Survey Says
[Note: this previous post concerning the 11th Circuit “foreign official” oral argument has been updated to include a link to the audio recording of the arguments]
Previous posts (here and here) have highlighted survey data collected – anonymously – from students in my FCPA Class at Southern Illinois University School of Law.
This third set of survey responses touch upon the following issues: exploring certain reasons for the general increase in FCPA enforcement and the FCPA’s long tentacles (i.e. how actual FCPA enforcement actions brought by the enforcement agencies are often just one consequence of FCPA scrutiny or enforcement in this new era).
*****
FCPA enforcement has generally increased during the past 7-10 years. Do you believe that the following reasons have merit in terms of a possible explanation for the general increase in FCPA enforcement?
FCPA enforcement has become lucrative for the government – in the views of some – a “cash cow”
A. Yes, this reason has merit = 83%
B. No, this reason does not have merit = 17%
FCPA Inc. participants, who often serve as gatekeepers to FCPA enforcement actions and scrutiny, have a vested business interest in there being more FCPA enforcement and scrutiny?
A. Yes, this reason has merit = 94%
B. No, this reason does not have merit = 6%
Do you believe FCPA Inc. marketing is often “fear-based” and a bit “over-the-top”?
A. No, FCPA Inc. is just trying to sell its FCPA services and products the best they can = 28%
B. Yes, FCPA Inc. often portrays a false reality in trying to sell its FCPA services and products = 72%
The typical career path of a DOJ or SEC enforcement attorney, after enforcing the FCPA, is to leave government service for the private sector to provide FCPA investigative and compliance services to business organizations subject to the FCPA enforcement climate they helped create. This typical career path:
A. Concerns me and the issue ought to be addressed to a greater extent that it currently is = 61%
B. Does not concern me = 39%
With increasing frequency, FCPA enforcement actions are followed by foreign law enforcement actions or investigations regarding the same core conduct at issue in the FCPA enforcement action. These “tag-along” or “carbon copy” prosecutions are:
A. Unfair to the company and its shareholders who end up paying twice for the same alleged misconduct = 33%
B. A consequence of doing business in multiple jurisdictions, and thus not unfair to the company and its shareholders = 67%
Article 5 of the OECD Convention (of which the U.S. and approximately 40 other countries are a party to) states that when “more than one Party has jurisdiction over an alleged offense … the Parties shall … consult with a view to determining the most appropriate jurisdiction for prosecution.” Which government has a greater and more direct interest in the conduct at issue, and is thus the “most appropriate jurisdiction for prosecution”?
A. The foreign gov’t whose “officials” were allegedly corrupted and/or where the bulk of alleged conduct actually took place = 71%
B. The U.S. government because the company making the alleged payments is subject to the FCPA’s jurisdiction = 29%
Do you believe that enforcement competition (i.e. the notion that multiple sovereigns may seek to bring an enforcement action concerning the same core conduct) is a problem in this new era of bribery enforcement?
A. Yes = 83%
B. No = 17%
If you answered “yes” to the above question, what is the best remedy?
A. A single, harmonized enforcement system = 27%
B. Greater adherence by all OECD member countries, including the U.S., to Article 5 of the OECD Convention = 73%
With increasing frequency, instances of FCPA scrutiny or enforcement are quickly followed by civil causes of action such as derivative claims or securities fraud claims brought by plaintiffs’ lawyers representing company shareholders. Excluding rare situations in which a company’s FCPA scrutiny or liability is the result of board of director or executive officer conduct, such civil causes of action
A. Have merit and provide shareholders the ability to recover for harm suffered as a result of the company’s FCPA scrutiny or liability = 28%
B. Lack merit and represent plaintiffs’ lawyers desire to feed-off this new era of FCPA enforcement = 72%
Survey Says
This previous post highlighted survey data collected – anonymously – from students in my FCPA class at Southern Illinois University School of Law. A second set of survey responses are set forth below.
(1) FCPA enforcement actions often involve companies that are otherwise viewed as selling the best product or service for the best price. With such companies, can it truly be said that the alleged improper payments were the sole reason the company secured the contract or other benefit received? In other words, does a “but for” analysis have a place in arriving at FCPA fine and penalty amounts?
