a “bad thing” because “criticism of us can be useful and cause us to look inward.” Duross indicated that “we should be held accountable for what we do – good and bad.” Duross shared that one of his biggest surprises upon becoming FCPA Unit chief is realizing how the unit “operates under a microscope” which highlights the need for his unit “to have its A game” at all times. Duross stated that media reporting of bribery and corruption issues can also spread a message of general deterrence.
Scrutiny Alerts
A roundup of the latest scrutiny alerts. As Christopher Matthews at the Wall Street Journal’s Risk & Compliance Journal stated “if you’re a corruption probe enthusiast, the hits just keep coming out of China these days.”
Danone
As noted in this article, Dumex Baby Food Co., a subsidiary of France’s Danone SA, is “launching a probe of its infant-formula marketing after China’s state broadcaster alleged the formula maker pays hospital staff to use its products and influence sales.” Danone has ADRs that are traded in the U.S.
Novortis
Novortis, already on the scrutiny list see here, was the focus of recent media articles (see here) suggesting that “it would investigate allegations published in a Chinese newspaper that its eye care unit Alcon bribed doctors.” Novortis has ADRs that are traded in the U.S.
Gabriel Resources
Gabriel Resources, a Canada based company with shares traded “over the counter” in the U.S., was the focus of this article concerning allegations of bribery in Romania in connection with a proposed gold mine.
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A good weekend to all.
What’s On Your Mind?
The dog days of summer. A time for reflection, a time to think.
I posed the question “what’s on your mind” to the following FCPA practitioners and below are their responses.
Philip Rohlik (Debevoise & Plimpton – Hong Kong)
“While I have been working on Asian related FCPA matters for more than seven years, I moved to the region two years ago. Living here and interacting with local employees in situations other than investigations has given me a different perspective of the cost and difficulties associated with compliance.
Facilitating payments and transnational legal regimes that seek to bar them are on my mind. While it is correct and easy to say that ethical multinational corporations should not give in to the petty extortion that characterizes facilitation payments, the issue is not so simple when looked at from the reality of an employee in a high-risk jurisdiction — the kind of employee who recently asked me for advice on “how do I make the police go away?” when they visit the second or third week of every month (about the time their last month’s paycheck runs out). It is easy for a compliance officer or lawyer who encounters random government officials on his or her way to or from the airport to make full use of the ICC’s Resist handbook. Local (and, let’s face it, not that well paid) employees who must deal with specific officials on a regular basis are in a different situation especially if they have no desire to test the limits of “imminent physical harm.”
When laws impose vicarious or respondeat superior liability, situations to which the law applies should not be determined from the abstract perspective of a corporation but from the realities faced by the company’s employees. Is the fight against corruption really furthered by having zero tolerance policies for facilitation payments at the corporate level, but local employees very rationally believing that such grand pronouncements leave them in a situation that will either (i) make their life very difficult or (ii) force them to circumvent internal controls in order to make the payment (thereby creating a potential mechanism for more nefarious payments)? In this respect, the U.S. law that exempts facilitating payments from the anti-bribery provisions of the FCPA may be less anachronistic than it is often made out to be.
Also often on my mind is third party due diligence. Right now, one of our concerns is attending to our clients’ needs for right-sizing third party due diligence. Businesses are concerned that the continued lack of clarity from regulators as to the required steps results in excessive cost and a misallocation of compliance resources. While some third parties deserve thorough diligence, how much diligence is due other third-parties? Is a basic questionnaire and (the often-not-inexpensive) outsourcing of a public records check sufficient? What if such checks are almost always inconclusive in countries with limited public records? Do they just become inefficient box ticking? We are actively working with both clients as well as due diligence firms providing cloud-based and world-wide investigative services to help get these costs under control. Among the solutions we are working on are greater use of in-house information. If there are adequate internal controls on the evaluation of in-house experience with a third party, we believe that the greater use of on-hand information to evaluate third parties can be a real cost-saver. Doing so would free up resources for other compliance tasks as well as improve the client’s bottom line.”
John Rupp (Covington & Burling – London)
“As we continue to struggle on behalf of clients with demands for bribes, large and small, by government officials in a depressing number of countries, I have become ever more convinced that a new approach to the campaign against bribery – in particular, by western countries – is needed. The approach that western countries have taken thus far to the bribery of foreign government officials is to punish the bribe giver. The premise appears to be that international companies, including those subject to the US Foreign Corrupt Practices Act and the UK Bribery Act 2010, rather like bribing foreign government officials, seeing it as a convenient way to win business without having to compete fairly with other companies operating in the same space.
A completely different picture emerges, of course, when one spends a good part of each working day developing strategies to enable clients to operate in countries where official corruption is endemic. The international company employee who wakes up in the morning, steadies himself or herself in the mirror and then looks forward to winning business through bribery is an exceedingly rare bird in my experience. Overwhelming, the reflected image of the vast majority of employees of international companies grappling with bribery demands is of consternation – how does one continue to operate in Country X when everyone on the government payroll in the country is demanding a bribe for everything?
