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DOJ Seeks Court Order To Release Previously Withheld Privileged Documents In Connection With Alleged Adoption Agency Bribery Scheme

privil

As highlighted in prior posts here and here, in 2019 and 2020 (in a rather unusual Foreign Corrupt Practices Act enforcement action) the DOJ criminally charged various individuals associated with Ohio-based European Adoption Consultants Inc. (EAC) with FCPA and related criminal charges in connection with a Ugandan bribery scheme and other conduct.

One defendant, Robin Longoria, pleaded guilty to one count of conspiring to violate the FCPA’s anti-bribery provisions and to commit wire fraud and visa fraud “for her role in a scheme to corruptly facilitate adoptions of Ugandan children through bribing Ugandan officials and defrauding U.S. adoptive parents and the U.S. Department of State.” The subsequently charged defendants, Margaret Cole, Debra Parris and Dorah Mirembe, appear to be mounting a defense.

Recently, the DOJ filed a motion seeking a court order allowing its privilege “filter team” (which currently possesses thousands of documents related to EAC and its former attorneys that were obtained during the investigation) to disclose the documents to the prosecution team because EAC’s assertion of privilege no longer applies because EAC is “defunct and thus no longer has the ability to assert privilege over those materials.”

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World Acceptance Corp. Resolves $21.7 Million Enforcement Action Based On The Conduct Of A Former Wholly-Owned Mexico Subsidiary

world accept

As highlighted in this prior post, in June 2017 World Acceptance Corporation (a South Carolina based consumer finance company) disclosed that it was “conducting an internal investigation of its operations in Mexico, focusing on the legality under the U.S. Foreign Corrupt Practices Act and certain local laws of certain payments related to loans, the maintenance of the Company’s books and records associated with such payments, and the treatment of compensation matters for certain employees.”

As highlighted in this prior post, in May 2020 the company disclosed that “discussions with the SEC have progressed to a point that the Company can now reasonably estimate a probable loss and has recorded an aggregate accrual of $21.7 million with respect to the SEC matters.”

Yesterday, the SEC announced that World Acceptance Corp. agreed to resolve a $21.7 million FCPA enforcement action based on the actions of a former wholly-owned Mexican subsidiary it sold in July 2018.

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Measured By This Goal, DOJ Policy Has Failed

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Imagine a government enforcement agency unveiling an enforcement policy that had X as a stated goal and then nearly five years later, X occurred only 7% of the time.

The answer would seem clear: the goal of the enforcement policy failed.

As highlighted below, in releasing the 2016 FCPA Pilot Program and thereafter in 2017 in releasing the FCPA Corporate Enforcement Policy, the DOJ stated that a “main goal” was to encourage voluntary disclosures to permit prosecution of individuals. Yet, nearly five years later there have been FCPA prosecutions of individuals in only 7% of cases the DOJ has self-identified as being resolved pursuant to / or consistent with the Pilot Program or the CEP.

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Friday Roundup

Roundup

Listening in, guilty plea, marketing the opaque, and machine learning. It’s all here in the Friday roundup.

Listening In

During a recent investor conference call, Cardinal Health executives were discussing how the company continues to evaluate which countries they should be in because “there’s a lot of hidden cost when you’re in a country.”

Company CEO Michael Kaufmann stated:

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Once Again, Rebooting A Long-Standing FCPA Proposal, This Time In The Aftermath Of A Recent Disclosure By Ciena

proposal

Including the first time I proposed this concept in 2010, this is the 10th time I have written this general post (see herehereherehereherehereherehere and here for the previous versions) and until things change I will keep writing it which means I will probably keep writing this same general post long into the future.

The proposal is this: when a company voluntarily discloses an FCPA internal investigation to the DOJ and/or SEC and when one or both of the enforcement agencies do not bring an enforcement action, have the enforcement agency publicly state, in a thorough and transparent mannerthe facts the company disclosed and why the enforcement agency did not bring an enforcement action based on those facts.

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