Edmonds Pleads Guilty As Trial Nears
The Department of Justice would like for all to believe that its plea agreements represent acknowledgment of the legitimacy of its enforcement theories including as to “foreign official.” A prior guest post (here) referred to this dynamic as prosecutorial common law. As to “foreign official,” in the Carson briefing (see here at pg. 46) the DOJ stated the following – because DOJ has secured approximately 35 guilty pleas from individuals who admitted to bribing officials at SOEs “it is thus ‘plain as a pikestaff’ that the FCPA prohibits paying bribes to officials who work at SOEs.” You can subscribe to that position if you choose or realize that testing one’s innocence comes at a high cost in our system. (See here for the prior post).
The conclusion is yours to draw, the facts are as follows.
*****
In April 2009, David Edmonds was criminally charged, along with other defendants who were also former employees of Control Components Inc. (CCI), in a criminal indictment (here) for engaging 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.”
As to Edmonds (the Vice-President of Worldwide Customer Service at CCI), the indictment alleged as follows. “From in or around 2003 through in or around 2007, defendant Edmonds caused [CCI’s] employees and agents to make corrupt payments totaling approximately $430,000 to officers and employees of state-owned companies, and corrupt payments totaling approximately $220,000 to officers and employees of private companies.” “[CCI’s] state-owned customers included, but were not limited to, Jiangsu Nuclear Power Corporation (“JNPC”) (China), Guohua Electric Power (China), China Petroleum Materials and Equipment Corporation (“CPMEC”), PetroChina, Dongfang Electric Corporation (China), China National Offshore Oil Corporation (“CNOOC”), Korea Hydro and Nuclear Power (“KHNP”), Petronas (Malaysia), and National Petroleum Construction Company (“NPCC”) (United Arab Emirates). Each of these state-owned entities was a department, agency, and instrumentality of a foreign government, within the meaning of the FCPA. The officers and employees of these entities, including the Vice-Presidents, Engineering Managers, General Managers, Procurement Managers, and Purchasing Officers, were “foreign officials” within the meaning of the FCPA.”
As noted in the DOJ release (here), Edmonds was charged with one count of conspiracy to violate the FCPA and the Travel Act, three counts of violating the FCPA and two counts of violating the Travel Act.
Shortly thereafter, CCI resolved an FCPA enforcement action based on the same core set of conduct alleged in the above indictment. (See here for the prior post). I noted then, as I had since launching this website in July 2009, that the DOJ’s position that employees of state-owned companies, regardless of position, are “foreign officials” under the FCPA is an unchallenged and untested legal theory – and one I believe is ripe for challenge.
In February 2011 (as noted in this prior post), for the first time in FCPA history, a federal court judge, with the benefit of a detailed and complete overview of the FCPA’s extensive legislative history on the “foreign official” element, was asked to rule on the DOJ’s interpretation that employees of alleged state-owned or state-controlled enterprises are “foreign officials” under the FCPA. My declaration on the FCPA’s legislative history relevant to “foreign official” (here) was used in the “foreign official” motion to dismiss.
In May 2011 (as noted in this prior post), Judge James Selna denied the “foreign official” motion to dismiss and concluded that “the question of whether state-owned companies qualify as instrumentalities under the FCPA is a question of fact.” The “foreign official” issue thus moved to the jury instructions (as noted in this prior post).
In February 2012 (as noted in this prior post), Judge Selna issued certain jury instructions. Not surprisingly, Judge Selna carried forward his previous “instrumentality” analysis into the “instrumentality” jury instruction. Yet, in a significant development in terms of the future of the case, Judge Selna issued an instruction titled “knowledge of status of foreign official.” In pertinent part, the instruction stated as follows.
[…..]
“(4) The defendant offered, paid, promised to pay, or authorized the payment of money, or offered, gave, promised to give, or authorized the giving of anything of value to a foreign official;
(5) The payment or gift at issue in element 4 was to (a) a person the defendant knew or believed was a foreign official or (b) any person and the defendant knew that all or a portion of such money or thing of value would be offered, given, or promised (directly or indirectly) to a person the defendant knew or believed to be a foreign official. Belief that an individual was a foreign official does not satisfy this element if the individual was not in fact a foreign official.”