A fully developed, and maximally effective, anti-bribery program by a western country would involve, I believe, much more attention than has been paid in the past to assisting international companies when they are confronting demands for bribes by foreign government officials. The US State and Commerce Departments, UK and German Foreign Ministries, World Bank – and many others – should put much more emphasis in the future than they have in the past on assisting companies fend off official demands for bribes. In many, many cases, they have the resources – and the leverage – to do so.
I’m not suggesting that western countries consider repealing statutes punishing the bribery of foreign government officials. What I am suggesting is that they balance that approach with an equally concerted effort to deal with the demand side of the bribery equation.“
Thomas Fox (Solo Practitioner, Founder and Editor of the FCPA Compliance and Ethics Blog)
“The Securities and Exchange Commission (SEC) is investigating JPMorgan Chase regarding its hiring practices in China. It appears that JP Morgan Chase hired children of Chinese government officials or heads of state owned enterprises. While such hirings do not violate the FCPA per se, they do raise red flags. The FCPA Professor was quoted in the New York Times, “While the hire of a son or daughter itself is not illegal, red flags would be raised if the person hired was not qualified for the position, or, for example, if a firm never received business before and then lo and behold, the hire brought in business.” Such a hire may be a FCPA noteworthy event if the timing of the alleged hiring is closely connected to important business victories and awards of government business.
While the questions of corrupt intent will be paramount I think that this episode emphasizes the continuing key concept of the three most important things in any FCPA compliance program; that being: Document, Document, Document. If your compliance program does not document its successes there is simply no evidence that it has succeeded. In addition to providing to your company support to put forward to the DOJ, it is the only manner in which to gauge the overall effectiveness of your compliance program. To negate corrupt intent, JP Morgan Chase will have to dis-link any hiring with the obtaining of business. It will be the documentary efforts of the company in answering this query that may well decide the question of whether the SEC will consider the matter a FCPA violation or not.”
Attorney General Holder’s Speech Has Broad Application
Yesterday Attorney General Eric Holder delivered this speech at the Annual Meeting of the ABA House of Delegates.
Below are snippets from his speech.
“It’s time – in fact, it’s well past time – to address persistent needs and unwarranted disparities by considering a fundamentally new approach.”
“[W]e must face the reality that, as it stands, our system is in too many respects broken. The course we are on is far from sustainable. And it is our time – and our duty – to identify those areas we can improve in order to better advance the cause of justice for all Americans.”
“[W]e need to examine new law enforcement strategies – and better allocate resources.”
“I’ve also issued guidance to ensure that every case [the DOJ] bring serves a substantial federal interest …”.
“As a society, we pay much too high a price whenever our system fails to deliver outcomes that deter and punish crime …”.
“The bottom line is that, while the aggressive enforcement of federal criminal statutes remains necessary, we cannot simply prosecute or incarcerate our way to becoming a safer nation. To be effective, federal efforts must also focus on prevention and reentry. We must never stop being tough on crime. But we must also be smart and efficient when battling crime and the conditions and the individual choices that breed it.”
“Today – together – we must declare that we will no longer settle for such an unjust and unsustainable status quo. To do so would be to betray our history, our shared commitment to justice, and the founding principles of our nation. Instead, we must recommit ourselves – as a country – to tackling the most difficult questions, and the most costly problems, no matter how complex or intractable they may appear.”
“This is our chance – to bring America’s criminal justice system in line with our most sacred values. This is our opportunity – to define this time, our time, as one of progress and innovation. This is our promise – to forge a more just society. And this is our solemn obligation, as stewards of the law, and servants of those whom it protects and empowers: to open a frank and constructive dialogue about the need to reform a broken system.”
Holder’s speech focused primarily on the war on drugs, violent crime, and incarceration rates.
However, the above quotes have broad application, including in the FCPA context.
Disparity? See here, here, here and here for previous posts.
Broken? As highlighted in this post, how many former high-ranking DOJ officials and/or former DOJ FCPA enforcement attorneys does it take before the current DOJ realizes that its FCPA enforcement policies and procedures are, in certain cases, broken? See also here.
Better allocate resources? There is a way to do that in the FCPA enforcement context while at the same time best advancing the laudable objectives of the FCPA. See here.
Cases that serve a substantial federal interest? Perhaps you’ve heard that a substantial majority of the top FCPA enforcement actions in terms of settlement amounts have been against foreign companies based on sparse U.S. jurisdictional allegations. See here for instance.
A system that fails to deliver outcomes that deter and punish crime? As highlighted in this prior post, the DOJ itself has acknowledged that it does not even know if NPAs and DPAs in the FCPA context deter.
As highlighted in this previous post, there is a way forward in the FCPA context – a system that will better promote compliance and hold wrongdoers accountable.
It will however require courage and bold leadership to – in the words of Holder “open a frank and constructive dialogue about the need to reform a broken system.”
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I also drew inspiration from the following in Holder’s speech.
“[T]o question that which is accepted truth; to challenge that which is unjust; to break free of a tired status quo; and to take bold steps to reform and strengthen America’s criminal justice system – in concrete and fundamental ways.”
These are among the reasons why I write about the FCPA and related topics.
Friday Roundup
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.”
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A good weekend to all.