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You Don’t Need To Look Far For The Location Resulting In Several Individual FCPA Enforcement Actions

By on August 31, 2017 in 1998-2004 Enforcement Actions, Agriculture Industry, Allen Sturdivant, American Rice, Haiti, Haiti Teleco Enforcement Actions, Individual Enforcement Action, Joel Malebranche, Joseph Schwartz, Lawrence Theriot, SEC Enforcement Action
Haiti2

This prior post highlighted the DOJ’s recently announced Foreign Corrupt Practices Act enforcement action against Joseph Baptiste for alleged bribery in Haiti.

The Baptiste enforcement action is just the latest in a long list of FCPA enforcement actions (all of the criminal actions were against individuals associated with small, privately-held companies) alleging improper business conduct in Haiti (a country located a short distance from the U.S.).

What makes this unusual is that Haiti attracts (relatively speaking compared to many other countries) little business activity by those subject to the FCPA. But then again, perhaps one of the reasons for this lack of business activity is the FCPA itself. As highlighted in this 2010 post, some called for the FCPA not to apply to doing business in Haiti arguing: “one of the best way to help Haiti” is to “pass a law stating that the FCPA does not apply to dealings in Haiti. As it stands right now, U.S. businesses are unwilling to take on this legal risk and the result is similar to an embargo. You can’t do business in Haiti without paying bribes.”

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Friday Roundup

By on July 28, 2017 in Amadeus Richers, America Movil, Baxter International, Deferred Prosecution Agreements, Haiti Teleco Enforcement Actions, IBM, Net 1, Non-Prosecution Agreement, Rio Tinto, Year in Review 2017
Roundup

Guilty plea, scrutiny alerts, and for the reading stack. It’s all here in the Friday roundup.

Guilty Plea

As highlighted in this prior post, in July 2011 the DOJ criminally charged Amadeus Richers (a former director of Cinergy Telecommunications with one count of conspiracy to violate the FCPA and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering) in the sprawling Haiti Teleco enforcement action.

Although Richers was indicted, he remained a fugitive until his arrest and ultimately his extradition from Panama on February 23, 2017.

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Checking In

By on August 1, 2013 in 2013 Enforcement Actions, ALSTOM, DOJ Enforcement Action, Executive Enforcement Action, FCPA Appeals, Foreign Official, Frederic Pierucci, Haiti Teleco Enforcement Actions, Individual Enforcement Action, Indonesia, Jean Rene Duperval, Lawrence Hoskins

This post checks in on recent developments in two enforcement actions:  (i) the FCPA enforcement action against various individuals associated with Alstom; and (ii) the FCPA-related enforcement action against alleged Haitian “foreign official” Jean Duperval currently on appeal to the 11th Circuit.

Alstom-Related Action

Earlier this week, the DOJ announced that Lawrence Hoskins, “a former senior vice president for the Asia region for [Alstom], was charged in the District of Connecticut with conspiring to violate the Foreign Corrupt Practices Act (FCPA) and to launder money, as well as substantive FCPA and money laundering violations.”

The conduct at issue in the Second Superceding Indictment is the same core conduct alleged in original criminal charges filed against Frederic Pierucci and David Rothschild, as well as the conduct alleged in the Superceding Indictment which added William Pomponi to the action.  (See here and here for previous posts).    That is –  alleged payments in connection with the Tarahan coal-fired steam power plant project in Indonesia.  In the prior charging documents, Hoskins was generically referred to as Executive A.

As noted in previous posts, Rothschild pleaded guilty to conspiracy to violate the FCPA.

The DOJ further announced in its release earlier this week that Pierucci pleaded guilty to one count of conspiring to violate the FCPA and one count of violating the FCPA.  (See here for the plea agreement).

Duperval Action

This previous post detailed the 11th Circuit appeal of Jean Duperval.  Duperval was one of the alleged “foreign officials” charged in connection with the Haiti Teleco enforcement actions (see here for a summary and roundup of the entire Haiti Teleco enforcement actions) with non-FCPA offenses and he was found guilty by a jury of various money laundering charges.