A. No – the full value of the benefit allegedly received should be the starting point for calculating fine and penalty amounts regardless of the type of company resolving the enforcement action = 56%
B. Yes – by using the full value of the benefit received, the calculation ignores the fact that the company may have secured the benefit regardless of the alleged improper payments = 44%
(2) Is disgorgement an appropriate remedy when the SEC charges only FCPA books and records and internal controls violations?
A. Yes = 25%
B. No = 75%
(3) In an FCPA enforcement action involving both a DOJ and SEC component, the value of the benefit allegedly received by the company from the improper payments is a key factor in determining the criminal fine amount under the advisory Sentencing Guidelines. The same figure is also likely to comprise the disgorgement amount in an SEC enforcement action. This is:
A. Inappropriate “double-dipping” and thus unfair to the company and its shareholders = 88%
B. Appropriate, this is not “double-dipping” and even if it was it is still appropriate = 12%
(4) Were the “enhanced compliance obligations” imposed on Johnson & Johnson and Pfizer necessary – in light of the other information set forth in the DPAs – or a government required transfer of shareholder wealth to FCPA Inc.?
A. Necessary = 31%
B. A government required transfer of shareholder wealth to FCPA Inc. = 69%
(5) Is there a double standard when it comes to enforcement of the FCPA and the U.S. domestic bribery statute (18 USC 201)? In other words, are corporate interactions with “foreign officials” subject to greater scrutiny and different standards of enforcement than corporate interactions with U.S. officials?
A. Yes, there is a double standard = 94%
B. No, there is no double standard = 6%
(6) Are you uncomfortable with “bribery, yet no bribery” cases such as Siemens and BAE where the enforcement agencies allege facts suggesting violations of the FCPA’s anti-bribery provisions, yet neither entity was actually charged with such violations?
A. Yes = 56%
B. No = 44%
(7) Since 2008, approximately 75% of corporate DOJ FCPA enforcement actions (and approximately 80% of corporate SEC FCPA enforcement actions) have not (at least yet) resulted in any related enforcement actions against company employees? This is likely due to:
A. The quality and legitimacy of the corporate enforcement action that was resolved via an NPA or DPA = 29%
B. Other factors not calling into question the quality and legitimacy of the corporate enforcement action = 71%
(8) Given the conduct at issue in the respective cases, does the disparity between the sentences of Joel Esquenazi and Carlos Rodriguez (180 months and 84 months), two individuals who tested their innocence, and Albert Stanley and Jeffrey Tesler (30 months and 21 months), two individuals who pled guilty, concern you?
A. Yes = 79%
B. No = 21%
If yes, were
A. Stanley and Tesler sentenced too lightly = 27%
B. Esquenazi and Rodriguez sentenced too harshly = 73%
Survey Says
Call them green, inexperienced, and naive as to how things really work.
I call them good Foreign Corrupt Practices Act survey respondents because they are immersed in learning: (i) about black letter legal principles; (ii) legal authority as opposed to non-legal sources of information; and (iii) how the law and the adversarial system functions in other areas of law. I call them good FCPA survey respondents because their answers are not influenced by client concerns, maintaining their own practice, or maintaining good will with the enforcement agency officials who possess the “carrots” and “sticks” relevant to FCPA enforcement.
The below survey data has been collected – anonymously – thus far from students in my FCPA class at Southern Illinois University School of Law.
By way of background, the class begins (as does my forthcoming book “The Foreign Corrupt Practices Act in a New Era“) by:
(i) telling the story of the FCPA through original voices of actual participants who shaped the law (see my article “The Story of the Foreign Corrupt Practices Act“);
(ii) addressing various FCPA “foundational knowledge” such as respondeat superior; the realities of the global marketplace; the “carrots” and “sticks” relevant to FCPA enforcement – that is – enforcement agency policies relevant to FCPA enforcement (such as the DOJ Principles of Prosecution of Business Organizations, the U.S. Sentencing Guidelines, and SEC policy); resolution vehicles typically used in FCPA enforcement actions (such as NPAs and DPAs and neither admit nor deny civil settlements); and the difference between FCPA legal authority (i.e. the statutory text, FCPA case law and legislative history) and other non-legal sources of FCPA information (i.e. the DOJ/SEC Guidance, resolved enforcement actions, and DOJ FCPA Opinion Procedure Releases).
