Lanny Breuer And Foreign Corrupt Practices Act Enforcement
Lanny Breuer stepped down as Assistant Attorney General of the Justice Department’s Criminal Division on March 1st after nearly four years on the job. Word of Breuer’s departure began circulating soon after the airing of a PBS Frontline program that examined the general lack of prosecutions of Wall Street executives in the aftermath of the so-called financial crisis. While much of the public scrutiny of Breuer and his Criminal Division focused on the financial services industry, the substantive law of most interest to Breuer appeared to be the Foreign Corrupt Practices Act. This article examines FCPA enforcement and related issues during Breuer’s tenure, demonstrates that his tenure was not as glowing as DOJ suggests, and shows that FCPA enforcement under Breuer raised significant public policy issues that need to be addressed by his successor.
So begins my article “Lanny Breuer and Foreign Corrupt Practices Act Enforcement” recently published by Bloomberg BNA’s White Collar Crime Report. (The article can be downloaded here).
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Interested in analyzing Breuer’s public FCPA statements and assessing the performance of his Criminal Division against such statements? Breuer’s FCPA speeches can be found here, here, here, here, here, here, here, here, here, here, and here.
An Equally Valid DOJ Press Release
Last week the DOJ announced in this release the departure of Assistant Attorney General Lanny Breuer. Breuer’s position was obviously not FCPA specific, but he took a great interest in the DOJ’s Foreign Corrupt Practices Act enforcement program and frequently made speeches on the FCPA in which he – to use his own words – “spread the gospel” (see here).
Not surprisingly given the nature and purpose of the release, the DOJ touted Breuer’s enforcement record, including in the FCPA context. The release stated as follows.
“The Criminal Division has also substantially increased enforcement of the Foreign Corrupt Practices Act (FCPA), convicting three dozen individuals for FCPA-related offenses – a record number – and entering into more than 40 corporate resolutions involving eight of the top 10 largest FCPA penalties in history. The Criminal Division also partnered with the Securities and Exchange Commission to publish groundbreaking guidance on FCPA enforcement.”
In the abstract, there is nothing incorrect about the above information. However, against the backdrop of the numerous statistics I published in recent weeks (see here for a summary) a different picture emerges.
A different picture also emerges when one considers the following undeniable facts about FCPA enforcement under Breuer’s criminal division. In short, what follows would have been an equally valid DOJ release concerning Breuer’s departure.
In January 2010, Breuer called the arrest of 22 individuals in the military and law enforcement products industry a “turning point” in the DOJ’s FCPA enforcement program (see here). The DOJ’s “turning point” prosecution in the so-called Africa Sting cases ended the following way. In granting the DOJ’s dismissal of the charges, Judge Richard Leon stated as follows.
“This appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement. Unlike takedown day in Las Vegas, however, there will be no front page story in the New York Times or the Post for that matter tomorrow reflecting the government’s decision today to move to dismiss the charges against the remaining defendants in this case. Funny, isn’t it, what sells newspapers? The good news, however, is that for these defendants, agents, prosecutors, defense counsel and the court we can get on with our professional and personal lives without the constant strain and burden of three to four more eight-week trials hanging over our heads. I for one hope this very long, and I’m sure very expensive, ordeal will be a true learning experience for both the department and the FBI as they regroup to investigate and prosecute FCPA cases against individuals in the future. Two years ago, at the very outset of this case, I expressed more than my fair share of concerns on the record regarding the way this case has been charged and was being prosecuted. Later, during the two trials that I presided over, I specifically commented again on the record regarding the government’s very, very aggressive conspiracy theory that was pushing its already generous elasticity to its outer limits. Of course, in the second trial that elastic snapped in the absence of the necessary evidence to sustain it. In addition, in that same trial, I expressed on a number of occasions my concerns regarding the way this case had been investigated and was conducted especially vis-a-vis the handling of Mr. Bistrong. I even had an occasion, sadly, to chastise the government in a situation where the government’s handling of the discovery process constituted sharp practices that have no place in a federal courtroom. Notwithstanding all of this water over the dam, and there has been a lot of water, I’m happy to see and I applaud the department for having the wisdom and courage of its convictions to face up to the limitations of its case as revealed in the past 26 weeks of trial and the courage to do the right thing under the circumstances. Having served at the higher levels of the department, I know that that was not an easy decision. They never are, when so much has been invested, and the agents and the prosecutors are so convinced of the righteousness of their position. I for one however am confident this will be in the end a positive, if not painful, lesson that results in better prosecutions of individuals in the future under the FCPA. As for the defendants, I hope the healing process is a swift one and that they get back to their normal lives in the very near future. Finally, I would be remiss if I did not comment on the tireless and spirited effort by the defense counsel from all over the country who came here to try these very lengthy and complicated cases under difficult circumstances and some even pro bono. Their hard work and effective advocacy are a testament to how strong our criminal defense bar is nationwide. And so without further adieu I grant the government’s motion to dismiss. The defendants are excused.”
