U.S. v. Siriwan Filing Sheds Light On Extradition Relations With Thailand In Pivotal Justice Department Case
Today’s post is from Mike Dearington, a rising 3L at Vanderbilt Law School and FCPA Professor reader.
*****
U.S. v. Siriwan Filing Sheds Light on Extradition Relations with Thailand in Pivotal Justice Department Case
Prosecutors in United States v. Siriwan submitted an extradition status report (here) last Friday in the Central District of California, revealing a potentially strained diplomatic relationship between officials in the U.S. and the Thai Attorney General’s office. Prosecutors charged Juthamas Siriwan, ex-governor of Tourism Authority of Thailand, and her daughter, Jittisopa, in 2009 with accepting bribes from Hollywood movie executives Gerald and Patricia Green in exchange for lucrative contracts. (See here for the previous FCPA Professor post.) The Greens were convicted in 2010 and sentenced to six months imprisonment. (See here for the previous post.)
In the DOJ’s filing, prosecutors expressed discomfort with providing an extradition-status update pursuant to court order, which they noted was “highly unusual in a public setting and strongly discouraged for many policy and case specific reasons.” One of these reasons, no doubt, was that the status update forced prosecutors to admit that the U.S. “has not yet received a response from Thailand regarding extradition.”
The Siriwan case is interesting also because it could be instrumental to DOJ efforts to curb foreign bribery, as it is an example of prosecutors uniquely targeting a “foreign official.” One of the oft-cited shortcomings of the FCPA is that it is purely a “supply side” enforcement scheme. In other words, the FCPA targets only those paying bribes, and does not prohibit receipt of such bribes by the foreign officials who demand them.
Indeed, critics have declared that, by targeting only the supply side, the law fails to appreciate the nature of foreign bribery. Bribery is not economically beneficial to corporations because of the risks and costs, yet corporate representatives nonetheless often pay bribes because they are economically extorted by foreign officials. Officials like Siriwan have been known to set the bidding process and are often first to broach the subject because of their powerful bargaining positions. Although the FCPA prohibits only bribe payments—and not receipts—the Siriwan case is somewhat of a DOJ workaround.
In Siriwan, prosecutors did not charge FCPA violations, as the Siriwans made no bribery payments. But prosecutors did charge substantive money-laundering. The Money Laundering Control Act (MLCA) prohibits the conveyance of funds to or from the U.S. “with the intent to promote the carrying on of specified unlawful activity.” Just what unlawful activity qualifies is an open question here.
Prosecutors argue that the Greens’ bribe payments represent specified unlawful activity, as do the Siriwans’ violations of Thai laws. On the other hand, the Siriwans contend the money-laundering charges are pulling “double duty” and that one cannot promote illegal payments by receiving illegal payments. The Siriwans’ motion to dismiss (see here for the prior post) has been pending since August 2011.
Siriwan may determine whether money-laundering is a viable tactic in the DOJ’s efforts to curb foreign bribery. The DOJ has expressed an interest in demand-side prosecutions. In 2009, prosecutors charged Robert Antoine and Jean Rene Duperval, formerly of Haiti Teleco, a state-owned national telecommunications company, with money laundering after each allegedly accepted bribes. (See here for the prior post.) Antoine pled guilty and was sentenced to four years in prison; Duperval was convicted and sentenced to nine years in prison in May 2012.
If prosecutors prevail in Siriwan, we can expect the DOJ to pursue a greater number of foreign officials under the MLCA, reminiscent of the way prosecutors pursued foreign executives in the 1990s/2000s under U.S. Antitrust laws due to a lag in foreign anti-trust enforcement. If U.S. prosecutors can bring foreign officials within their purview, the DOJ may have more tools to reign in foreign bribery.
The Elusive Mr. Kozeny
Today’s post is from Brian Whisler (here – a former federal prosecutor and current partner at Baker & McKenzie).
*****
On March 28, 2012, the Bahamian Privy Council dismissed the U.S. Justice Department’s appeal of the lower court’s decision on jurisdictional grounds, largely though not entirely foreclosing the U.S. effort to extradite Victor Kozeny to stand trial and defend against FCPA/money laundering charges pending in the Southern District of New York. (See here for the 2005 indictment). The Privy Council’s opinion (here) reflects some unfavorable comments on the merits of the Justice Department’s extradition case, but did provide some leave for the U.S. to renew its extradition attempt. For now, Kozeny is free to remain in the Bahamas, but faces a pending extradition request from the Czech Republic (relative to defrauded investors), which was awaiting the outcome of the U.S. extradition request.
Whether the Justice Department will continue to pursue Kozeny after seven years of effort remains an open question. As the sentencings of the co-defendants in the Bourke/Kozeny matter (Bodmer, Farrell, and Lewis) have been deferred since 2005 pending extradition of Kozeny, there may be some pressure to dismiss against Kozeny and bring closure to the co-defendants’ cases.