With a solid foundation as to general legal principles and enforcement agency policies and resolution vehicles relevant to FCPA enforcement, coverage then turns to the FCPA’s statutory elements. In this regard, legal authority and non-legal sources of information is highlighted as to each substantive element of the FCPA’s anti-bribery provisions.
Set forth below are the survey questions and responses.
(1) In enforcing the FCPA, or any law for that matter, what is the best definition of success?
A. The number of settlements the DOJ or SEC is able to secure = 17%
B. Instances in which the DOJ or SEC is put to its burden of proof in an adversarial proceeding and prevails = 83%
(2) Rank, in the order of importance (with 1 being most important and 4 being least important) what the FCPA means?
Judicial decisions construing the FCPA = average = 3.1
The FCPA’s statutory language = average = 1.3
Enforcement agency guidance, including resolved enforcement actions = average = 3.4
Congressional intent in enacting the FCPA = average = 2.3
(3) You are the general counsel of ABC Inc. A whistleblower has contacted the DOJ and SEC regarding potential FCPA violations in your China operations and the agencies have opened up an investigation. After an internal review conducted by outside counsel, outside counsel advises you that based upon the factual evidence and relevant FCPA legal authority, should the enforcement agencies bring an action and be put to its burdens of proof in an adversarial proceeding, there is only a 30% chance that the enforcement agencies would prevail. Should the enforcement agencies bring an action (i.e. the DOJ criminally charges the company and the SEC civilly charges the company), it is likely that the company’s stock price would fall at least 3% (and perhaps more) eclipsing $750 million in shareholder value. Outside counsel advises you that during its negotiations with the DOJ and SEC, the agencies are willing to offer the company non-prosecution agreements in which the company will be required to pay $75 million in aggregate fine and penalty amounts to resolve its alleged FCPA scrutiny. The non-prosecution agreements are unlikely to have any impact on the company’s stock price. As general counsel, what course of action are you going to suggest to the company’s board of directors?
A. Put the DOJ and SEC to its burden of proof at trial = 11%
B. Agree to resolve the company’s FCPA scrutiny via the non-prosecution agreements = 89%
(4) The FCPA’s legislative history instructs that Congress’s primary motivation in enacting the FCPA was the foreign policy implications resulting from the discovered payments. Are foreign policy implications present in most current FCPA enforcement actions given the alleged “foreign officials”?
A. Yes = 18%
B. No = 82%
(5) The FCPA defines “foreign official” as follows: “any officer or employee of a foreign government or any department, agency, or instrumentality thereof …”. In U.S. v. Carson, the court held that “the question of whether state-owned companies qualify as instrumentalities under the FCPA is a question of fact.” The court then listed the following factors that “bear on the question of whether a business entity constitutes a government instrumentality”:
(i) the foreign state’s characterization of the entity and its employees; (ii) the foreign state’s degree of control over the entity; (iii) the purpose of the entity’s activities; (iv) the entity’s obligations under the foreign state’s law, including whether the entity exercise exclusive or controlling power to administer its designated functions; (v) the circumstances surrounding the entity’s creation; and (vi) the foreign state’s extent of ownership of the entity, including the level of financial support by the state (e.g., subsidies, special tax treatment and loans).
The court then stated that “such factors are not exclusive, and no single factor is dispositive.” In addition to the above conclusion, the Carson court issued a “knowledge of status of foreign official” jury instruction which stated in pertinent part that the payment or gift at issue was to “a person the defendant knew or believed was a foreign official.”
The Carson decision and jury instruction:
A. Provides clarity to the FCPA’s “foreign official” element = 53%
B. Results in less clarity as to the FCPA’s “foreign official” element = 47%
(6) As to “foreign official,” the Carson court found “that the statutory language of the FCPA is clear, that the statutory scheme is coherent and consistent, and that resort to the legislative history of the FCPA is unnecessary.”
