A Look Back At World-Wide Coin
SEC v. World-Wide Coin Investments, Ltd., 567 F. Supp. 724 (N.D. Ga. 1983) is one of just a few judicial decisions to substantively interpret the FCPA’s books and records and internal controls provisions.
The key language from World-Wide Coin, in the words of Judge Robert Vining, was as follows.
The definition of accounting controls does comprehend reasonable, but not absolute, assurances that the objectives expressed in it will be accomplished by the system. The concept of “reasonable assurances” contained in [internal control provisions] recognizes that the costs of internal controls should not exceed the benefits expected to be derived. It does not appear that either the SEC or Congress, which adopted the SEC’s recommendations, intended that the statute should require that each affected issuer install a fail-safe accounting control system at all costs. It appears that Congress was fully cognizant of the cost-effective considerations which confront companies as they consider the institution of accounting controls and of the subjective elements which may lead reasonable individuals to arrive at different conclusions. Congress has demanded only that judgment be exercised in applying the standard of reasonableness. […] It is also true that the internal accounting controls provisions contemplate the financial principle of proportionality—what is material to a small company is not necessarily material to a large company.
The remainder of this post summarizes the facts and holding of World-Wide Coin.
Seventh Circuit Decision Touches Upon FCPA’s Books And Records Provision
There is little Foreign Corrupt Practices Act case law (particularly appellate court decisions) including as to the FCPA’s books and records provisions.
Thus, when an appellate court opines on an FCPA issue – even if the issue is a relatively minor part of the overall appeal – it is worth noting.
As stated by the 7th Circuit in this recent opinion.
“In 2022, a grand jury indicted [Michael] Madigan [the Speaker of the Illinois House of Representatives] on twenty-three counts. Almost half of the charges in the operative (superseding) indictment concerned two broad schemes relevant on appeal.”
Judge Denies Oztemel’s Post-Trial Motions
In Fall 2024, Glenn Oztemel (previously employed by Arcadia Fuels Ltd. and Freepoint Commodities LLC) was found guilty at trial of FCPA and related offenses in connection with a Brazil bribery scheme.
As stated in the DOJ release: “According to court documents and evidence presented at trial, Oztemel […] paid bribes to officials of Petróleo Brasileiro S.A. (Petrobras), the Brazilian state-owned oil and gas company, to obtain lucrative contracts for Arcadia Fuels Ltd. (Arcadia) and Freepoint Commodities LLC (Freepoint). […] With the assistance of others, Oztemel paid and caused the payment of bribes to Petrobras officials for their assistance in helping Arcadia and Freepoint to obtain and retain fuel oil contracts with Petrobras and by providing Oztemel and others with confidential information regarding Petrobras’ fuel oil business. Oztemel and his co-conspirators caused Arcadia and Freepoint to make corrupt payments — disguised as purported consulting fees and commissions — to a third party intermediary and agent, Eduardo Innecco, 74, knowing that Innecco would pay a portion of those funds to Brazilian officials, including to Houston-based Petrobras trader Rodrigo Berkowitz.”
The General Lack Of FCPA Judicial Decisions
Many Foreign Corrupt Practices Act defendants and their counsel who actively litigate against the DOJ ultimately run into the same issue.
The DOJ’s argument in briefing that there are no FCPA cases on the disputed issue or that other cases (including appellate and Supreme Court decisions) are not FCPA cases.
The DOJ’s argument ignores that in many instances the DOJ meaningfully controls whether there will be FCPA legal decisions authored by judges.
Judicial Decision Touches Upon On A Variety Of FCPA Issues
As highlighted in this prior post, in February 2024 Javier Aguilar was convicted by a federal jury “for his role in a scheme to bribe Ecuadorean and Mexican government officials and to launder money to secure contracts worth hundreds of millions of dollars for his then-employer, Vitol Inc. (Vitol), the U.S. affiliate of the largest independent energy trading firm in the world.” Aguilar was convicted of one count of conspiracy to violate the Foreign Corrupt Practices Act (“FCPA”), one count of violating the FCPA, and one count of conspiracy to commit money laundering.
Thereafter, Aguilar filed a motion for judgment of acquittal, or in the alternative, for a new trial. Recently, Judge Eric Vitaliano (E.D.N.Y.) denied the motion and in doing so touched upon the FCPA’s “foreign official,” element, knowledge, and the FCPA’s local law affirmative defense.