Category: FCPA Inc.

Friday Roundup

What others are saying, more candy, seriously out-of-whack, not first hand, and for the reading stack.  It’s all here in the Friday Roundup.

What Others Are Saying

Last week, I published this article “Why You Should Be Alarmed By The ADM FCPA Enforcement Action.”  I’ve received a higher than norm amount of feedback – all positive – about the article via e-mail and social media.  Below is what others are saying about the article.

“For many reasons this is a terrific article.  [You are] very brave to write this necessary and timely analysis.”

“Just wanted to say thank you for keeping me updated on your FCPA-related work.  It looks like your 2010 Facade article is still holding up pretty well, despite the DOJ’s “Guidance” from last year.  It will be interesting to see how long the agencies can continue with their relatively unconstrained enforcement practices.”

Thanks for sharing Mike. And don’t change: you are as good as ever!

“Excellent article, Mike!  Readable even by those of us who are not lawyers.  The conclusion about why ADM chose settlement is undoubtedly true of many others who are charged, but leads to a question of the [conduct] of those who are charged to extract “easy takings” rather than have to justify themselves to the SEC or DOJ.  On whose behalf are they acting?”

Also a thank you for the many positive and encouraging comments I’ve received since publishing two posts (here and here) concerning the recent departure of the DOJ’s FCPA Unit Chief.

In other news on that front, White & Case recently announced here that Kathleen Hamann will join the firm as a partner “from the DOJ where she was an anticorruption policy counsel and trial lawyer assigned to the Foreign Corrupt Practices Act (FCPA) Team in the Criminal Division’s Fraud Section.”  The head of White & Case’s Global White Collar Practice stated: “Kathleen’s experience at the DOJ gives her a strong understanding of the complexities of the FCPA and the federal government’s anticorruption policies.  Kathleen is a wonderful addition to our global white collar team, and will further strengthen our ability to represent and defend clients around the world in all phases of investigations, and criminal and civil enforcement proceedings.”

More Candy

This previous post “Like a Kid In A Candy Store” highlighted the abundant offerings of FCPA year in reviews this time of year.

There is more candy to digest.

See here for the slick Global Bribery and Corruption Review 2013 from Hogan Lovells.

See here for Mayer Brown’s FCPA Update:  Year-End 2013.

But again, be warned – the divergent enforcement statistics are likely to make you dizzy at times and as to certain issues.  [Given the increase in FCPA Inc. statistical information and the growing interest in empirical FCPA-related research, I again highlight the need for an FCPA lingua franca (see here for the prior post), including adoption of the “core” approach to FCPA enforcement statistics (see here for the prior post), an approach endorsed by even the DOJ (see here), as well as commonly used by others outside the FCPA context (see here)]

Seriously Out-Of-Whack

One could have either of the following positions.

DOJ enforcement of criminal laws is more about leverage against public companies and risk aversion by corporate leaders rather than facts and law.  Therefore, even if a company settles various enforcement actions for approximately $20 billion in a year, it is not surprising that a company’s profits and stock price are up and that the company’s CEO is therefore given a substantial raise.

DOJ enforcement of criminal laws is about facts and law and if a company settles various enforcement actions for approximately $20 billion in a year, it is just not right that the company’s CEO is given a substantial raise.

Regardless of your position (I know where I fall), you would have to agree that things are seriously out-of-whack these days.

See here and here for articles regarding the compensation of James Dimon (CEO of JPMorgan).  As highlighted in the Wall Street Journal article.

“J.P. Morgan Chase’s board delivered a strong endorsement of Chief Executive James Dimon, boosting his pay 74% for a year in which the nation’s largest bank agreed to more than $20 billion in legal payouts …”  […] The raise reflects the view among the board that most shareholders believe Mr. Dimon is doing a good job protecting the bank’s earnings power and driving the stock price higher despite the high-profile legal settlements, according to people familiar with the board’s conversations. […] Many large shareholders seem comfortable with the bank’s leadership, too. The company’s stock price rose 33% during 2013, outpacing the 30% increase in the S&P 500 stock index. If not for its billions in legal expenses, J.P. Morgan likely would have earned record profits.  […]   Warren Buffett, the billionaire investor who personally owns an undisclosed number of shares in J.P. Morgan, described Mr. Dimon as a “bargain.” “If I owned J.P. Morgan Chase, he would be running it, and he would be making more money than the directors are paying him,” said Mr. Buffett, who has publicly defended the bank executive before.”