Do you agree?
A. Yes = 17%
B. No, as to foreign official, the statutory language is not clear and thus legislative history should have been consulted = 83%
(7) In U.S. v. Kay, the Fifth Circuit held that corrupt payments to “foreign officials” to avoid customs duties and sales taxes “could (but do not necessarily) come within the ambit” of the FCPA. In pertinent part, the court stated as follows:
“Avoiding or lowering taxes reduces operating costs and thus increases profit margins, thereby freeing up funds that the business is otherwise legally obligated to expend. And this, in turn, enables it to take any number of factions to the disadvantage of competitors. Bribing foreign officials to lower taxes and customs duties can provide an unfair advantage over competitors and thereby be of assistance to the payor in obtaining or retaining business.”
The court also stated “we hasten to add, however, that this conduct does not automatically constitute a violation of the FCPA: It still must be shown that the bribery was intended to produce an effect … that would ‘assist in obtaining or retaining business.’” Specifically, the court stated:
“[T]hat is not to say that such a diminution [in duties and taxes] always assists in obtaining or retaining business. There are bound to be circumstances in which such a cost reduction does nothing other than increase the profitability of an already-profitable venture or ensure the profitability of some start-up venture. Indeed, if the government is correct that anytime operating costs are reduced the beneficiary of such advantage is assisted in getting or keeping business, the FCPA’s language that expresses the necessary element of assisting in obtaining or retaining business would be unnecessary, and thus surplusage – a conclusion we are forbidden to reach.”
Company A is an already-profitable venture doing business in 75 countries. Company A’s subsidiary in a foreign country (a subsidiary that accounts for less than 5% of Company A’s overall business) makes a payment to a foreign official to reduce custom duties in connection with the importation of product. Given the Fifth Circuit’s holding and reasoning in Kay, has Company A violated the FCPA’s anti-bribery provisions?
A. Yes = 33%
B. No = 67%
(8) Given the DOJ and SEC’s enforcement theories – most notably in enforcement actions involving foreign licenses, permits, etc. – does the FCPA’s facilitating payment exception have any real meaning in this new era of enforcement?
A. Yes = 32%
B. No = 68%
(9) Given the “carrots” and “sticks” relevant to resolving a corporate FCPA enforcement action, as well as the DOJ’s and SEC’s enforcement theories, do statute of limitations have any real meaning in this new era of enforcement?
A. Yes = 16%
B. No = 84%
(10) Do you believe that the books and records and internal controls charges against Dow Chemical, Avery Dennison, Veraz Networks, NATCO Group, and Oracle – based on the allegations in those enforcement actions – were consistent with legal authority as to the books and records and internal controls provisions?
A. Yes = 40%
B. No = 60%
(11) Do you believe that the books and records and internal controls charges against Dow Chemical, Avery Dennison, Veraz Networks, NATCO Group, and Oracle – based on the allegations in those enforcement actions – were consistent with SEC/DOJ guidance as to the books and records and internal controls provisions?
A. Yes = 45%
B. No = 55%
Friday Roundup
Scrutiny alerts, misleading yet interesting, the flip side, and for the reading stack. It’s all here in the Friday roundup.
Scrutiny Updates
Baxter International
The Wall Street Journal reports that Baxter International “investigated a joint venture in China and discovered expense violations there last year.” According to the article, Baxter took action after employees of Guangzhou Baxter Qiaoguang Healthcare Co., reported problems internally in July 2012. According to the article, similar allegations were made in July 2013 that “employees at Baxter’s joint venture paid travel agencies for arranging conferences between 2011 and 2012 for Chinese health officials.” According to the article, “employees at several hotels identified as the conference sites in the documents said they had no records of the conferences.”