In May 2011 Breuer stated, after a jury found Lindsey Manufacturing and its executives Keith Lindsey and Steve Lee guilty in an FCPA trial, as follows. These verdicts “are an important milestone in our Foreign Corrupt Practices Act (FCPA) enforcement efforts.” (See here). The”important milestone” ended when Judge Howard Matz vacated the convictions, dismissed the indictment after finding numerous instances of prosecutorial misconduct, and stated as follows.
“[The instances of misconduct were so varied and occurred over such a long time] that they add up to an unusual and extreme picture of a prosecution gone badly awry. […] The Government team allowed a key FBI agent to testify untruthfully before the grand jury, inserted material falsehoods into affidavits submitted to magistrate judges in support of applications for search warrants and seizure warrants, improperly reviewed e-mail communications between one Defendant and her lawyer, recklessly failed to comply with its discovery obligations, posed questions to certain witnesses in violation of the Court’s order, engaged in questionable behavior during closing argument and even made misrepresentations to the Court.”
“Dr. Lindsey and Mr. Lee were put through a severe ordeal. Charges were filed against them as a result of a sloppy, incomplete and notably over-zealous investigation, an investigation that was so flawed that the Government’s lawyers tried to prevent inquiry into it. In some instances motives, statements and conduct were attributed to them that were wholly unfounded or were obtained unlawfully . . . [. . .] The financial costs of the investigation and trial were immense, but the emotional drubbing [Lindsey and Lee] absorbed was even worse. As for [Lindsey Manufacturing], the very survival of that small, once highly respected enterprise has been placed in jeopardy.”
In November 2009, Breuer’s criminal division criminally charged John Joseph O’Shea with FCPA offenses (see here). The case ended when Judge Lynn Hughes granted O’Shea’s motion for acquittal after the DOJ’s case. Judge Hughes stated as follows.
“The problem here is that the principal witness against Mr. O’Shea … knows almost nothing.”
“The government should have been prepared before they brought the charges to the Grand Jury. […] You shouldn’t indict people on stuff you can’t prove.”
The approximate 25 individuals (individuals who had their real lives altered, their real careers sidetracked, their real reputations harmed, and their real wallets emptied) probably have a different perspective on FCPA enforcement under Breuer. And with good and valid reasons.
DOJ Prosecution Of Individuals – Are Other Factors At Play?
Yesterday’s post (here) focused on DOJ FCPA individual prosecutions and highlighted the following facts and figures.
- Since 2008, the DOJ has charged 77 individuals with FCPA criminal offenses.
- 61% of the individuals charged by the DOJ with FCPA criminal offenses since 2008 have been in just four cases and 77% of the individuals charged by the DOJ since 2008 have been in just seven cases.
- There have been 53 corporate DOJ FCPA enforcement actions since 2008 and of the 53 corporate DOJ FCPA enforcement actions, 39 (or 74%) have not (at least yet) resulted in any DOJ charges against company employees.
These statistics should cause alarm, including at the DOJ as it has long recognized that a corporate-fine only enforcement program is not effective and does not adequately deter future FCPA violations. For instance, in 1986 John Keeney (Deputy Assistant Attorney General, Criminal Division, DOJ) submitted written responses in the context of Senate hearings concerning a bill to amend the FCPA. He stated as follows:
“If the risk of conduct in violation of the statute becomes merely monetary, the fine will simply become a cost of doing business, payable only upon being caught and in many instances, it will be only a fraction of the profit acquired from the corrupt activity. Absent the threat of incarceration, there may no longer be any compelling need to resist the urge to acquire business in any way possible.”