In his order, Judge Selna stated as follows.
“The Government proposes to add the following paragraph to element 5:”
The government need not prove that the defendant knew the legal definition of “foreign official” under the FCPA or knew that the intended recipient of the payment or gift fell within the legal definition. The defendant need not know in what specific official capacity the intended recipient was acting, but the defendant must have known or believed that the intended recipient had authority to act in a certain manner as specified in element 6.”
The Court does not believe that this language is necessary, and it is potentially confusing.”
As noted in this prior post, in April 2012 – a few months prior to trial, Stuart and Hong Carson pleaded guilty to conduct not found in the original indictment. Pursuant to a plea agreement, Stuart Carson, 73, faces up to 10 months in prison and Rose Carson, 48, faces a sentence of three years probation, which may include up to six months of home confinement.
As noted in this prior post, in late May 2012 – a few weeks prior to trial, Paul Cosgrove (a 65 year old individual who recently underwent emergency heart quadruple bypass surgery) pleaded guilty to conduct not found in the original indictment. Pursuant to a plea agreement, Cosgrove faces up to 15 months in prison.
Last week – a few weeks prior to his trial, the DOJ announced (here) that Edmonds pleaded guilty to a one-count superseding information charging him with making a corrupt payment to a foreign government official in violation of the FCPA.
Unlike the original indictment, the four page superseding information as to Edmonds (here) focuses solely on Public Power Corporation of Greece (“Public Power”) and states as follows. “Public Power was a department, agency, and instrumentality of a foreign government with the meaning of the FCPA” and “officers and employees of Public Power were ‘foreign officials’ within the meaning of the FCPA.” The superseding information then states that “on or about May 15, 2000” Edmonds “corruptly caused an e-mail to be sent authorizing the payment of approximately $45,000 to officials of Public Power for the purpose of securing Public Power’s business.
For more on Public Power during the general time period alleged in the superceding information, see this Annual Report.
As noted in the DOJ’s release (here), “Edmonds, 59, faces up to 15 months in prison. Sentencing is scheduled for Nov. 19, 2012.”
The Edmonds plea agreement (here) incorporates the substance of Judge Selna’s jury instruction set forth above. In addition, the plea agreement states as follows. “Defendant Edmonds understands that at any trial, the government would prove sufficient facts to demonstrate that Public Power was a government instrumentality within the meaning of the FCPA […] and its employees ‘foreign officials’ within the meaning of the FCPA.”
The plea agreement further states as follows. “Although defendant Edmonds did not actually know that the approximately $45,000 was to be offered, given, or promised to an employee of Public Power for the purpose of securing Public Power’s business, he was aware of a high probability of this circumstances and failed to make additional inquiries concerning the nature of the commission and the suspected recipient in order to determine whether the proposed commission payment might be made to an employee at Public Power for the purpose of securing Public Power’s business.” The plea agreement further states as follows. “Although defendant Edmonds did not know about the prohibitions of the FCPA, defendant Edmonds was aware that the law would forbid making an undisclosed payment to an employee of a customer for the purpose of securing the customer’s business.”
In the plea agreement, Edmonds waived any statute of limitations defenses.
For Your Listening Enjoyment
On June 5th, the American Bar Association Criminal Justice Section and the ABA Center for Continuing Legal Education in cooperation with Dorsey & Whitney & LLP and Pepper Hamilton LLP sponsored a program titled “The New Era of FCPA Enforcement and the Collapse of the Africa Sting Cases: Time to Reevaluate?”
I was pleased to participate along with John Buretta (Deputy Assistant Attorney General, Criminal Division, Department of Justice); Charles Cain (Deputy Chief, FCPA Unit, Securities and Exchange Commission); France Chain (Senior Legal Analyst, Anti-Corruption Division, OECD); Stanley Sporkin; and Eric Bruce (Partner, Kobre & Kim LLP). The program was moderated by Thomas Gorman (Partner, Dorsey & Whitney LLP) and Frank Razzano (Partner, Pepper Hamilton LLP).
