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Ransom Payments And Corrupt Intent


Recently, the CEO of Colonial Pipeline Co. acknowledged that he authorized a $4.4 million ransom payment to the perpetrators of the recent cyberattack on the company’s distribution system. CEO Joseph Blount stated: “I didn’t make it lightly. I will admit that I wasn’t comfortable seeing money go out the door to people like this. But it was the right thing to do for the country.” (The Colonial Pipeline provides about 45% of the fuel for the East Coast).

While not an apparent Foreign Corrupt Practices Act issue, the ransom payment provides a good opportunity to explore the FCPA’s corrupt intent element and how things of value provided to a foreign official in the context of a legitimate extortion situation would not violate the FCPA’s anti-bribery provisions.

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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


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 …


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


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


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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