Likewise, in 2010 Hank Walther (Deputy Chief Fraud Section) stated that a corporate fine-only FCPA enforcement program allows companies to calculate FCPA settlements as the cost of doing business.
In my 2010 Senate FCPA testimony (here), I noted that the absence of individual FCPA charges in most corporate FCPA enforcement actions causes one to legitimately wonder whether the conduct giving rise to the corporate enforcement action was engaged in by ghosts. Others have rightly asked the “but nobody was charged” question, including perhaps most notably James Stewart in a New York Times column highlighted in this previous post.
However, as I stated in my Senate testimony, there is an equally plausible reason why no individuals have been charged in connection with many corporate FCPA enforcement actions. The reason has to do with the quality and legitimacy of the corporate enforcement action in the first place. Readers know well of the prevalence of non-prosecution and deferred prosecution agreements (NPA / DPA) in the FCPA context and how these agreements, not subject to any meaningful judicial scrutiny, are often agreed to by companies for reasons of ease and efficiency, and not necessarily because the conduct at issue violates the FCPA. For more on this dynamic, see my article “The Facade of FCPA Enforcement.” Individuals, on the other hand, face a deprivation of personal liberty, and are more likely to force the DOJ to satisfy its high burden of proof as to all FCPA elements.
In other words, perhaps the more appropriate question is not “but nobody was charged,” but rather do NPA and DPAs always represent provable FCPA violations.
I set out to test this with the following working hypothesis. Instances in which the DOJ brings actual criminal charges against a company or otherwise insists in the resolution context that the corporate entity pleads guilty to FCPA violations, represent a higher quality FCPA enforcement action (in the eyes of the DOJ) and is thus more likely to result in related FCPA criminal charges against company employees. Instances in which the DOJ resolves an FCPA enforcement action solely with an NPA or DPA, represent a lower quality FCPA enforcement action and is thus less likely to result in related FCPA criminal charges against company employees given that an individual is more likely to put the DOJ to its high burden of proof.
The below statistics provide a compelling datapoint concerning the quality and legitimacy of many corporate DOJ FCPA enforcement actions.
Since NPAs and DPAs were first introduced to the FCPA context in December 2004 (see here), there have been 69 corporate DOJ FCPA enforcement actions.
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12 of these corporate enforcement actions were the result of a criminal indictment or resulted in a guilty plea by the corporate entity to FCPA violations. 10 of these corporate enforcement actions – 83% – resulted in related criminal charges of company employees.
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46 of these corporate enforcement actions were resolved solely with an NPA or DPA. In only 3 instances – 6.5% – were there related criminal charges of company employees.
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A third type of corporate FCPA enforcement action is what I will call a hybrid action in which the resolution includes a guilty plea by some entity in the corporate family – usually the relevant foreign subsidiary – and an NPA or DPA against the parent company. Since the advent of NPAs and DPAs in the FCPA context, there have been 11 such corporate enforcement actions. In 3 of these actions – 27% – there were related criminal charges of company employees. This percentage is what one might expect compared to the two types of corporate FCPA enforcement actions discussed above, although it is interesting to note the following regarding these three instances. The DOJ ended up dismissing the charges against Si Chan Wooh (Schnitzer Steel), John O’Shea (ABB) was not found not guilty, and Bobby Elkin (Alliance One) received a probation sentence after the sentencing judge questioned many aspects of the enforcement action (see here for the prior post).
If the above statistics do not cause you to question the quality and legitimacy of many corporate FCPA enforcement actions, no empirical data ever will. For those who believe NPAs and DPAs always represent provable FCPA violations, the ball is now in your court to offer credible explanations for following datapoints.
If a corporate DOJ FCPA enforcement action is the result of a criminal indictment or resulted in a guilty plea by the corporate entity to FCPA violations, there is a 83% chance that related criminal charges will be brought against a company employee. If a corporate DOJ FCPA enforcement action is resolved solely with an NPA or DPA, there is a 6.5% chance that criminal charges will be brought against a company employee.
[Note – the above data was assembled using the “core” approach as well as the definition of an FCPA enforcement action described in this prior post]
DOJ Enforcement Of The FCPA – Year In Review
Yesterday’s post (here) highlighted facts and figures from the SEC’s enforcement of the FCPA in 2012.