An audio version of the 90 minute program can be downloaded here. Below is a breakdown of topics discussed along with the approximate minute mark(s) of the discussion.
4 – 11 minutes – Eric Bruce (defense counsel in the Africa Sting case) provides an inside view of the case.
11 – 13 minutes – discussion of 78dd-3 jurisdictional issues, including in the Africa Sting case
13 – 19 minutes – discussion of various issues including corporate FCPA resolutions, whether the DOJ is more of a regulator than prosecutor in FCPA cases, and the DOJ’s view of the Africa Sting cases including whether it learned anything from the cases
19 – 24 minutes – Stanley Sporkin weighs in as to the origins of the FCPA’s books and records and internal control provisions, says that the DOJ was hunting in the wrong place in the Africa Sting cases and says that FCPA enforcement needs to get back to the basics of “blocking and tackling”
25 – 30 minutes – discussion of the “foreign official” issue in which the DOJ says that “no one really conveys that they are confused” about what “foreign official” means
30 – 38 minutes – discussion of facilitation payments and whether the enforcement agencies have ignored this statutory exemption
38 – 41 minutes – I raise the question of whether the FCPA has morphed into an all-purpose corporate ethics or governance statute and discussion regarding what is the best way to expand the FCPA – through charging decisions or through Congressional action
42 – 50 minutes – discussion of compliance issues and how best to reward corporate compliance as well as the recent Garth Peterson / Morgan Stanley case in which I pose to the DOJ and the SEC the question of whether the outcome would have been any different if the FCPA had a formal compliance defense
50 – 55 minutes – discussion of miscellaneous issues including transparency in enforcement, cooperation issues and self-reporting
55 – 67 minutes – further discussion of compliance issues, including whether a compliance defense would be a “race to the bottom” or a “race to the top,” whether there is a Washington D.C. beltway view on FCPA compliance, and whether the increase in FCPA enforcement is doing anything to properly incentivize business conduct
67 – 71 minutes – discussion of whether there is any practical difference in the corporate liability standards in the U.K. Bribery Act and the FCPA
72 – 76 minutes – further discussion of the Africa Sting cases
77 – 79, 83 – 86 minutes – DOJ responds to a question regarding FCPA guidance, including timing and specifics
80 – 83 minutes – discussion as to whether it is acceptable not to self-report if the company otherwise implements a variety of internal remedial measures
87 – 89 – once again the issue of whether the DOJ has learned anything from the Africa Sting cases
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If you are aware of other FCPA video or audio programs and would like to provide a similar annotation as to issues, please consider this an open invitation to do a guest post as many could benefit.
An Update On Section 1504
Approximately two years ago, Congress passed and President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act. As noted in this previous post, tacked to the end of the massive Dodd-Frank bill at the last minute was a “miscellaneous provision” titled Section 1504 “Disclosure of Payments by Resource Extraction Issuers.” Prior to being tucked into Dodd-Frank, the substance of Section 1504 languished in the Senate. (See here for a prior post regarding S. 1700 introduced in the Senate in September 2009).
As I noted in the prior posts, bribery and corruption are bad, but that does not mean that every attempt to curtail bribery and corruption is good or represents sound public policy.
Case in point is Section 1504. In short, Section 1504 will substantially increase compliance costs and headaches for numerous companies that already have extensive FCPA compliance policies and procedures by further requiring disclosure of perfectly legal and legitimate payments to foreign governments. As I’ve noted before, Section 1504 is akin to “swatting a fly with a bazooka” and is an attempt to legislate an issue that was sensibly put to rest in the mid-1970′s when Congress held extensive hearings on what would become the FCPA.
Here is some background. The FCPA as enacted in 1977 contained (and still contains) an outright prohibition on improper payments to “foreign officials” to obtain or retain business (the anti-bribery provisions) as well as books and records and internal control provisions – but not disclosure provisions. The original versions of what became the “FCPA” (i.e. the “Foreign Payments Disclosure Act” and other similar bills) started out with disclosure provisions, including provisions requiring all U.S. companies to disclose all payments over $1,000 to any foreign agent or consultant and any and all other payments made in connection with foreign government business.