“Not First Hand”

JPMorgan of course is under FCPA scrutiny for its alleged hiring practices in China.  (See here among other posts).

In this video interview, Goldman Sach’s CEO Lloyd Blankfein talks about hiring issues at his company.  As noted in the related article, “asked whether he had seen any hiring that looked like a bribe, Mr. Blankfein paused for a moment” and said “not first hand.”

Reading Stack

From BalkanInsight, an in-depth piece regarding the Magyar Telecom enforcement action (see here for the prior post).

From the Economist regarding Brazil’s new FCPA-like law.

*****

A good weekend to all.

A More Complete Picture Of Duross’s Tenure As DOJ FCPA Unit Chief

Yesterday’s post highlighted how Chuck Duross (the DOJ’s FCPA Unit Chief) became the latest in a long line of DOJ and SEC FCPA enforcement attorneys to leave government service for FCPA Inc. to provide defense and compliance services to business organizations subject to the enforcement climate they helped create.  The concerns raised in the prior post were policy issues relevant to the typical career path of DOJ and SEC enforcement attorneys.

This post uses the news of Duross’s departure to highlight additional factual information concerning FCPA enforcement during his tenure.  As FCPA Unit Chief, Duross was a public figure and one that publicly welcomed scrutiny and accountability.  This post does nothing more than provide the public with additional facts and information concerning FCPA enforcement during Duross’s tenure beyond the press release issued by his future employer Morrison & Foerster (“MoFo”).

In this way, readers can analyze for themselves Duross’s tenure as FCPA Unit Chief – and more broadly – various policy issues relevant to DOJ FCPA enforcement including how the DOJ’s FCPA enforcement program is often publicly portrayed.

During his tenure as FCPA Unit Chief, I had the pleasure to meet Chuck several times.  He was helpful to me in obtaining access to certain original source documents and we engaged several times over e-mail and a few times by phone.  Moreover, I will forever be grateful to him for participating in an FCPA conference in March 2012 I helped organize at Ohio State University Moritz College of Law (at the time, the most comprehensive FCPA symposium ever held at a law school).

Throughout his tenure as FCPA Unit Chief, Duross appeared uneasy as to the public scrutiny associated with his position and the DOJ’s FCPA enforcement program more broadly.  Earlier in his tenure, I chaired the World Bribery & Corruption Compliance Forum in London during which Duross stated (see here for the prior post) that he took the FCPA Unit Chief job with a bit of “trepidation” given that he had big shoes to fill (he made specific praise of prior FCPA Chiefs Peter Clark and Mark Mendelsohn) and given that each new case is followed more closely than the last.  More recently, in September 2013, as noted in this prior post, Duross struck a similar theme when he stated that one of his biggest surprises upon becoming FCPA Unit chief was realizing how the unit “operates under a microscope” which highlighted, in his words, the need for his unit “to have its A game” at all times.

To his credit, Duross publicly welcomed scrutiny of the FCPA Unit.  For instance, at the September 2013 event, Duross indicated that “we should be held accountable for what we do – good and bad.”

This post does just that as the MoFo press release announcing the hiring of Duross paints an incomplete picture of FCPA enforcement during his tenure as FCPA Unit Chief.

This post does not suggest or imply that everything that occured in connection with DOJ FCPA enforcement since April 2010 was the direct result of Duross’s decisions or conduct. 

Yet, the same could be said regarding the FCPA statistics touted in the MoFo release. (“Under his leadership, the FCPA Unit resolved more than 40 corporate cases, which include about two-thirds of the top 25 biggest corporate resolutions ever.  Those matters resulted in approximately $1.9 billion in monetary penalties and the conviction of more than two dozen business executives and money launderers.”)  Many of these enforcement actions, including several of the largest ones from a settlement amount perspective, were on the DOJ’s docket long before Duross assumed leadership of the FCPA Unit in April 2010.