In this post, I highlight facts and figures from the DOJ’s FCPA enforcement program in 2012. (See here for a similar post from 2011 and here from 2010).
In 2012, the DOJ brought 9 corporate FCPA enforcement actions. By comparison, in 2011 the DOJ brought 11 corporate enforcement actions and in 2010, the DOJ brought 18 corporate enforcement actions (including the FCPA-related enforcement action against BAE).
Fine Amounts
In the 9 corporate FCPA enforcement actions from 2012, the DOJ collected approximately $142 million in criminal fines. By comparison, in 2011, the DOJ collected approximately $355 million in corporate criminal fines ($504 million including the $149 million forfeiture in the Jeffrey Tesler individual enforcement action) and in 2010, the DOJ collected approximately $870 million ($1.27 billion including the $400 million FCPA-related enforcement action against BAE).
DOJ FCPA enforcement in 2012 ranged from $54.6 million in criminal fines (Marubeni Corp.) to $2 million in criminal fines (NORDAM Group). Four FCPA enforcement actions in 2012 were DOJ only (Marubeni, BizJet/Lufthansa, Data System and Solution, and NORDAM Group).
Of the $142 million the DOJ collected in 2012 corporate FCPA enforcement actions, approximately $55 million (38%) was in one enforcement action (Marubeni). Of the $142 million, approximately $65 million (46%) were in enforcement actions against pharmaceutical or other health care related companies. All of these enforcement actions were based, in whole or in part, on the enforcement theory that employees of various foreign health care systems (such as physicians, nurses, mid-wives, lab personnel, etc.) are “foreign officials” under the FCPA. See this prior post which traced the origins and prominence of this enforcement theory.
In 5 of the 7 corporate FCPA enforcement actions where an analysis was possible, the DOJ agreed to a criminal fine below the minimum range suggested by the sentencing guidelines. In these 5 actions, the average was approximately 27% below the minimum guidelines range and the distribution range was 34% below the minimum guidelines range (Pfizer ) to 20% below the minimum guidelines range (Biomet and Smith & Nephew). In 2 corporate FCPA enforcement action in 2012 (Orthofix and Marubeni) the company paid a criminal fine within the guidelines range – in both cases the minimum amount suggested by the guidelines.
[Note – why are only 7 of the 9 corporate enforcement actions included in the above analysis? 2 corporate enforcement actions involved an NPA and the DOJ did not set forth a guidelines range in the agreement or related documents]
By way of comparison, in 2011 the average DOJ criminal fine in an FCPA enforcement action was approximately 28% below the minimum guidelines range and the distribution range was 55% below the minimum guidelines range to 18% below the minimum guidelines range. In 2010, the average was approximately 25% below the minimum guidelines range and the distribution range was 55% below the minimum guidelines range and 5% below the minimum guidelines range.
Corporate vs. Individual Prosecutions
How many corporate FCPA enforcement actions in 2012 have involved related individual prosecutions of company employees by the DOJ (recognizing that such prosecutions may be forthcoming in the future)? Of the 9 corporate DOJ enforcement actions in 2012, 0 (0%) have involved any related DOJ prosecutions of company employees. In 2011, 27% of corporate DOJ enforcement actions involved related DOJ prosecutions of company employees and in 2010, 30% of corporate DOJ enforcement actions involved related DOJ prosecutions of company employees. In short, since 2010 approximately 22% of corporate DOJ enforcement actions have involved related DOJ prosecutions of company employees.
NPAs / DPAs
What about non-prosecution and deferred prosecution agreements vs. old fashioned law enforcement (i.e., if a company committed a crime the DOJ charged it and if the company did not commit a crime the DOJ did not charge it)? In 2012, 100% of corporate DOJ enforcement actions involved either an NPA (Nordam Group) or a DPA (Marubeni, Smith & Nephew, Biomet, Data Systems and Solution, Orthofix, Pfizer). [Note, the BizJet/Lufthansa enforcement action involved both an NPA (Lufthansa) and a DPA (BizJet). Note, the Tyco enforcement action involved a plea agreement as to a subsidiary and an NPA with Tyco.] In 2011, 82% of corporate DOJ enforcement actions were resolved via an NPA or DPA and in 2010, 94% of corporate DOJ enforcement actions were resolved via such agreements. In short, since 2010, 92% of corporate DOJ enforcement actions have been resolved via NPAs or DPAs.