As to these disclosure provisions, many people, including, most notably Senator Proxmire (D-WI – a Congressional leader on what would become the FCPA), were concerned that the disclosure obligations were too vague to enforce and would require the disclosure of thousands of payments that were perfectly legal and legitimate. Proxmire said during congressional hearings, “I would think they [the corporations subject to the disclosure requirements] would want some certainty. They want to know what they have to report and what they don’t have to report. They don’t want to guess and then find themselves in deep trouble because they guessed wrong.”
The final House Report (see here) on what would become the FCPA is even more clear. It states (when discussing the various disclosure provisions previously debated, but rejected): “Most disclosure proposals would require U.S. corporations doing business abroad to report all foreign payments including perfectly legal payments such as for promotional purposes and for sales commissions. A disclosure scheme, unlike outright prohibition, would require U.S. corporations to contend not only with an additional bureaucratic overlay but also with massive paperwork requirements.”
In this prior post, I analogized that Section 1504 is like having to report one’s speed on the highways even though there are speed limits in place.
I previously stated as follows. “The FCPA already criminalizes improper payments made to the ‘foreign government’ recipients targeted in Section 1504 to the extent those payments are made to “obtain or retain business.” Do we really now need a law that requires ‘Resource Extraction Issuers’ to disclose all such payments, even perfectly legitimate and legal payments?”
In passing Dodd-Frank , Congress apparently said yes to this question (although I wonder if most voting in favor of Dodd-Frank even knew the miscellaneous provision was tagged onto the bill).
Pursuant to Dodd-Frank, the SEC issued proposed rules (see here) in December 2010.
And that’s pretty much where things stand at the moment even though the SEC originally planned to adopt final rules between January – March 2011 – as noted in this previous post. The long delay in SEC final rules implementing Section 1504 is perhaps further evidence as to the folly of this ill-conceived legislation.
A few updates to pass along regarding Section 1504.
As noted in this recent release, Oxfam America (an international relief and development organization) recently filed a complaint (here) against the SEC “for unlawfully delaying the issuance of a Final Rule implementing” Section 1504.
The release states as follows. “Congress set a deadline of April 17, 2011, for the SEC’s promulgation of the final rule that is needed to bring Section 1504 into effect. The SEC has now missed this statutory deadline by one year and one month. Oxfam America notified the SEC on April 16, 2012 that it would file suit if the regulatory agency did not issue a final rule within 30 days. […] Unfortunately, the SEC’s pattern of delay gives no assurance that it will ever promulgate a Final rule without the involvement of this Court.” As noted in the release, “Oxfam America is represented in this matter by Baker Hostetler LLP, one of the largest law firms in the US, and EarthRights International, an organization dedicated to defending human rights and the environment through legal actions and other strategies.”
Thereafter, as noted in this story from The Hill, “oil companies are seizing on a White House executive order that promotes international regulatory harmony to seek an exemption from upcoming federal rules that would force energy producers to disclose payments to foreign governments.” This May 18th letter to the SEC from the American Petroleum Institute, states that “if the Commission were to issue a final rule that requires reporting even when it conflicts with foreign laws, such a rule would cause exactly the type of unnecessary competitive harm that the Executive Order seeks to avoid.”
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Section 1504 has not been all bad. As noted in this prior post and as relevant to the current “foreign official” debate, Section 1504 demonstrates that when Congress wants to, it knows how to pass a bill that captures state-owned or state-controlled enterprises (SOEs). In short, Section 1504 defines “foreign government” to “include [] a department, agency, or instrumentality of a foreign government or a company owned by a foreign government.” If instrumentality can include SOEs (as the enforcement agencies maintain) why the need for the additional clause “or a company owned by a foreign government” in Section 1504?
Checking In On The Carson Case
This post checks in on the case commonly referred to as the “Carson” case (even though as indicated in this prior post, last month Stuart and Hong Carson pleaded guilty). This post summarizes the recent superceding information against Paul Cosgrove and his guilty plea. David Edmonds remains a defendant in the case and is scheduled to go to trial in late June. This post ends by linking to briefs in connection with the DOJ’s motion to exclude Edmond’s designated experts, including myself, from testifying at trial.