Perhaps the most notable event of Duross’s tenure as FCPA Unit was publication of the FCPA Guidance in November 2012.

However, far from a pro-active DOJ effort to “make FCPA enforcement more transparent and compliance with the statute more understandable to the business community” (as stated in the MoFo release), the timing of the Guidance appeared to be a DOJ attempt to forestall introduction of an actual FCPA reform bill.

The following chronology of events is relevant as highlighted in my article “Grading the FCPA Guidance.”  After the November 2010 Senate FCPA hearing, FCPA reform gained steam.  After the Senate hearing, Senator Amy Klobuchar (D-Minn.) asked the DOJ, ‘‘do you believe companies could comply with more certainty with the FCPA if they were provided with more generally applicable guidance from the Department in regards to situations covered by the FCPA that are not clear cut or fall into gray areas?’’  The DOJ response was that it “believes it provides clear guidance with respect to FCPA enforcement through a variety of means,’’ and it then listed the same general categories of information the OECD identified in 2002 as being deficient.”  FCPA reform gained further steam as a result of the June 2011 House FCPA hearing which evidenced bipartisan support for certain aspects of FCPA reform.  Against this backdrop, and only then, did Assistant Attorney General Lanny Breuer announce in November 2011 that the DOJ intended to issue FCPA Guidance in 2012.  Those on Capital Hill who were inclined to introduce an FCPA reform bill said they would await DOJ’s FCPA guidance before introducing such a bill.  It took a year for the DOJ and SEC to release the FCPA Guidance and its release was shortly after the November presidential election and during a lame duck Congress.

Regardless of the motivations of the DOJ (and SEC) in releasing the FCPA Guidance when they did, the related issue is the Guidance itself.

In the MoFo release, Paul Friedman, co-chair of the firm’s FCPA & Anti-Corruption Practice, calls the Guidance “groundbreaking” and “authoritative” and states that it “has proven invaluable to global companies and practitioners.”  As noted in this prior post (summarizing nearly 50 law firm and practitioner views on the Guidance), the Guidance has been perceived much differently than portrayed in the MoFo release.  For instance, Steven Tyrrell  (the former chief of the DOJ fraud section) called the Guidance “more of a scrapbook of past DOJ and SEC successes than a guide book for companies who care about playing by the rules.”

Perhaps more to the point, Duross’s future law firm had a different take as to the Guidance it termed “groundbreaking” in its recent release.  Indeed, MoFo previously called the Guidance “not groundbreaking.”  In this November 2012 Client Alert, Friedman and others state, in pertinent part:

“the guidance is not a panacea for the difficult issues that global companies navigate on a daily basis …”

“the guidance does not deliver any of the fundamental reform that the business community has been seeking, likely setting the stage for further attempts to secure statutory reform from Congress”

“[as to “foreign official” issues discussed in the Guidance] it provides no meaningful relief from the fact-specific ambiguities presented in real life.”

“[as to the standard for corporate liability v. individual liability in the Guidance] what the regulators see as the difference between “willful” and “corrupt intent” goes unsaid.”

“The [FCPA Guidance] is not groundbreaking. There is no sign of the regulators retreating from their expansive views of liability under the FCPA.”

Guidance aside, Duross’s departure from the DOJ once again raises the broader point –  how does the DOJ actually define success in its FCPA enforcement program?   (For instance, see recent statements here and here from Acting Assistant Attorney General Mythili Raman “our stellar FCPA unit continues to go gangbusters” and “our recent string of successful prosecutions of corporate executives is worth highlighting.”)

While the DOJ has had “success” in exercising its leverage and securing large FCPA settlements against risk-averse corporations through resolution vehicles not subjected to any meaningful judicial scrutiny, when put to its burdens of proof in the context of an adversarial system, the DOJ has had substantially less success. In a legal system founded on the rule of law, this later form of success is more meaningful than the former.