ENI
IntelliNews report here: “ENI SpA chief executive Paolo Scaroni will become a target of a major US Foreign Corruption Practices Act investigation by the US Department of Justice and the US Securities Exchange Commission in connection with an Algerian bribery scandal, [Italian] judicial sources said.” Among other things, the article states: “Judicial sources in Milan said they have compelling evidence Scaroni had personal knowledge of the bribe paid by SAIPEM and that SAIPEM is directly controlled by ENI and its management.”
As noted in this previous post, Eni has ADRs registered with the SEC. In 2010, Eni resolved (see here) an SEC FCPA enforcement action concerning Bonny Island, Nigeria conduct. In resolving the action, Eni consented to the entry of a court order permanently enjoining it from violating the FCPA’s books and record and internal controls provisions.
Weatherford
The company recently disclosed as follows concerning its long-lasting FCPA scrutiny.
“During the quarter ended June 30, 2013, negotiations related to the oil-for-food and FCPA matters progressed to a point where we recognized a liability for a loss contingency that we believe is probable and for which a reasonable estimate can be made. Certain significant issues remain unresolved in the negotiations and, if these issues are not resolved to the Company’s satisfaction, negotiations may be discontinued and such unresolved issues may ultimately impact our ability to reach a negotiated resolution of the matters. At this time, the Company estimates that the most likely amount of this loss is $153 million.”
A $153 million settlement would be the eighth largest in FCPA history.
Avon
The company recently disclosed as follows concerning its long-lasting FCPA scrutiny.
“As previously reported in August 2012, we are in discussions with the SEC and the DOJ regarding resolving the government investigations. Our factual presentations as part of these discussions are substantially complete. In June 2013, we made an offer of settlement to the DOJ and the SEC that, among other terms, included payment of monetary penalties of approximately $12. The DOJ and the SEC have rejected the terms of our offer. Although we expect that the DOJ and the SEC will make a counterproposal to our offer, they have not yet done so. Our discussions with the DOJ and the SEC are ongoing.
There can be no assurance that a settlement with the SEC and the DOJ will be reached or, if a settlement is reached, the timing of any such settlement or the terms of any such settlement. We expect any such settlement will include civil and/or criminal fines and penalties, and may also include non-monetary remedies, such as oversight requirements and additional remediation and compliance requirements. We may be required to incur significant future costs to comply with the non-monetary terms of any settlement with the SEC and the DOJ. Under certain circumstances, we may also be required to advance significant professional fees and expenses to certain current and former Company employees in connection with these matters. Until any settlement or other resolution of these matters, we expect to continue to incur costs, primarily professional fees and expenses, which may be significant, in connection with the government investigations.At this point we are unable to predict the developments in, outcome of, and economic and other consequences of the government investigations or their impact on our earnings, cash flows, liquidity, financial condition and ongoing business. However, based on our most recent discussions with the DOJ and the SEC, the Company believes that it is probable that the Company will incur a loss upon settlement that is higher than the offer made by the Company of approximately $12, which was accrued by the Company as of June 30, 2013. We are unable to reasonably estimate the amount of any additional loss above the amount accrued to date; however it is reasonably possible that such additional loss will be material.”
Owens-Illinois
The beverage company recently disclosed as follows.
“The Company conducted an internal investigation into conduct in certain of its overseas operations that may have violated the anti-bribery provisions of the United States Foreign Corrupt Practices Act (the “FCPA”), the FCPA’s books and records and internal controls provisions, the Company’s own internal policies, and various local laws. In October 2012, the Company voluntarily disclosed these matters to the U.S. Department of Justice (the “DOJ”) and the Securities and Exchange Commission (the “SEC”). The Company intends to cooperate with any investigation by U.S. authorities. On July 18, 2013, the Company received a letter from the DOJ indicating that it presently did not intend to take any enforcement action and is closing its inquiry into the matter. The Company is presently unable to predict the duration, scope or result of any investigation by the SEC or whether the SEC will commence any legal action.”
AB InBev
The beverage company recently disclosed as follows.
“As previously disclosed, we have been informed by the SEC that it is conducting an investigation into our affiliates in India, including our non-consolidated Indian joint venture, InBev India Int’l Private Ltd, and whether certain relationships of agents and employees were compliant with the FCPA. We continue to cooperate in this investigation and have been informed by the Department of Justice (DOJ) that it is also conducting a similar investigation. Our investigation into the conduct in question is ongoing and we are cooperating with the SEC and the DOJ.”
