A Look Back At World-Wide Coin
This recent post highlighted how a court rejected the SEC’s broad internal controls theory in SEC v. SolarWinds.
The decision in SolarWinds was a rare instance of a court substantively interpreting the internal controls provisions of the Foreign Corrupt Practice Act.
Prior to SolarWinds, a leading case concerning the scope of the internal controls provisions (as well as the books and records provisions) was SEC v. World-Wide Coin Investments, Ltd., 567 F. Supp. 724 (N.D. Ga. 1983) (a decision frequently cited in SolarWinds).
Court Rejects SEC’s Broad Internal Controls Enforcement Theory
The Foreign Corrupt Practices Act has always been a law much broader than its name suggests.
Sure, the FCPA contains anti-bribery provisions which concern foreign bribery.
Sure, the FCPA’s books and records and internal controls provisions can be implicated in foreign bribery schemes.
However, the fact remains that most FCPA enforcement actions (that is enforcement actions that charge or find violations of the FCPA’s books and records and internal controls provisions) have nothing to do with foreign bribery. For lack of a better term, these enforcement actions have longed been called non-FCPA, FCPA enforcement actions on this site.
This 2023 post highlighted the SEC’s enforcement action against Austin, Texas-based software company SolarWinds Corporation and its chief information security officer, Timothy Brown, for fraud and internal control failures relating to allegedly known cybersecurity risks and vulnerabilities.
Oztemel Motion To Dismiss Denied
In February 2023, the DOJ announced that Glenn Oztemel (previously employed by Freepoint Commodities LLC) and Eduardo Innecco (an agent for the company) were charged with FCPA and related offenses for an alleged Brazil bribery scheme. (See here for the prior post).
In summary fashion, the indictment alleged: “Between in or about 2010 and continuing until in or about 2018, Glenn Oztemel and Eduardo Innecco, together and with others, agreed to pay, and did pay, bribes to foreign officials at Brazil’s state-owned and state-controlled oil and gas company, Petroleo Brasileiro S.A. – Petro bras (“Petrobras”), on behalf of Trading Company #1 and Trading Company #2. In exchange for the bribes, foreign officials at Petrobras, including Rodrigo Berkowitz (“Berkowitz”), who has been charged separately, provided Oztemel, Innecco and others with confidential information related to Petrobras’s business. The inside information and other improper assistance Berkowitz provided to Oztemel, Innecco and others gave Trading Company #1 and Trading Company #2 improper business advantages in trades with Petrobras.”
Recently, Judge Kari Dooley (D. Conn) denied Oztemel’s motion to dismiss.
“Foreign Official” Rewind – Part 2
Ten years ago this week, the 11th Circuit released its decision in U.S. v. Esquenazi.
The case was, and remains, the only appellate court decision in Foreign Corrupt Practices Act history to substantively address the FCPA’s “foreign official” element.
As discussed below, the Esquenazi decision was, and remains, a flawed decision.
In pertinent part the court stated:
“Foreign Official” Rewind
Ten years ago this week, the 11th Circuit released its decision in U.S. v. Esquenazi. Set forth below is the post originally published on FCPA Professor on May 16, 2014 summarizing the decision.
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Numerous prior posts (see here for instance) have highlighted the historic appeal in U.S. v. Joel Esquenazi and Carlos Rodriguez.
Although there were several issues on appeal, the appeal is best known as the first time in FCPA history in which an appellate court has the opportunity to weigh in on the prominent enforcement theory that employees of alleged state-owned or state-controlled entities are “foreign officials” under the FCPA. (The defense relied, in part, on my foreign official declaration and, as previously disclosed, I served as a pro-bono expert to the defense in this case).