For instance, as noted in this recent post, SEC Chairman Mary Jo White recently stated that trials are the “crown jewel of our system of justice” as they “create public accountability for both defendants and the government through the public airing of charges and evidence.”  As White stated, “trials allow for more thoughtful and nuanced interpretations of the law in a way that settlements and summary judgments cannot.”

To his credit, Duross recognized the importance of trials in terms of the FCPA Unit’s overall legitimacy and credibility.  As noted in this September 2010 post, Duross stated that the “ability to try lengthy and complex trials” is critical to the FCPA Unit’s success and that the Unit must continue to be willing to try cases and be put to its burden.

Duross’s FCPA Unit was put to its burden several times during his tenure and the results were often DOJ failures.

Again, this post does not suggest or imply that everything that occured with DOJ FCPA enforcement since April 2010 was the direct result of Duross’s decisions or conduct. 

Nevertheless, it is a fact that the following things occurred while Duross headed the DOJ’s FCPA Unit.

The DOJ’s Africa Sting cases ended in February 2012 with Judge Richard Leon granting the DOJ’s motion for dismissal and stating as follows (see here for the prior post).

“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 a recent interview, Duross stated as follows regarding the Africa Sting case – “I still believe it was a better case than most people thought.”  This is not how the jury foreman in one of the Africa Sting trials saw it.  In this guest post, the jury foreman stated that ‘‘a number of jurors were troubled by the nature of the FBI sting operation’’ and stated that the underlying view of the jury was that ‘‘the defendants had acted in good faith and the FBI/DOJ in bad faith.”

The jury foreman concluded the FCPA Professor post as follows:

“The government has the option to try [the defendants on which the jury hung] again. As a taxpayer, I sincerely hope they will instead dismiss the charges. The evidence simply does not exist, even if they get their witnesses to behave better under cross, to convict. This is a case that makes one wish that a supermajority was sufficient to acquit. Prolonging this prosecution is a waste of government resources. At some point in the deliberations, I described this sting and prosecution as a quarterback sneak. Although I came to regret that analogy for the frequency with which it was recalled in the jury room, I think it apt. The FBI and DOJ designed a play to get the ball just across the goal line. Unfortunately, in the ensuing pileup, no camera angle shows the ball with clarity and it is anyone’s guess as to whether they scored.”

The DOJ’s enforcement action against Lindsey Manufacturing and its executives Keith Lindsey and Steve Lee ended in December 2011 with Judge Howard Matz dismissing the indictment after finding numerous instances of prosecutorial misconduct and stating as follows (see here for the prior post).

“[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.”

The DOJ’s enforcement action against John O’Shea ended in January 2012 when Judge Lynn Hughes granted O’Shea’s motion for acquittal after the DOJ’s case, a case which Duross personally tried (see here).  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.”

As FCPA Unit Chief, Duross was a public figure and one that publicly welcomed scrutiny and accountability.  This post provides the public with additional facts and information concerning FCPA enforcement during Duross’s tenure as FCPA Unit Chief so that readers can analyze for themselves Duross’s tenure, as well as more broadly, various policy issues relevant to DOJ FCPA enforcement.

In a recent interview, Duross stated as follows concerning his tenure as FCPA Unit Chief – “I think I had a great run.”

You can decide for yourself.

DOJ FCPA Unit Chief Joins FCPA Inc.

Imagine a foreign country where enforcement of a specific law is vested solely, per enforcement agency policy, in the hands of a few individuals and where these few individuals are “in charge of all investigations, prosecutions, and resolutions” under the law; where the individuals set and champion policy objectives relevant to the specific law; where the individuals “enforce” the specific law against business organizations largely behind closed doors in the absence of meaningful judicial scrutiny and little case law setting the parameters of the specific law; and where the individuals then leave government service for lucrative jobs in the private sector to provide defense and compliance services to business organizations subject to the enforcement climate they helped create and champion.

Do you have concerns with such a system?

Yesterday, Morrision & Foerster announced “that Charles Duross will join the firm’s Litigation Department as a partner and will head its global anti-corruption practice, resident in the Washington, D.C. office, effective February 17, 2014.”

The release further states as follows.