Voluntary Disclosures
Of the 9 corporate DOJ FCPA enforcement actions in 2012, 5 enforcement actions (56%) (Tyco, Pfizer, NORDAM Group, Orthofix, and BizJet) were the result of corporate voluntary disclosures. 2 enforcement actions (22%) (Smith & Nephew and Biomet) appear to have been based on corporate disclosures following an industry sweep (a sweep that may have been prompted by Johnson & Johnson’s voluntary disclosure – see here for the prior post). 1 enforcement action (Marubeni) was based on a previous foreign law enforcement investigation and 1 enforcement action (Data Systems and Solutions) appears to have been based on a DOJ subpoena.
Monitors
Of the 9 corporate DOJ FCPA enforcement actions in 2012, 3 enforcement actions (33%) (Biomet, Smith & Nephew, and Marubeni) involved a monitor. The monitor term ranged from 18 months (Biomet and Smith & Nephew) to 2 years (Marubeni).
This remainder of this post provides an overview of corporate DOJ FCPA enforcement in 2012.
Tyco International (September 24th)
See here for the prior post.
Charges: Tyco Valves & Controls Middle East Inc. – conspiracy to violate the FCPA’s anti-bribery provisions, Tyco International – none.
Resolution Vehicle: Criminal information against Tyco Valves & Controls Middle East Inc. resolved through a plea agreement and a non-prosecution agreement (three year term) as to Tyco International.
Guidelines Range: As to Tyco Valves & Controls $2.1 million – $4.2 million. As to Tyco International, not set forth in the NPA.
Penalty: Tyco agreed to pay a $13.68 million penalty (the $2.1 million penalty Tyco Valves & Controls agreed to pay pursuant to the plea agreement is included in this figure).
Disclosure: Voluntary disclosure.
Monitor: No.
Individuals Charged: No.
Pfizer (August 7th)
See here for the prior post.
Charges: Conspiracy to violate the FCPA’s anti-bribery and books and records provisions and a substantive FCPA anti-bribery violation.
Resolution Vehicle: Criminal information against Pfizer HCP resolved through a deferred prosecution agreement (two year term).
Guidelines Range: $22.8 – $45.6 million.
Penalty: $15 million (34% below the minimum amount suggested by the Guidelines).
Disclosure: Voluntary disclosure.
Monitor: No.
Individuals Charged: No.
NORDAM Group (July 17th)
See here for the prior post.
Charges: None.
Resolution Vehicle: Non-prosecution agreement (three year term).
Guidelines Range: Not set forth in the NPA.
Penalty: $2 million.
Disclosure: Voluntary disclosure.
Monitor: No.
Individuals Charged: No.
Orthofix International (July 10th)
See here for the prior post.
Charges: FCPA internal controls violation.
Resolution Vehicle: Criminal information resolved through a deferred prosecution agreement (three year term).
Guidelines Range: $2.22 – $4.44 million.
Penalty: $2.2 million.
Disclosure: Voluntary disclosure.
Monitor: No.
Individuals Charged: No.
Data Systems & Solutions (June 18th)
See here for the prior post.
Charges: Conspiracy to violate the FCPA’s anti-bribery provisions and one substantive FCPA anti-bribery violation.
Resolution Vehicle: Criminal information resolved via a DPA (term 2 years).
Guidelines Range: $12.6 – $25.2 million
Penalty: $8.8 million (30% below the minimum amount suggested by the Guidelines).
Disclosure: DPA states as follows: “following the receipt of subpoenas in connection with the government’s investigation, DS&S initiated an internal investigation and provided real-time reports and updates of its investigation into the conduct described in the Information”
Monitor: No.
Individuals Charged: No.
Biomet (March 26th)
See here for the prior post.
Charges: Conspiracy to violate the FCPA, three substantive FCPA anti-bribery violations, and FCPA books and records violation.
Resolution Vehicle: Criminal information resolved via a DPA (term 3 years).
Guidelines Range: $21.6 – $43.2 million.
Penalty: $17.3 million (20% below the minimum amount suggested by the Guidelines).