The Kozeny quest illustrates the challenge associated with charging foreign nationals in FCPA cases (and criminal cases generally). In the event that the U.S. authorities elect to dismiss against Kozeny, they may perhaps take some comfort knowing that Kozeny served 19 months in pre-trial detention in a Bahamian prison, while co-defendant Frederick Bourke was sentenced (though yet to serve) only 12 months, one day for his role in the conspiracy. It has also been reported that Kozeny has spent in excess of $1 million in legal fees fighting extradition to the United States.
Cheney Reportedly To Be Charged By Nigerian Authorities In Connection With Bonny Island
During Tuesday’s Senate subcommittee FCPA hearing, Senator Christopher Coons noted, in connection with other nations ramping up enforcement of their own bribery laws, that “today we are the only nation that is extending extraterritorial reach and going after the citizens of other countries, we may some day find ourselves on the receiving end of such transnational actions.”
Prescient statement.
Bloomberg is reporting (here) that Nigeria’s Economic and Financial Crimes Commission will soon files charges against former Vice President Dick Cheney and officials from five foreign companies, including Halliburton Co., in connection with the Bonny Island bribery scheme.
Bloomberg reports that indictments will be filed in a Nigeria court and that an arrest warrant for Cheney “will be issued and transmitted through Interpol” for enforcement. As noted by Bloomberg, Cheney was CEO of Halliburton from 1995 until 2000.
In February 2009, Halliburton, Kellogg Brown & Root LLC, and KBR Inc. agreed to pay $579 million in combined DOJ/SEC FCPA enforcement action to resolve charges related to Bonny Island. According to the DOJ, the improper conduct took place between 1994 and 2004. The case remains the largest ever FCPA enforcement action against a U.S. company.
See here for the DOJ resolution and here for the SEC resolution.
The DOJ’s press release (here) states that the “successful prosecution of KBR […] demonstrates that no one is above the law” and that the FBI “will continue to investigate these matters by working in partnership with other law enforcement agencies, both foreign and domestic, to ensure that corporate executives who have been found guilty of bribing foreign officials in return for lucrative business contracts, are punished to the full extent of the law.”
Over the summer, Technip and Snamprogetti/Eni, joint venture partners with KBR, also agreed to settle FCPA enforcement actions in connection with Bonny Island.
Technip agreed to pay $338 million in a joint DOJ / SEC enforcement action (see here and here).
Snamprogetti/ENI agreed to pay $365 million in a joint DOJ / SEC enforcement action (see here and here).
The fourth joint venture partner, JGC of Japan, has yet to resolve its exposure although it has been reported that it is settlement discussions with the DOJ.
For a complete run-down of “Bonny Island Bribery Club Statistics” see here.
The only individual charged thus far has been Albert Jack Stanley (see here). Stanley pleaded guilty and was originally scheduled to be sentenced in May 2009, but has not yet been sentenced.
Two joint venture agents, Jeffrey Tesler and Wojciech Chodan (both U.K. citizens) have also been charged (see here). Tesler and Chodan have been fighting extradition.
Yesterday, the U.K. Guardian (here) reported that Chodan, who had given up his extradition battle, is to arrive in the U.S. in the next 10 days to stand trial. The Guardian reports that Tesler will seek to overturn his extradition today.
Friday Roundup
The Bribery Act is not the only thing delayed in the U.K., where in the world is James Tillery, Thai authorities looking into Alliance One and Universal Corp bribe recipients, and corporate directors appear satisfied … it’s all here in the Friday roundup.
BAE U.K. Plea Agreement Delayed
In a recent article in The Times (London), Alex Spence and David Robertson report that the BAE – SFO plea agreement “is unlikely to come before the courts for approval before November.”
In February (see here) the SFO announced that it “reached an agreement with BAE Systems that the company will plead guilty” to the offense of “failing to keep reasonably accurate accounting records in relation to its activities in Tanzania.” The SFO resolution was controversial given that BAE was viewed by many to have engaged in bribery around the world.
The Times reports “that the SFO fears that a judge may now refuse to approve the BAE settlement or increase the penalties imposed on the company.” The article indicates that “BAE, which has always denied bribery, is understood to be frustrated by the slow progress of the SFO case, but the delay is not thought to have had an impact on the company’s operations.”
James Tillery
In December 2008, James Tillery, a former executive of Willbros International Inc., and Paul Novak, a consultant to the company, were criminally charged “in connection with a conspiracy to pay more than $6 million in bribes to government officials in Nigeria and Ecuador …” (see here).
In November 2009, Novak pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA (see here).
Tillery has apparently been hanging out in Nigeria, but is now apparently in custody according to various Nigerian news outlets. According to the sources, “Tillery was believed to have been handed over by officials of Interpol to officials of the US Federal Bureau of Investigation (FBI).”