“As the head of DOJ’s FCPA Unit, Mr. Duross was in charge of all of DOJ’s FCPA investigations, prosecutions and resolutions in the United States from April 2010 through his departure from the DOJ on Friday, January 24, 2014. Internationally recognized for his leading role in developing and implementing the government’s FCPA enforcement strategy, he was a Deputy Chief of the Fraud Section in the Criminal Division of the U.S. Department of Justice for almost four years. Once dubbed “Mr. FCPA” in the Washington Post, he is widely credited with developing the current enforcement regime, and recruiting and leading a talented team of prosecutors who have brought some of the most important FCPA cases in the statute’s 36-year history. Under his leadership, the FCPA Unit resolved more than 40 corporate cases, which include about two-thirds of the top 25 biggest corporate resolutions ever. Those matters resulted in approximately $1.9 billion in monetary penalties and the conviction of more than two dozen business executives and money launderers.

Friday Roundup

Looking for talent … got talent, the DOJ is sued, the Corruption Perceptions Index, a pulse on FCPA Inc., and for the reading stack.  It’s all here in the Friday roundup.

Looking for Talent … Got Talent

If your firm or organization is looking for either a summer associate or full-time lawyer with a solid Foreign Corrupt Practices Act foundation, please e-mail me at fcpaprofessor@gmail.com.  This past semester, twenty Southern Illinois University law students completed a semester long class on the FCPA, FCPA enforcement and FCPA compliance.

Learning objectives for the class included:  (i) developing a comprehensive understanding of the FCPA’s anti-bribery provisions and books and records and internal controls provisions; (ii) analyzing legal, ethical and policy issues associated with FCPA enforcement; (iii) understanding the FCPA’s long tentacles and how actual FCPA enforcement actions brought by the DOJ and/or SEC are often just one consequence of FCPA scrutiny; and (iv) gaining practical FCPA compliance skills including the ability to conduct an FCPA risk assessment and develop FCPA compliance policies.

I am confident in saying that few, if any, law students in America have as solid a foundation in the FCPA and FCPA compliance as these students.  I encourage you to give them an opportunity.

The DOJ Is Sued

University of Virginia Law Professor Brandon Garrett and Reference Librarian Jon Ashley maintain the excellent Federal Organizational Prosecution Agreements website which contains hundreds of federal organizational prosecution agreements such as non-prosecution and deferred prosecution agreements … at least those in the public domain.

Recently Ashley filed this lawsuit against the DOJ under the Freedom of Information Act seeking release of a certain non-prosecution agreement.  The complaint asserts:

“Plaintiff is statutorily entitled to the disclosure of [the] non-prosecution agreement and [the DOJ] has improperly withheld the requested records in violation of the law and in opposition to the strong public interest in understanding the judicial system and why admitted wrongdoers are not criminally prosecuted.”

While lacking knowledge as to the specifics of the complaint, I applaud the lawsuit for seeking to shine a light on DOJ enforcement practices.

As noted in this prior post, the 2012 FCPA Guidance highlighted secret FCPA enforcement.  While I did not file a formal Freedom of Information Act request, I sought on several occasions to seek information from the DOJ regarding its secret FCPA enforcement practices.  In each instance, my requests were ignored.

Corruption Perceptions Index

Transparency International (“TI”) recently released its annual Corruption Perceptions Index (“CPI”) (see here).

The CPI ranks countries/territories based on how corrupt their public sector is perceived to be and is a composite index drawing on corruption-related data collected by a variety of institutions and reflecting the views of observers from around the world including those living and working in the countries/territories evaluated.

The top four (very clean) countries in the CPI were Denmark, New Zealand, Finland and Sweden. The bottom four (highly corrupt) countries were Somalia, North Korea, Afghanistan, and Sudan.

The United States placed 19th on the list of 177 countries.

The DOJ has spoken in religious terms regarding its FCPA enforcement actions as former Assistant Attorney General Lanny Breuer stated “we in the United States are in a unique position to spread the gospel of anti-corruption, because there is no country that enforces its anti-bribery laws more vigorously than we do.”