Cosgrove Information and Plea
In April 2009, Paul Cosgrove was criminally charged, along with other defendants who were also former employees of Control Components Inc. (CCI), in a criminal indictment (here) for engaging 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.”
As to Cosgrove, the indictment alleged as follows. “From in or around 2003 through in or around 2007, defendant Cosgrove caused [CCI’s] employees and agents to make corrupt payments totaling approximately $1.9 million to officers and employees of state- owned companies, and corrupt payments totaling approximately $300,000 to officers and employees of private companies.” “[CCI’s] state-owned customers included, but were not limited to, Jiangsu Nuclear Power Corporation (“JNPC”) (China), Guohua Electric Power (China), China Petroleum Materials and Equipment Corporation (“CPMEC”), PetroChina, Dongfang Electric Corporation (China), China National Offshore Oil Corporation (“CNOOC”), Korea Hydro and Nuclear Power (“KHNP”), Petronas (Malaysia), and National Petroleum Construction Company (“NPCC”) (United Arab Emirates). Each of these state-owned entities was a department, agency, and instrumentality of a foreign government, within the meaning of the FCPA. The officers and employees of these entities, including the Vice-Presidents, Engineering Managers, General Managers, Procurement Managers, and Purchasing Officers, were “foreign officials” within the meaning of the FCPA.”
As noted in the DOJ release (here), Cosgrove was charged with one count of conspiracy to violate the FCPA and the Travel Act, six counts of violating the FCPA and one count of violating the Travel Act.
Shortly thereafter, CCI resolved an FCPA enforcement action based on the same core set of conduct alleged in the above indictment. (See here for the prior post). I noted then, as I had since launching this website in July 2009, that the DOJ’s position that employees of state-owned companies, regardless of position, are “foreign officials” under the FCPA is an unchallenged and untested legal theory – and one I believe is ripe for challenge.
In February 2011 (as noted in this prior post), for the first time in FCPA history, a federal court judge, with the benefit of a detailed and complete overview of the FCPA’s extensive legislative history on the “foreign official” element, was asked to rule on the DOJ’s interpretation that employees of alleged state-owned or state-controlled enterprises are “foreign officials” under the FCPA. My declaration on the FCPA’s legislative history relevant to “foreign official” (here) was used in the “foreign official” motion to dismiss.
In May 2011 (as noted in this prior post), Judge James Selna denied the “foreign official” motion to dismiss and concluded that “the question of whether state-owned companies qualify as instrumentalities under the FCPA is a question of fact.” The “foreign official” issue thus moved to the jury instructions (as noted in this prior post).
In February 2012 (as noted in this prior post), Judge Selna issued certain jury instructions. Not surprisingly, Judge Selna carried forward his previous “instrumentality” analysis into the “instrumentality” jury instruction. Yet, in a significant development in terms of the future of the case, Judge Selna issued an instruction titled “knowledge of status of foreign official.” In pertinent part, the instruction stated as follows.
[…..]
“(4) The defendant offered, paid, promised to pay, or authorized the payment of money, or offered, gave, promised to give, or authorized the giving of anything of value to a foreign official;
(5) The payment or gift at issue in element 4 was to (a) a person the defendant knew or believed was a foreign official or (b) any person and the defendant knew that all or a portion of such money or thing of value would be offered, given, or promised (directly or indirectly) to a person the defendant knew or believed to be a foreign official. Belief that an individual was a foreign official does not satisfy this element if the individual was not in fact a foreign official.”
In his order, Judge Selna stated as follows.
“The Government proposes to add the following paragraph to element 5:”
The government need not prove that the defendant knew the legal definition of “foreign official” under the FCPA or knew that the intended recipient of the payment or gift fell within the legal definition. The defendant need not know in what specific official capacity the intended recipient was acting, but the defendant must have known or believed that the intended recipient had authority to act in a certain manner as specified in element 6.”
The Court does not believe that this language is necessary, and it is potentially confusing.”
Earlier this week, the DOJ announced (here) that Cosgrove “pleaded guilty … before U.S. District Judge James V. Selna in Santa Ana, Calif., to a one-count superseding information charging him with making a corrupt payment to a foreign government official in China in violation of the FCPA.”