As noted in the previous post, in his appeal Duperval argues, among other things, as follows.  “The evidence was insufficient to prove beyond a reasonable doubt that Haiti Teleco was a government instrumentality and that Jean Rene Duperval was a foreign official as required to prove that a violation of the Foreign Corrupt Practices Act generated proceeds of a specified unlawful activity – a necessary predicate for the convictions on the money laundering conspiracy and substantive money laundering charges.”

As noted in the previous post, Duperval’s substantive arguments as to “foreign official” largerly mirror the arguments of Joel Esquenazi and Carlos Rodriguez (also criminally charged and convicted in the Haiti Teleco matter) in their historical “foreign official” appeal to the 11th Circuit (see here for links to the briefing).

Among other things, Duperval’s argument includes discussion and several citations to my “foreign official” declaration  (see here).

Briefing is now complete in the Duperval appeal.

Not surprisingly, the DOJ’s arguments in connection with “foreign official” largely mirror the arguments it makes in the Esquenazi and Rodriguez appeal.  The DOJ is again seeking to exclude my foreign official declaration from the record and its brief states:

“Duperval relies on a 144-page declaration by a proposed defense expert that was filed on behalf of the defendants in Carson.  Although Duperval suggests that this Court may take judicial notice of the declaration because it relates to legislative history, the declaration selectively reviews the legislative history and draws inferences in support of a defense motion to dismiss the indictment. As such, it is not necessarily the statement of a disinterested expert, it was not reviewed as a scholarly article, and it was never subject to impeachment in the case below.”

Last week Duperval filed a reply brief, and not surprisingly, the arguments in connection with “foreign official” largely mirror the arguments made by Esquenazi and Rodriguez in their reply brief.  As to my “foreign official” declaration, the brief states:

“The government also condemns Duperval’s reference to Professor Michael J. Koehler’s declaration addressing the legislative history of the FCPA, which was filed in United States v. Carson. Aside from the analysis contained in the Koehler declaration, the substance of the declaration is the legislative history of the FCPA. The Court can surely take notice of legislative history, and evaluate the utility and accuracy of Professor Koehler’s declaration for itself. But the Government’s claim that the declaration of a professor filed in another criminal proceeding and under penalty of perjury is somehow of lower status than a law-review article reviewed by law students strains credulity.”

It will be an interesting “foreign official” Fall in the 11th Circuit.

Haiti Teleco “Foreign Official” Says He Was Not A “Foreign Official” – Files Appeal On This And Other Issues

By on February 8, 2013 in Carlos Rodriguez, FCPA Appeals, Foreign Official, Haiti Teleco Enforcement Actions, Jean Rene Duperval, Joel Esquenazi

Some background is necessary to place in context an interesting development that is likewise relevant to the pending Eleventh Circuit “foreign official” appeal by Joel Esquenazi and Carlos Rodriguez (see here for the prior post linking to the full briefing in the case).

In terms of the number of individual criminal defendants (9), the Haiti Teleco enforcement actions are the largest in FCPA history (minus the manufactured Africa Sting case).  The FCPA charges in the enforcement actions were based on the theory that Haiti Teleco was a “instrumentality ” of the Haitian government, such that Haiti Teleco employees were “foreign officials” under the FCPA.  Seven of the defendants pleaded guilty and two of the defendants, Esquenazi and Rodriguez, exercised their constitutional right to a jury trial and were found guilty of FCPA and related charges.  As noted above, both defendants have appealed their convictions to the Eleventh Circuit.  [Disclosure – I am providing pro bono expert services to defendants’ counsel, including my former law firm Foley & Lardner, relevant to the “foreign official” issue].

In addition to the FCPA (and related) charges brought against the above category of defendants, the DOJ also criminally charged three “foreign officials” in connection with the matter (see this prior post titled “Haiti Teleco Roundup” for additional details).  Two of the individuals pleaded guilty to non-FCPA offenses, and one “foreign official,” Jean Rene Duperval, was found guilty by a jury on various money laundering charges.

In short, 12 individuals were criminally charged, pleaded guilty, and/or were found guilty based, in whole or in part, on the theory that Haiti Teleco was an “instrumentality” of the Haitian government.