Yet, it remains a bit ironic that as the U.S. aggressively expands its Foreign Corrupt Practices Act enforcement practice and theories, the U.S. remains far from the top of the CPI.  The latest CPI should again cause us to pause as to our claimed exceptionalism and moral superiority on this topic.  For instance, see this prior post “We Really Ought to Pause and Reflect.”

See the “Double Standard” subject matter tag for more.

Pulse of FCPA Inc.

What is one reason Wal-Mart is spending in excess of $1 million per working day on its FCPA issues?  Because, in many instances corporate FCPA scrutiny has turned into a full employment act for FCPA Inc.

Reuters recently reported here that Wal-Mart “is paying for lawyers to represent more than 30 of its executives involved in a foreign corruption investigation, according to people familiar with the matter,  an unusually high number that shows the depth of the federal probe.”  The article states:

“In recent months, the U.S. government has brought in a number of senior Wal-Mart executives for questioning, including officials from corporate headquarters in Bentonville, Arkansas, the sources said. The move, along with widespread publicity about the probe, appears to have prompted executives to seek their own legal representation. The sources declined to name the executives who have submitted to interviews.”

As noted in this recent Friday roundup, there are few relevant data points associated with the pulse of FCPA Inc.  Much information is anecdotal, including the following from Legal Search Consultants Major, Lindsey & Africa in its Asia Legal Market, Semi-Annual Report.

“FCPA practices continue to grow with firms continuing to relocate specialists from their US offices to Asia. This is reflective of an effort to meet the unrelenting demand in investigations work. There seem to be few certainties in Asia, but one is that FCPA business will not be diminishing anytime soon.”

Reading Stack

An informative post recently on the FCPAmericas site titled “Conducting Effective FCPA Training in Latin America.”  The eight pointers discussed are true regardless of which region FCPA compliance is focused.

A little dickey bird whispers to thebriberyact.com here regarding U.K. DPAs and Bribery Act prosecutions.

For the resources stack, the OECD, the U.N. Office on Drugs and Crime, and the World Bank recently released here the “Anti-Corruption Ethics and Compliance Handbook for Business.”  It states:

“The handbook is not intended to create new standards or represent any form of legally binding requirement for businesses. It has been developed to serve as a useful, practical tool for companies seeking compliance advice in one, easy-to-reference publication.  The handbook is divided into three sections. The first section provides an overview of the international anti-corruption framework, within which companies conducting international business must operate. The second section provides a brief introduction to how companies can assess their risk in order to begin developing an effective anti-corruption ethics and compliance programme. The third and most significant section brings together the major business guidance instruments. A comparison of these instruments reveals that they all largely include the same basic anti-corruption ethics and compliance elements. These elements are further illustrated using real-life, anonymised case studies provided by companies. Finally, the handbook includes as an annex a quick-reference table providing a cross-comparison of all the major business guidance instruments referenced in this handbook.”

*****

A good weekend to all.

Friday Leftovers

Scrutiny alerts, corruption in China, quotable, and for the reading stack.  It’s all here in the Friday leftover version of the roundup.

Scrutiny Alerts

Caribbean News Now reports here as follows.

“A complaint has been filed with the Department of Justice (DOJ) in the United States under the Foreign Corrupt Practices Act (FCPA) in relation to a contract purporting to grant oil exploration rights over some eight million acres of Saint Lucia’s maritime territory.  The 46-page complaint, which Caribbean News Now has seen, names Saint Lucia’s prime minister, Dr Kenny Anthony, and RSM Production Company (RSM), a Texas company, along with its president Jack J. Grynberg. Caribbean News Now has also seen a written notification confirming receipt of the document by the DOJ.

[…]

Specifically, the complaint notes that, in or about February 2000, Anthony, as then minister of finance, planning and sustainable development, signed a contract with RSM that purported to grant the company an “Exploration License” in respect of territorial maritime resources belonging to Saint Lucia amounting to 8,726,263 acres.  However, under Saint Lucia’s Minerals Vesting Act, all minerals in, on or under any land in Saint Lucia are vested in and controlled by the Crown and only the governor general may grant a licence to prospect for and/or mine such minerals.  Further, although the contract provides that RSM shall pay a royalty to “the Government” (as required by section 5 of the Minerals Vesting Act), it goes on to state that the liability of RSM in this respect shall be discharged by paying such royalty to the minister and not the government.”