Apparently this occurred “without the knowledge of Attorney-General of the Federation and Minister of Justice, Mr. Mohammed Adoke, who is supposed to be notified before such action is taken. Under section 6 of the Extradition Act, a request for extradition is supposed to be sent to the AGF who is supposed to arraign such a deportee before a magistrate court and upon the declaration of the magistrate, the deportee is deported accordingly.”
Then it was reported that Tillery’s extradition “was stopped by immigration officials at the Murtala Muhammed International Airport, Lagos because he did not have a travel document.”
Then Tillery’s Nigerian lawyer apparently stepped in and said that the attempted extradition was a “grave assault on the sovereignty of Nigeria” and a violation of Nigeria’s Extradition Act because Tillery renounced his U.S. citizenship and became a Nigerian by naturalization in 2009. Thus, the lawyer argued that the U.S. needed to follow legal steps in Tillery’s extradition.
Then it was reported that Justice Abang Okon of the Federal High Court in Lagos ordered the Federal Government to halt its alleged plan to extradite Tillery from Nigeria to the U.S.
For more on Willbros Group and other individuals involved in related enforcement actions (see here and here).
Thai Authorities Investigating Alliance One / Universal Corp. Bribe Recipients
Earlier this month, the DOJ and SEC announced a joint FCPA enforcement action against tobacco companies Alliance One International Inc. and Universal Corporation. Certain of the allegations against both companies involved bribe payments to “Thai government officials to secure contracts with the Thailand Tobacco Monopoly (TTM), a Thai government agency, for the sale of tobacco leaf.” (See here).
In this prior post, I noted that it is potentially embarrassing for a foreign country to have “one of its own” profiled in a U.S. FCPA enforcement action. With increasing frequency, the end result is that the alleged “foreign official” bribe recipient becomes the subject of an “in-country” investigation.
As noted in this Bangkok Post article:
“A local investigation is expected into US allegations that Thailand Tobacco Monopoly staff accepted US$1.93 million (62 million baht) in bribes to buy Brazilian tobacco. The Department of Special Investigation has asked the Finance Ministry to file a complaint against the TTM staff so it can look into the allegations. DSI director-general Tharit Pengdit told the Bangkok Post yesterday the Finance Ministry, which supervises the state-owned cigarette maker, should file a complaint with the DSI so it can look into the US claims. […] Sathit Limpongpan, permanent secretary for finance, said his ministry would work with the Justice Ministry to seek information from the US Justice Department and would conduct an initial investigation.”
Corporate Directors Are Satisfied
According to a recent legal survey by Corporate Board Member and FTI Consulting (see here), 90% of directors “are satisfied with their in-house legal department’s management” of FCPA issues.
A good weekend to all.
Friday Roundup
Some FCPA developments and news to pass along this Friday.
Additional Prosecutor Joins DOJ FCPA Unit
As reported earlier this week in the New York Times (see here), Jeffrey Knox, a current federal prosecutor in the Eastern District of New York, will soon assume a new position in the DOJ’s FCPA unit. Knox, a prosecutor with extensive terrorism and foreign intelligence gathering experience, describes himself in the NY Times article “as a traditional law-and-order Republican.” Prior to becoming a DOJ prosecutor, Knox was an attorney at Simpson Thacher & Bartlett in New York. For additional coverage, see here from Christopher Matthews at Main Justice.
Flavio Ricotti Extradition
As detailed in this DOJ release, “Flavio Ricotti, a former executive of Rancho Santa Margarita, Calif.-based valve company Control Components Inc. (CCI), has been extradited to the United States from Germany in connection with his alleged participation in a conspiracy to secure contracts by paying bribes to officials of foreign state-owned companies as well as officers and employees of foreign and domestic private companies.” According to the release, “Ricotti, 49, of Bientina, Italy, was arrested on Feb. 14, 2010, in Frankfurt, Germany, and arrived in the United States on July 2, 2010.”
As noted in the release:
“Ricotti and five other former executives of CCI were charged on April 8, 2009, in a 16-count indictment (see here) for their alleged roles in the foreign bribery scheme. According to the indictment, Ricotti, who served as CCI’s vice president and head of sales for Europe, Africa and the Middle East from 2001 through 2007, allegedly caused CCI employees and agents to make corrupt payments totaling approximately $750,000 to officers and employees of state-owned companies, and corrupt payments totaling approximately $380,000 to officers and employees of private companies. According to the indictment, these corrupt payments occurred in connection with CCI projects in various countries around the world, including in the United Arab Emirates, Kazakhstan, India and Qatar.”
For more on the CCI matter, see here.
Other foreign nationals facing extradition to the U.S. to face FCPA charges include Jeffrey Tesler, the U.K. agent at the center of the Bonny Island bribery scheme, and Wojciech Chodan, also a U.K. citizen and a former salesperson and consultant of a U.K. subsidiary of Kellogg, Brown & Root. (See here). British judges have ruled that Tesler and Chodan can be extradited to the U.S. and these individuals are appealing that decision. And then of course there is Viktor Kozeny (see here).
A good weekend to all.