Disclosure: Industry sweep inquiry followed by disclosure of misconduct at issue, including a portion of which that was voluntarily disclosed.
Monitor: Yes (18 month term).
Individuals Charged: No.
BizJet International / Lufthansa Technik (March 14th)
See here for the prior post.
Charges: BizJet – conspiracy to violate the FCPA; Lufthansa – no charges.
Resolution Vehicle: BizJet – criminal information resolved via a DPA (term 3 years); Lufthansa – NPA (term 3 years).
Guidelines Range: $17.1 – $34.2 million.
Penalty: $11.8 million (30% below the minimum amount suggested by the Guidelines).
Disclosure: Voluntary disclosure.
Monitor: No.
Individuals Charged: No.
Smith & Nephew (Feb. 6th)
See here for the prior post.
Charges: Conspiracy to violate the FCPA, FCPA’s anti-bribery violation, and FCPA books and records violation.
Resolution Vehicle: Criminal information resolved via a DPA (term 3 years).
Guidelines Range: $21 – $42 million.
Penalty: $16.8 million (20% below the minimum amount suggested by the Guidelines).
Disclosure: Industry sweep inquiry followed by disclosure of misconduct at issue.
Monitor: Yes (term 18 months).
Individuals Charged: No.
Marubeni (Jan. 17th)
See here for the prior post.
Charges: Conspiracy to violate the FCPA, and aiding and abetting FCPA anti-bribery violations.
Resolution Vehicle: Criminal information resolved via DPA (term 2 years).
Guidelines Range: $54.6 – $109.2 million.
Penalty: $54.6 million.
Disclosure: Enforcement action based on a previous foreign law enforcement investigation.
Monitor: Yes (2 year term).
Individuals Charged: No.
Assistant Attorney General Lanny Breuer On …
Yesterday, Assistant Attorney General Lanny Breuer spoke at IBC Legal’s World Bribery & Corruption Compliance Forum in London. See here for his remarks. Breuer touched upon a number of topics (but not FCPA guidance as noted by the FCPA Blog here), including the following as excerpted below.
General
“I am asked to speak about efforts in the United States to fight foreign bribery perhaps more than on any other subject, and all over the world.”
“As you may know, no criminal FCPA case can be brought in the United States without the Fraud Section’s authorization. I have said before that I personally believe our FCPA work is so important. It helps to level the playing field for U.S. and foreign companies, and motivates corporations to create genuine cultures of compliance. Moreover, corruption has such negative effects, particular in emerging economies, that we must use every tool at our disposal to fight it. Not only does corruption corrode the public trust and weaken democratic institutions, but it also creates gaps in government structures that organized criminal groups and terrorist networks can exploit. The FCPA, which has been on the books for approximately 35 years, was the first effort of any nation to specifically criminalize the act of bribing foreign officials. But only in the last several years has the law become a strong enforcement tool.”
“In recent years, we have witnessed a significant awakening to the problem of corruption around the globe. Russia, China and India are taking foreign bribery more seriously than ever before; the U.K. has an important new Bribery Act; and, perhaps due in part to United States enforcement efforts, companies and individuals doing business around the world are coming to appreciate that they will be held accountable for the way they conduct business with foreign officials. In short, the world is moving in one direction only with respect to anti-corruption efforts. There is still plenty of work to be done. But we are making progress, and I hope and believe that we will continue to make strides in this area together.”
Asset Recovery
“Criminal enforcement is a critically important aspect of our anti-corruption work. But, in the Criminal Division, we have also been developing an asset forfeiture initiative – the Kleptocracy Asset Recovery Initiative – that involves civil actions against the proceeds of foreign official corruption. Attorney General Holder announced the initiative in Uganda in 2010, and my team and I have been building the initiative in the Criminal Division’s Asset Forfeiture and Money Laundering Section since then. Our theory is simple: Even if we cannot pursue you criminally in the United States – because we lack criminal jurisdiction, for example – corrupt leaders should not be permitted to use the United States as a safe haven for the proceeds of their corrupt activities. We have recently had our first Kleptocracy Initiative successes. In July, for example, we announced that we had secured a restraining order against more than $3 million in corruption proceeds related to James Onanefe Ibori, the former governor of the oil-producing Delta State in Nigeria; and, earlier this month, we executed restraints against an additional $4 million in Ibori assets, including the proceeds from the sale of a penthouse unit in the Ritz-Carlton in Washington, D.C. Ibori was previously convicted here in the United Kingdom on money laundering and fraud charges and sentenced to 13 years in prison. Another example involves two civil forfeiture complaints we have filed against approximately $70 million in assets allegedly belonging to Teodoro Nguema Obiang Mangue, a government minister for Equatorial Guinea and the son of that country’s president. According to the complaints, despite an official government salary of less than $100,000 per year, Minister Obiang corruptly amassed wealth of more than $100 million. Among the items that we are seeking to forfeit are a Gulfstream jet, a mansion in Malibu, Calif., and $1.8 million worth of Michael Jackson memorabilia.”