Reuters reports here as follows.

“The U.S. Justice Department is probing Morgan Stanley for its hiring practices in China as part of an industry-wide investigation by the government into whether banks’ employment of politically connected Chinese breached U.S. bribery laws, according to people familiar with the matter.  As part of the industry sweep, the U.S. Securities and Exchange Commission sent letters to Morgan Stanley and other banks, including Goldman Sachs and Citigroup, seeking information about their hiring practices, according to several people familiar with the matter.  The SEC has asked the financial services firms to provide information about their hiring of the relatives of government officials in China …”.

This is not a surprising development following the New York Times August story regarding JPMorgan (see here for the prior post).

Corruption in China

The Congressional-Executive Commission on China recently held a roundtable on “Corruption in China Today: Consequences for Governance, Human Rights, and Commercial Rule of Law.”  As stated on the Commission’s website:

“Corruption takes many forms in China, from corrupt officials at all levels using their public office for private gain and seizing land for development to corrupt state-owned enterprises gaming the system to their advantage. Corruption also continues to be among the root causes of rights abuses against Chinese citizens. Senior leaders acknowledge that corruption threatens the legitimacy of the Communist Party and contributes to citizen dissatisfaction, and President Xi Jinping has stated that fighting corruption is a high priority. But Chinese authorities continue to crack down on independent and citizen-led efforts to combat corruption. Panelists will discuss corruption among Chinese high-level officials and recent anti-corruption efforts, and explore corruption’s role in human rights violations. Panelists also will examine corruption linked to state-owned and other enterprises and explore the implications for commercial rule of law.”

Among the panelists were Professor Daniel Chow (Ohio State) (see here for his statement).  In 2012,  I was pleased to play a role, along with   Professor Chow and the staff of the Ohio State Law Journal, in organizing “The FCPA at Thirty-Five and Its Impact on Global Business,” a full-day symposium at The Ohio State University Moritz College of Law.  (See here).

Quotable

On his Corruption, Crime & Compliance site, Michael Volkov states:

“The idea of legal ‘marketing’ has been diluted in the last few years.  As businesses become smarter consumers of legal services, in-house counsel and Chief Compliance Officers are much better at deciphering legal mumbo jumbo.  Perhaps the best example of legal marketing as an oxymoron, was the roll-out of the UK Bribery Act.  Legal marketing was premised on one idea –fear and fear alone.  Client alert after client alert warned companies about the impending doom, the effective date of the UK Bribery Act.  Not to pat myself on the back (assuming my arm is long enough), but I wrote that the UK Bribery Act was a real non-event in the world anti-corruption compliance and that it was unlikely to have any real impact.  To this day, those words still ring true.  After writing the ‘truth’ about the UK Bribery Act, I received a call from the firm’s London partners and was chastised for undermining their entire ‘marketing’ program.  (In stark contrast, many clients wrote me and thanked me for my ‘honesty.'”

Spot-on.

Nearly three years ago, I wrote:

“The U.K. Bribery Act … has been the subject of much discussion and much over-hype in my opinion.  It has been called the FCPA ‘on steroids’ (here) and if one subscribes to the industry marketing material, you might be left with the impression that the end of the world is near.  […]   In sum, I don’t see how companies already subject to the FCPA and already thinking about compliance in a pro-active manner, have much to worry about when it comes to the U.K. Bribery Act because of the adequate procedures defense.  I will be surprised if U.K. enforcement of the Bribery Act reaches the level of U.S. enforcement of the FCPA …”.

See here for my post the day the U.K. Bribery Act went live in July 2011.

See here for my post “Marketing The FCPA … The FCPA Risks Of … Well, Just About Everything.”

For the Reading Stack

The most recent issue of the always-informative FCPA Update from Debevoise & Plimpton is here.  Among other things, the issue summarizes recent remarks of DOJ and SEC officials regarding the FCPA and FCPA enforcement.

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A good weekend to all.