This prosecution theory of course is a main focus of the Esquenazi and Rodriguez appeal in the Eleventh Circuit.  As noted in this prior post, shortly after their convictions and before their current appeal, a stunning development occurred in the case as the Haitian Prime Minister (Jean Max Bellerive) authored a declaration, on behalf of the Haitian Ministry of Justice, concerning the “Legal Status of Teleco.”  (See here for the declaration).   The declaration asserted, among other things, that “Teleco has never been and until now is not a state enterprise.”  The declaration was dated ten days before the jury reached its verdict in the Esquenazi and Rodriguez trial and subsequent filings in the cases suggest that the origins of the declaration was in response to a letter sent by Paul Calli (Carlton Fields – then an attorney for Patrick Joseph (one of the “foreign officials” who pleaded guilty in the case)) inquiring about the status of Haiti Teleco and whether it was a private company or a government owned company.

In a further stunning development, and as noted in this prior post, after the Bellerive declaration surfaced, the DOJ contacted the Prime Minister and he filed a revised declaration (here), in which he backtracked from many of his prior declaration statements, and stated that he did not know his original declaration  “was going to be used in criminal legal proceedings in the United States or that it was going to be used in support of the argument that […] Teleco was not part of the Public Administration of Haiti.”

The trial court judge in the Esquenazi and Rodriguez case denied defendants’ request for a new trial and this denial is among the issues on appeal in the Eleventh Circuit.

And now for the interesting and notable recent development alluded to in this Main Justice story.

Duperval, the key “foreign official” at the center of the Haiti Teleco prosecutions, filed an appeal (here) in the Eleventh Circuit earlier this week challenging his convictions.  One issue on appeal is stated as follows.  “The evidence was insufficient to prove beyond a reasonable doubt that Haiti Teleco was a government instrumentality and that Jean Rene Duperval was a foreign official as required to prove that a violation of the Foreign Corrupt Practices Act generated proceeds of a specified unlawful activity – a necessary predicate for the convictions on the money laundering conspiracy and substantive money laundering charges.”

Separately, Duperval’s brief discusses the Bellerive declarations in connection with his due process challenges.  Among other things, the brief notes that the DOJ’s “explanation and Bellerive’s statements in his second declaration, are nothing short of disingenuous, border on the nonsensical, and are expressly contradicted by the previous correspondence, which established that Bellerive signed the first declaration in response to an inquiry from an attorney representing Patrick Joseph …”.    The brief then asserts that “but for the government’s unjustified interference with Prime Minister Bellerive, Mr. Duperval could have availed himself of a favorable witness to demonstrate quite simply that Teleco was not a government instrumentality and he was not a foreign official.”

Duperval’s brief also challenges the sufficiency of the trial court evidence regarding “foreign official” and whether Duperval was a “foreign official as required to prove a charge of money laundering related to the proceeds of a violation of the FCPA.”  The substantive arguments on this issue largely mirror previous defense arguments in the Lindsey Manufacturing and Carson “foreign official” challenges as well as Esquenazi’s and Rodriguez’s arguments on appeal.  Duperval’s argument includes discussion and several citations to my “foreign official” declaration (see here).

Another interesting aspect of Duperval’s appeal is his challenge that the “trial court erred in not charging the jury in accordance with Duperval’s proffered theory of defense instruction.”  Specifically, Duperval argues that the trial court denied Duperval’s FCPA facilitation payments exception instruction.  The brief asserts that the “language in the instruction was extracted verbatim” from the FCPA and that there was “ample evidence in the record to support the giving of the instruction.”

In this regard, it is interesting to note that in Judge Keith Ellison’s (S.D. Tex.) December 2012 Jackson / Ruehlen decision (see here for the prior post regarding the SEC enforcement action) he concluded, in what is believed to be an issue of first impression, that the SEC must bear the burden of negating the facilitation payments exception.

Friday Roundup

By on July 20, 2012 in Burma, Environmental Issues, FCPA Inc., FCPA Sentences, Haiti Teleco Enforcement Actions, Insurance Industry, Myanmar, Patrick Joseph, Wal-Mart

Burma with conditions, the SEC lawyer heading up the Wal-Mart inquiry, connections between foreign environmental crimes and corruption, FCPA Inc. marketing, adding to the Haiti Teleco Roundup, and a new entrant to the FCPA space.  It’s all here in the Friday roundup.