Misleading Yet Interesting
Perhaps one reason for why there appears to much confusion about the FCPA and FCPA enforcement is due to the vast amount of misleading information in the public domain concerning the FCPA.
This recent article in the Economic Times of India concerning Wal-Mart is an instructive example.
Stating that the FCPA is a “law that prohibits American companies and their foreign subsidiaries from bribing officials” is not a completely accurate statement concerning the scope of the law. Stating that “the anti-bribery provisions of the FCPA are enforced by the Department of Justice and the accounting provisions by the Securities and Exchange Commission” is not completely accurate either. The SEC can also bring civil actions for FCPA anti-bribery violations and the DOJ can also bring criminal actions for wilful violations of the accounting provisions.
“In 2008, for example, Siemens paid a fine of $1.6 billion, the largest ever for an FCPA violation.” This is a false statement. While the Siemens enforcement action is indeed the largest in FCPA history in terms of fine and penalty amount, the amount was $800 million.”
Citing a source that says Wal-Mart’s FCPA scrutiny could result in an enforcement action “between $4.5 billion and $9 billion” is outrageous beyond belief.
Despite its deficiencies, the article highlights an interesting tension between conducting a thorough internal investigation and the treatment of employees. The article states:
“The long shadow of Bentonville, channelled by the permanent gaze of investigators, is causing angst among the Indian staff of Walmart. A company official quoted earlier says the army of investigators, who enjoy sweeping powers to seize documents and equipment of the staff, are seen by many employees as intrusive and as an extra-judicial authority in the office. For example, the investigators scan even the couriers sent out by the staff. The official quoted above says the objective to ensure FCPA compliance is causing even minor situations to snowball.”
[…]
“In another case, Richard Leonard, a British citizen and general manager for asset protection in India, was on a store visit to Ludhiana, that too with Asia head Price, when he received a frantic call from a colleague that KPMG executives were trying to seize his desktop computer and break open his drawer. He immediately called other colleagues, asking them to stop the investigators from taking possession of his workstation. On his return to the office, Leonard dashed off e-mails to his bosses, including Walmart’s global head Mike Duke, on how employees like him have lost respect in the office and they are being portrayed as “criminals” by independent auditors.”
The article also states:
“Walmart is asking all India employees who have left or been suspended to sign a three-page ‘consultancy and cooperation agreement’, ostensibly with the FCPA fallout in mind. The agreement essentially requires them to make themselves available to provide any information or explanation of materials or documents requested by Walmart or any government authority. “The manner in which lawyers and audit team are going about doing their business, I have started believing that I have done something wrong,” says an employee.”
The Flip Side
This Forbes columnist asks – in the context of GlaxoSmithKline – “is big pharma addicted to fraud?”
The question reminded me of the spot-on statement previously profiled here. In a Law360 interview, Stephen Jonas (here), a partner in the Boston office of WilmerHale, was asked “what aspects of law in your practice are in need of reform, and why?” He stated:
“One area greatly in need of reform, in my view, is the investigation of alleged health care fraud. This is an area in which the government regularly secures enormous settlements, starting in the tens of millions of dollars, and now exponentially expanding to the billions of dollars. Virtually every pharmaceutical company has now been subjected to one or more of these investigations and the results are predictable — enormous monetary contributions to the federal government. I find it hard to believe that wrongdoing is so rampant in this industry that every company has at least several hundred million dollars worth of it. The more likely answer is that these settlements often have far more to do with the leverage the government enjoys than the merits of what the company did or didn’t do. In order to stay in business, pharmaceutical and medical device companies must be able to sell products that can be paid for by Medicaid and Medicare. But a conviction for a health care offense would result in exclusion of the companies from federal health insurance and essentially a death sentence for their business. So they cannot afford to fight even the most debatable of charges. One of the results is that novel legal theories and sketchy evidence will never be tested in a court of law and negotiated settlements (under threat of exclusion) serve as “precedent” for the next case. That is a system badly in need of reform.”