Unlike the original indictment, the four page superseding information as to Cosgrove (here) focuses solely on Sichuan Chemical Works Group Ltd. (here) and states as follows. “Sichuan Chemical was a department, agency, and instrumentality of a foreign government within the meaning of the FCPA […] the officers and employees of Sichuan Chemical were ‘foreign officials’ within the meaning of the FCPA.” The superseding information states that in July 2003 “Cosgrove corruptly caused an e-mail to be sent authorizing the payment of approximately $7,500 to officials of Sichuan Chemical for the purpose of securing Sichuan Chemical’s business.”
As noted in the DOJ’s release, “at sentencing, Cosgrove, 65, faces up to 15 months in prison.” Sentencing is scheduled for Aug. 27, 2012.
The Cosgrove plea agreement (here) incorporates the substance of Judge Selna’s jury instruction set forth above. In addition, the plea agreement states as follows. “Defendant Cosgrove knew Sichuan Chemical was a Chinese state-owned entity. Defendant Cosgrove understands that at any trial, the government would prove sufficient facts to demonstrate that Sichuan Chemical was a government instrumentality within the meaning of the FCPA … and its employees ‘foreign officials’ within the meaning of the FCPA.” As to the $7,500 payment Cosgrove authorized via e-mail, the plea agreement states as follows. “As a result of this payment, CCI earned profits of approximately $5,625 in connection with the sale of the valve.”
The plea agreement further states as follows. “Although defendant Cosgrove did not actually know that the $7,500 was to be offered, given, or promised to any employees at Sichuan Chemical for the purpose of securing Sichuan Chemical’s business, he was aware of a high probability of this circumstance and failed to make additional inquiries concerning the nature of the commission and the suspected recipient in order to determine whether the proposed commission payment might be made to an employee at Sichuan Chemical for the purpose of securing Sichuan Chemical’s business.” The plea agreement further states as follows. “Although defendant Cosgrove did not know about the prohibitions of the FCPA, defendant Cosgrove was aware that the law would forbid making an undisclosed payment to an employee of a customer for the purpose of securing the customer’s business.”
As set forth in the plea agreement, the advisory Sentencing Guidelines range for the conduct at issue is 10-16 months imprisonment. The plea agreement states as follows. “Defendant and the Department of Justice agree that … an appropriate disposition of this case is that the court impose a sentence of: no more than 15 months imprisonment; three years supervised release …; up to a $20,000 fine; no amount of restitution; and a $100 special assessment. Defendant reserves the right to seek variance or a downward departure in the offense level based upon defendant’s medical condition. At sentencing, defendant will present evidence of his medical condition, to include the following: Defendant has a lengthy history of coronary problems, gastric bleeding, and other serious health issues for which he has received treatment since at least 2003. On August 16, 2010, defendant underwent emergency heart quadruple bypass surgery and has since been under the treatment and care of his cardiologist to ensure defendant remains in stable condition.”
In the plea agreement, Cosgrove waived any statute of limitations defenses.
Some have called the Cosgrove plea a “big win” and a “victory” for the DOJ (see here and here). The conclusions are yours to reach.
Expert Issues
See here for the DOJ’s motion to exclude Edmond’s expert witnesses, here for Edmond’s response, and here for the DOJ’s reply.
Friday Roundup
Efforts to influence the upcoming guidance, a stiff FCPA-related sentence, Representatives Cummings and Waxman think they are on to something, and thumbs up – it’s all here in the Friday roundup.
Guidance
Earlier this week, Global Financial Integrity, Open Society Foundations, and others released this letter to the DOJ and SEC concerning upcoming FCPA guidance. The letter addresses “foreign official,” a compliance defense, voluntary disclosure, declination decisions, parent-subsidiary liability, successor liability, de minimis gifts and hospitality, and mens rea and corporate criminal liability.
As to “foreign official” the letter states “that ownership of companies around the world, including in the U.S., is impossible to determine independently” and that “the staff of a U.S. company is not likely to be able to independently verify the direct and indirect ownership of foreign companies.” The letter also states, as to control of an instrumentality by a foreign government, that control can be conferred, among other ways, by “unspoken custom.”