Burma With Conditions

Yesterday Miller Chevalier released this informative alert concerning business opportunities in Burma.  As noted in the alert, the U.S. Government recently “enacted measures that dramatically ease the Burmese Sanctions Regulations (“BSR”) that has been in place for over 15 years. On July 11, 2012, the Treasury Department’s Office of Foreign Assets Control (“OFAC”) authorized new investments and the exportation of U.S. financial services into Burma for the first time since 1997 and 2003 respectively through the issuance of two new general licenses.”

As noted in the alert, on the same day that OFAC released the two new general licenses, the State Department published draft reporting requirements [here] relating to investment in Burma.”  Pursuant to the draft reporting requirements, “any U.S. person whose aggregate investment in Burma exceeds $500,000” must provide information regarding, among other things, its policies and procedures as they relate to its operations and supply chain in Burma concerning, among other things, “policies and procedures on anti-corruption in Burma.”  The State Department document specifically references the OECD Guidelines, Section VII. Combating Bribery, Bribe Solicitation and Extortion [here], and the OECD Good Practice Guidance on Internal Controls, Ethics, and Compliance.” [here].

It’s a bit ironic isn’t it.  A company seeking to do business in Burma can obtain the necessary U.S. government licenses by disclosing its pre-existing FCPA compliance policies and procedures consistent with best practices guidance, but if any employee in its organization acts inconsistent with those policies and procedures without management or senior executive knowledge, the U.S. government may criminally prosecute the organization subject only to the non-reviewable, opaque, internal discretion of DOJ enforcement attorneys.  See here for “Revisiting a Foreign Corrupt Practices Act Compliance Defense.”

SEC Attorney Sees “The Spotlight As An Opportunity”

This recent Texas Lawbook article profiles Michael King (Assistant Director of Enforcement with the SEC’s Forth Worth office) reportedly heading up the SEC’s Wal-Mart inquiry.  King is quoted in the article as saying he views “the spotlight as an opportunity.”  Other lawyers quoted in the article stated as follows.  “I think King is under tremendous pressure to make Wal-Mart the poster child for what happens when corporations violate [the] Foreign Corrupt Practices Act and then don’t self report.”

Am I the only one alarmed when a government enforcement attorney uses the word “spotlight” and “opportunity” in the same sentence?

An interesting tidbit discussed in the article is that King also headed up the SEC’s enforcement actions against Panalpina and Pride International (see here and here for prior posts).  These enforcement actions, as well as others in the so-called CustomsGate actions, reached the outer bounds of the FCPA (and likely involved conduct Congress did not seek to capture in passing the FCPA) and it is likely the same result will occur in any Wal-Mart action as I discussed in this previous post.

FCPA Inc. Marketing

“Firms face increasing exposure to anti-bribery and corruption laws and regulations. Laws such as the Foreign Corrupt Practices Act (FCPA) have been in place in the U.S. for 35 years.  Despite this length of time, each year shows increasing non-compliance and growing fines, penalties and judgments by the U.S. Department of Justice.  […] The financial impact is more significant than the fine alone. Investigation and litigation costs can easily equal the cost of the fine itself. The firm must then also bear the weight of interaction with a corporate monitor to validate its compliance program for the next 10 to 20 years [really, show me an FCPA monitor or FCPA NPA or DPA that has a 10 to 20 year term] and report to the Federal government. Not to mention the reputation and brand impact that bribery and corruption has upon the firm. If the FCPA is not enough, the United Kingdom approved the U.K. Bribery Act (UKBA) legislation in 2010, which went into force in July 2011.  This anti-corruption law brings broader scope and implications to anti-corruption compliance.  […] This is the era of the corporate bounty hunter.  Government is increasingly turning to insiders (e.g., employees), incenting them to report wrongdoing and non-compliance.  […] In an era of increased scrutiny and judgments for anti-corruption, this is a significant concern that keeps executives, the board, legal and compliance professionals up at night.”

So writes AccuitySolutions in a recent white paper titled “Addressing Anti-Bribery and Corruption Compliance.”

The solution, why of course ComplianceMAX and the Anti-Bribery and Corruption Solution “a flexible compliance management platform. The Solution eases the compliance burden by delivering operational effectiveness, human and financial efficiency and agility to compliance processes. The solution enables a firm to manage anti-bribery and corruption programs including monitoring and enforcing policy through workflow management; screening and tracking of high-risk entities and relationships; reporting and communicating compliance issues; and ensuring a state of readiness for inspections and audits.”