Related to GSK, see here for my recent TV interview with LinkAsia.
Reading Stack
The always informative Miller & Chevalier FCPA Summer Review 2013. As noted in the review “while investigation activity levels appear robust, the overall pace of enforcement in 2013, in terms of resolved dispositions, remains at its lowest level since 2006.” This is correct, although difficult to square with a recent article from Compliance Week titled “FCPA Enforcement on the Rise Once Again.” This is why an FCPA lingua franca is so important. (See prior posts here and here). Among other things, the Miller & Chevalier review contains useful charts including the nationality of companies under FCPA investigation and the countries implicated most frequently in FCPA enforcement actions.
Press coverage of BSG Resources and Beny Steinmetz (the wealthy Israeli for whom BSG Resources is named) regarding its business in Guinea continues. (See this recent article from the U.K. Guardian).
An informative read from John Rupp (Covington) on how corporate interests and individual interests in a bribery investigation can collide and what corporate counsel can do to prevent this dynamic.
An interesting read from Trace Blog on how bribery schemes fall apart. The post states:
“The reality is that many bribery schemes simply self-implode. Think of it this way, once a bribe is paid, a corresponding debt is created to all who are involved in the scheme: to the business partner who provides the funds; to the third party “consultant” who launders them through false pretense; to the accountant who cooks the books; to the bagman who delivers the payment; to each and every role player, big or small, who helps to bring about the bribe. At the time, loyalties may seem obvious: each co-conspirator will usually have a clear self-interest in keeping the bribery scheme hidden. But as situations change, so too do incentives, and in business there are few guarantees as unsure as the honor among thieves. […] Think of all the bribery stories that have come to light simply by their own accord.”
*****
A good weekend to all.
Potpourri
News Corp. In the News
Approximately two years ago to the date, News Corp.’s potential FCPA scrutiny dominated the news cycle. (See here for the prior post).
In recent days, News Corp. has again made the news as a recording of Rupert Murdoch surfaced in which he allegedly stated as follows concerning payments to U.K. public officials to obtain information. “That situation existed at every newspaper in Fleet Street. Long since forgotten. But absolutely. It was the culture of Fleet Street. We’re talking about payments for news tips from cops. That’s been going on a hundred years, absolutely.”
The disclosure prompted U.K. members of Parliament to demand that News Corp. be charged with Foreign Corrupt Practices Act violations. (See here for a letter from Tom Watson MP to Senator John D. Rockefeller).
In a statement, News Corp. stated as follows. “Mr. Murdoch never knew of payments made by Sun staff to police before News Corp. disclosed that to U.K. authorities. Furthermore, he never said he knew of payments. It’s absolutely false to suggest otherwise.”
For more coverage, see here, here, and here.
BSG Resources Related
This previous post highlighted the April arrest of French citizen Frederic Cillins who was criminally charged by the DOJ for allegedly attempting to obstruct an ongoing FCPA investigation into whether a mining company paid bribes to win lucrative mining rights in the Republic of Guinea. Cillins has been linked to Guernsey-based BSG Resources Ltd.
This recent article in the New Yorker by Patrick Radden Keefe goes in-depth as to the mining rights at issue, the political environment in Guinea, Cillins, and Beny Steinmetz (the wealthy Israeli for whom BSG Resources is named). As noted in the article, and also noted in this recent article in Main Justice, BSG Resources and Cillins are claiming that several documents at the center of the bribery probe are fake.
As noted in this recent Wall Street Journal Risk & Compliance Journal post, Cillins was denied bail as he awaits trial. As noted in this Law360 article, U.S. District Judge William H. Pauley reversed a magistrate judge’s decision to allow Frederic Cilins to be released on $15 million bail and stated as follows. “The court finds that Mr. Cilins is a serious risk of flight and there are no conditions that will ensure his appearance in court.”
Survey Says
According to PwC’s 3rd annual State of Compliance Survey, the top three risks identified by chief compliance officers are: data privacy and confidentiality; industry specific regulations; and bribery/corruption.