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In A Highly Unusual Development, DOJ Brings A $19.6 Million Enforcement Action Against Beam Approximately 2.5 Years After The SEC’s Related Action

Beam

DOJ and SEC Foreign Corrupt Practices Act enforcement actions against issuers based on the same core conduct are relatively common. However, such actions are nearly always coordinated and announced on the same day.

In a highly unusual (although not unprecedented) development, the DOJ announced yesterday a $19.6 million FCPA enforcement action against Beam Suntory Inc. based on the same core conduct in India at issue in the SEC’s July 2018 FCPA enforcement action against the company (see here).

Another unusual aspect of the Beam DOJ action was the DOJ’s position that the company did not voluntarily disclose. In contrast, in the 2018 SEC enforcement action the SEC said that the company voluntarily disclosed.

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Regarding Extortion …

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As highlighted in this prior post, the FCPA Blog recently posed the silly question “are agents ever ‘legal’ under the FCPA?”

Now the FCPA Blog is asking why “nobody talks about the FCPA extortion defense”?

It is likewise a silly question because the Foreign Corrupt Practices Act doesn’t even have an extortion defense. The only two defenses in the FCPA are the so-called local law affirmative defense and the so-called reasonable and bona fide expenditures directly connected to a business purpose affirmative defense. (The FCPA also has a facilitation payment exception which the government has the burden of negating – see here).

Even though the FCPA does not have an extortion defense, extortion issues are relevant to corrupt intent – a prima facie element of an FCPA anti-bribery violation that the government must prove.

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DOJ’s Kahn Answers The PPE FCPA Hypothetical

PPE

One common Foreign Corrupt Practices Act hypothetical that has been repeated often over the last couple of months sort of goes like this. The current COVID-19 crisis presents increased FCPA risks because, among other things, businesses are scrambling to secure personal protective equipment (PPE) for their workers and some of this PPE may be located in foreign countries and/or manufactured by foreign governments or state-owned or state controlled enterprises. (See here, here, here, and here for examples).

I’ve never really understood this hypothetical. Among other things, in the FCPA’s 40+ year history I am not aware of any enforcement action in which the alleged improper conduct occurred in connection with the purchase of a good or service rather than in connection with selling or facilitating the sale of a good or service.

Moreover, as highlighted in this prior post, the FCPA has, among other elements, a corrupt intent element.

As highlighted below, during a webinar yesterday Daniel Kahn (Senior Deputy Chief, U.S. Department of Justice Criminal Division – Fraud Section) addressed a version of this hypothetical.

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In Post-Trial Motions, Baptiste Seeks Judgment Of Acquittal Or New Trial Based On Ineffective Assistance Of Counsel

Baptiste

As highlighted in this previous post, in 2017 (in connection with an undercover string) the DOJ unsealed criminal charges against Joseph Baptiste (a retired U.S. Army Colonel, practicing dentist, and founder / president of a Maryland-based Haitian focused non-profit) for alleged Haitian bribery.

In the original charging document, it was noted as follows:

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Second Circuit Affirms Seng’s Conviction

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Previous posts here, here and here highlighted Ng Lap Seng’s Second Circuit appeal after a federal jury convicted him in July 2017 of two counts of violating the FCPA, one count of paying bribes and gratuities, one count of money laundering and two counts of conspiracy “for his role in a scheme to bribe United Nations ambassadors to obtain support to build a conference center in Macau that would host, among other events, the annual United Nations Global South-South Development Expo.”

Recently, in this decision the Second Circuit affirmed Seng’s conviction. As stated in the opinion, the issues on appeal were: (i) whether the United Nations is an “organization” within the meaning of 18 U.S.C. 666; (ii) whether the jury was correctly instructed as to controlling law, particularly as pertains to bribery in light of McDonnell v. United States (see here for the prior post concerning the Supreme Court’s 2016 decision construing 18 USC 201 – the domestic bribery statute – particularly the meaning of “official act”; and (iii) whether the evidence was insufficient to support a guilty plea.

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