DPAs / NPAs
“As a result both of increased FCPA enforcement and increased policing of corporate conduct in general, I think that the culture of corporate compliance has improved in recent years. As I explained in a speech in New York City recently, until roughly 20 years ago, prosecutors in the United States, when they encountered corporate misconduct, were usually faced with a stark choice – either to indict, or walk away. That began to change in the 1990s, when the government started doing something new: agreeing to defer prosecution against the corporation in exchange for an admission of wrongdoing; cooperation with the government’s investigation, including against individual employees; payment of monetary penalties; and concrete steps to improve the company’s behavior. And, over the past decade, deferred prosecution agreements, or DPAs, have become an important part of corporate criminal law enforcement. I am aware that the U.K. government recently put forth a proposal to introduce DPAs as a way of resolving corporate cases in the U.K. Based on the United States experience, my sense is that the availability of DPAs here would represent a positive step forward. In the United States, the increased use of DPAs has meant far greater accountability for corporate wrongdoing. Whereas prosecutors often declined when their only choice was to indict or walk away, now companies know that avoiding the disaster scenario of an indictment does not mean an escape from accountability. […] DPAs and NPAs are appropriate in certain circumstances and, therefore, they can be useful alternatives to criminal indictments. But they cannot be a substitute for criminal charges.”
Individual Prosecutions
“As I have said repeatedly, the strongest deterrent against corporate wrongdoing is the prospect of prison time. That is why I have put such a high priority on making sure that individuals are prosecuted when the evidence warrants prosecution.”
Morgan Stanley
“A former managing director of Morgan Stanley, Peterson pleaded guilty to conspiring to evade the bank’s internal FCPA controls and was sentenced to prison in August. Because Morgan Stanley voluntarily disclosed Peterson’s misconduct, fully cooperated with our investigation and showed us that it maintained a rigorous compliance program, including extensive training of bank employees on the FCPA and other anti-corruption measures, we declined to bring any enforcement action against the institution in connection with Peterson’s conduct. Prosecutors need to be smart about how they use their discretion in the FCPA context, as in every context. And, as we did in the Peterson case, we always attempt to strike an appropriate balance between vigorous and responsible enforcement.”
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I had the pleasure to Chair the 2010 World Bribery & Corruption Compliance Forum in London. See here for my opening remarks.
In my remarks I stated as follows regarding NPAs and DPAs. “Non and deferred prosecution agreements share a common thread – they both remove, whether in whole or in part, an independent judiciary from a critical role in a transparent legal system founded on the rule of law – and that is ensuring that provable facts support each element of the crime alleged and ensuring that resolution specifics are in the public interest. In his recent Innospec sentencing remarks, Lord Justice Thomas cited a paper – “The Risk of Abusing a Dominant Position” – that notes, among other things, that the newly enacted SFO guidance on“alternative methods to the disposal of criminal investigations by way of negotiated pleas or other resolutions by corporate defendants” may “introduce some unintended risks of abuse.” I share this concern and assert that it is troubling when an area of law largely develops outside of the judicial system via privately negotiated agreements – agreements that corporates often feel compelled to enter into, regardless of facts or legal theories, mindful of the “sticks” the enforcement agencies posses. I support the study Transparency International (“TI”) has called for in its recent “Progress Report on the OECD Convention.” That report expresses a concern that negotiated settlements could be“questionable deals” between enforcement agencies and companies and it calls for procedures to make settlement terms subject to judicial approval independent from the prosecutor’s office.”
See here for my recent post on Breuer’s unconvincing defense of NPAs and DPAs.