Should one laugh or cry when reading such statements concerning a key element of the most important U.S. law governing international business transactions? Perhaps the groups don’t care. After all, as noted here, some of the groups have previously stated as follows regarding “foreign official” – “The U.S. Chamber is promoting the creation of a definition of “foreign official” so that companies have greater legal certainty. Greater certainty of what? Greater certainty of who they are permitted to bribe and who they are not permitted to bribe. […] In short, defining the term “foreign official” would underscore the idea that it is OK to bribe certain people and not others, a principle the United States surely does not want to promulgate.”
Duperval Sentenced
Earlier this week, the DOJ announced (here) that “Jean Rene Duperval, a former director of international relations for Telecommunications D’Haiti S.A.M. (Haiti Teleco), a Haitian state-owned telecommunications company, was sentenced [by U.S. District Court Judge Jose Martinez in the Southern District of Florida] to nine years in prison for his role in a scheme to launder bribes paid to him by two Miami-based telecommunications companies.” The stiff sentence continues the trend of the Southern District of Florida (and Judge Martinez in particular) handing out the toughest FCPA or FCPA-related sentences in the country.
As noted in the release, Duperval was convicted in March 2012 of two counts of conspiracy to commit money laundering and 19 counts of money laundering. According to the release, “Judge Martinez also ordered Duperval to forfeit $497,331.” Assistant Attorney General Lanny Breuer stated as follows. “Mr. Duperval took bribes in exchange for giving companies an unfair and illegal advantage in the marketplace, and then tried to hide these illicit transactions behind the cloak of shell corporations and fake invoices. Just as we prosecute corrupt businesspeople under the FCPA, we will hold accountable corrupt foreign officials when they seek to launder the proceeds of that bribery through the U.S. financial system. Today’s nine-year prison sentence sends a strong message to foreign officials and others who would facilitate foreign corruption that they will face serious consequences.”
As noted in this prior post, the Haiti Teleco case (minus the manufactured and now former Africa Sting case) is the largest in FCPA history in terms of defendants charged – 13. The prior post provides a summary of all the enforcement actions.
The Latest FCPA Reform Volley
If your third cousin received a speeding ticket years ago does this prohibit you from forever seeking reform of speed limit laws? Probably not the best analogy, but Representatives Elijah Cummings and Henry Waxman seem to think so. As noted in this previous post, Cummings (Ranking Member of the House Committee on Oversight and Government Reform) and Waxman (Ranking Member of the House Committee on Energy and Commerce) sent letters to the Chairman of the Board of Directors of the Retail Industry Leaders Association and the President of the U.S. Chamber of Commerce stating as follows. “We are concerned about the role that Wal-Mart officials may have played in the Chamber’s Institute for Legal Reform (“ILR”). It would appear to be a conflict of interest for Wal-Mart officials to advise on ways to weaken the Foreign Corrupt Practices Act at a time when the leadership of the company was apparently aware of corporate conduct that may have violated the law.”
Earlier this week, Representatives Cummings and Waxman again put pen to paper and sent this letter to the President of the U.S. Chamber of Commerce stating as follows. “A new analysis by our staff reveals that Wal-Mart is not the only company represented on the ILR’s board that has faced allegations that it violated the Foreign Corrupt Practices Act. Our review of ILR’s tax filings from 2007 to 20 10, member companies’ filings with the U.S. Securities and Exchange Commission (SEC), and other documents reveals that 14 out of 55 ILR board members-almost one in four- were affiliated with companies that were reportedly under investigation for violations or had settled allegations that they violated the Foreign Corrupt Practices Act.” See here for more.
Closing with the analogy, perhaps Representatives Cummings and Waxman should instead inquire about how the speeding laws are being enforced – or at the very least – read this prior post titled “The Sun Rose, A Dog Barked, And A Company Disclosed FCPA Scrutiny.”
Thumbs Up
To Howard Sklar for this recent post on his Open Air Blog. I agree with the general thrust of Howard’s argument. So did Congress when it passed the FCPA. For that reason, and here is where I disagree with Howard, the issues he identifies are legal issues, not merely policy issues.
*****
A good weekend to all.