Next.

“The US FCPA and UK Bribery Act are far-reaching acts; they reach deep into the organization, leaving almost no part of the business untouched. The acts are taken very seriously both by governments, as well as by the general public. There is little empathy to bribes in the general public. This makes non-compliance, more than many other acts, a reputational risk in itself.”

So writes BWise in a recent white paper titled “US FCPA and UK Bribery Act.”

The solution, why of course The BWise GRC [Governance, Risk and Compliance] Platform “with a best-in-class method to address corruption and bribery, and achieve company-wide compliance and transparency.” (See here).

Next.

Another entrant into the FCPA insurance market (see here and here for previous posts).

Navigators recently announced (here) that “its Navigators Pro division has introduced “Side A Global InNAVation,” a directors and officers (D&O) liability policy to address emerging global risks. This new policy offers dedicated excess coverage for individual directors and officers for specific non-indemnifiable claims, including where the company they serve is insolvent. The policy provides coverage for civil fines and penalties, where insurable by law, when they are assessed pursuant to Section 308 of the Sarbanes Oxley Act of 2002, the Foreign Corrupt Practices Act, the U.K. Bribery Act or similar laws.”

Finally, an informative white paper (here) by FTI Consulting Technology titled “E-Discovery Strategies for International Anti-Bribery Investigations.”  The paper discusses the “complexity of issues that may arise during an international anti-bribery investigation” such as data privacy laws, blocking statutes, secrecy laws and ill-defined privilege rules” that are a “common feature of an FCPA investigation.”  And by the way “FTI Technology helps clients manage the risk and complexity of e-discovery” and collaborates with clients to develop and implement defensible e-discovery strategies with keen focus on the productivity of document review.”

It truly is an FCPA world.

The Lacey Act Meets the FCPA

The Lacey Act prohibits trafficking in wildlife and plant products in violation of foreign law.

Arnold & Porter attorneys Marcus Asner, Samuel Witten, and Jacklyn DeMar write in “The Foreign Corrupt Practices Act and Overseas Environmental Crimes: How Did We Get Here and What Happens Next?” (Bloomberg Law – see here) as follows.

“Environmental regulation by any country creates a series of touch points between the private sector and government authorities, any one of which may provide an opportunity and a temptation for an unscrupulous employee or agent of a company to seek to corruptly influence a government official. Opportunities for corruption occur, for example, from the moment officials decide how to regulate local natural resources through laws and regulations; how and when they decide who may harvest resources and in what amounts; how permit requests are reviewed; and how local laws are actually enforced in practice. Each point of contact creates an opportunity for offering or making bribes or otherwise seeking improper influence.”

The authors further state as follows.  “Though there is no explicit statutory link between the Lacey Act and the FCPA, the possibilities are endless: Potential bribe takers in forestry and fishery schemes could run the gamut from the police, to forestry and fishery officials, to guards, to regulators, to customs and export officials, and even to officials at state-owned companies. All of these are government officials within the meaning of the Foreign Corrupt Practices Act. While there has been no public case charging both Lacey Act and FCPA violations thus far, we believe such investigations may well be just around the corner, and, in any event, responsible companies should do what it takes to protect themselves from the risks.”

Haiti Teleco Roundup

This recent post summarizing the expansive Haiti Teleco related enforcement actions has been updated to reflect Patrick Jospeh’s recent 366 day sentence.  Joseph, an alleged “foreign official” at Haiti Teleco previously pleaded guilty to money laundering conspiracy in connection with the bribery scheme.  As noted in this recent Wall Street Journal Corruption Currents post by Chris Matthews, Joseph was also ordered to forfeit nearly $1 million.

FCPA Monitor

Rajat Soni recently launched FCPA Monitor (here).  FCPA Monitor examines news and cases about the Foreign Corrupt Practices Act and the UK Bribery Act of 2010.  Soni is an attorney with several years of experience conducting global internal investigations related to the FCPA.  He has worked on large FCPA investigations including those arising from the UN Oil-for-Food Program and Siemens AG.

*****

A good weekend to all.

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