Coverage From The Conference Circuit
The end of June was a busy time on the FCPA conference circuit with events taking place around the world.
Wrage Blog (see here) has a summary of certain events, including comments by Hank Walther, the Assistant Chief DOJ Fraud Section, at an event hosted by Ethical Corporation (see here).
As noted in the post, with official FCPA guidance “pretty sparse,” reading the “tea leaves” from comments made by government enforcement attorneys at conferences “become more important.” It all seems like a rather odd way for a law to develop and for enforcement theories and priorities to be disclosed, but such is the current state of affairs.
Among the “tea leaves” discussed in the Wrage Blog post:
“The ‘Siemens Phenomena’ is here to stay. That is, the DOJ will continue to pursue large cases where the alleged misconduct spans multiple continents. [Walther] noted that the Siemens case, with its billion-dollar-plus settlement, was not an outlier. [Walther] pointed to other recent eye-catching settlements: BAE ($400 million), Daimler ($93 million criminal penalty) and KBR ($402 million).”
[Comment: why does the DOJ continue to trumpet the BAE case as an FCPA case when it (or others in government) did not have the gumption to actually charge BAE with FCPA violations despite allegations which seem to support such a charge?]
“…the DOJ’s interest in pursuing marquee names does not mean private companies are off the hook. Per [Walther], the DOJ still likes the smaller cases. Although the public company prosecutions grab the headlines, [Walther] was quick to note that more private companies have been prosecuted under the FCPA than public companies.”
“Individuals remain squarely in the DOJ’s cross hairs. [Walther] pointed out that, even as recently as four or five years ago, the DOJ rarely charged individuals with FCPA violations. What has changed? First, an apparent public policy shift at the DOJ has occurred. The DOJ has come to realize that ‘it can’t build an enforcement regime on criminal fines alone.’ That is, if bribery convictions only impact corporate coffers, then paying bribes just becomes a cost of doing business. If, instead, the specter of jail time is factored into the cost-benefit analysis, then the calculus changes dramatically. Second, the DOJ has become more adept at gathering evidence in FCPA cases.”
For additional coverage on the DOJ’s focus on individuals, see this article from Aruna Viswanatha at Main Justice. Of particular interest, the Main Justice article quotes Walther as saying that “a fine-only enforcement policy allows companies to calculate such settlements as the cost of doing business.”
That fine-only FCPA enforcement actions (particularly those that leave the company in a “net positive” position after the improper payments) and FCPA enforcement actions that allow the company to escape the “most fitting” charges and penalties do not deter is precisely one of the points I made in these prior posts (see here and here) challenging Mark Mendelsohn and William Jacobson’s (both former DOJ FCPA enforcement attorneys) defense of the Siemens enforcement action.
For coverage of another recent event (The Marcus Evans 4th FCPA & Anti-Corruption Compliance Conference) see this piece from Joe Palazzolo at Main Justice regarding how the FBI anti-corruption unit is expanding and being more aggressive.
Breuer – Siemens Investigation (As to Individuals) Remains Open
Last week, Lanny Breuer (Assistant Attorney General – Criminal Division) testified before The Criminal Law Subcommittee of the Senate Judiciary Committee. During his Q&A exchange with Senator Arlen Specter, Breuer stated that “individuals, executives and others who were involved [in the Siemens bribery scandal], remain exposed and the matter is not closed.”
Why was Specter asking Breuer about the Siemens enforcement action?
A bit of background.
In December 2008, right in time for the holidays, the DOJ put a nice “bribery, yet no bribery” bow on the Siemens enforcement action.
According to the DOJ, for much of Siemens operations around the world “bribery was nothing less than standard operating procedure.” The egregious nature of Siemens conduct is set forth in the criminal information (see here).
Among other allegations, the information details how Siemens paid out, through various mechanisms, $805.5 million in “corrupt payments to foreign officials” including: (i) payments made by various subsidiaries, including those with offices in the U.S., to “purported business consultants, knowing that at least some or all of those funds would be passed along to foreign government officials;” (ii) money withdraw from “cash desks within Siemens’ offices” for “corrupt payments;” and (iii) “slush funds to generate cash for corrupt payments.”
As to the amount of business Siemens obtained or retained through these corrupt payments, the DOJ’s sentencing memorandum (see here) states that calculating a traditional loss figure under the Sentencing Guidelines “would be overly burdensome, if not impossible” given the “literally thousands of contracts over many years.”
Yet, Siemens was not charged with violating the FCPA’s anti-bribery provisions.
That would have hurt too much, a point made in the DOJ’s sentencing memorandum which notes that a key factor the DOJ considered in resolving the case against Siemens in the way it did was the “collateral consequences” that could have resulted from criminal antibribery charges including the “risk of debarment and exclusion from government contracts.”
All of this troubled Senator Specter who has “long been concerned about the acceptance of fines instead of jail sentences in egregious cases.” (see here). In a release, Senator Specter notes that “there are many illustrative cases but three will suffice to make the point. In each of these cases, I registered my complaint with the Department of Justice.”
One such case was the Siemens enforcement action.
As Senator Specter’s release notes:
“On December 15, 2008, Siemens AG entered guilty pleas to violations of the Foreign Corrupt Practices Act and agreed to pay $1.6 billion in fines, penalties and disgorgements with no jail sentences. Again, that amounts to a calculation as part of the cost of doing business for a company which had revenues of $104 billion and a net income of $2.5 billion in fiscal year 2008 after the penalty.”
Thus, the reason Senator Specter questioned Breuer about the Siemens enforcement action during last week’s hearing.
Set forth below is the exchange.
*****
SPECTER: Are you familiar with the Siemens prosecution, Mr. Breuer?
BREUER: I am, Senator, to a degree, I am familiar with the Siemens prosecution.
SPECTER: Well, that’s a — that’s a case where Siemens, according to the information provided to me, agreed to pay a total criminal fine of $450 million and a disgorgement of $350 million in profits. And nobody went to jail. Siemens’ income, according to the information I have, was $104 billion, and income in excess or approximately $2.5 billion in fiscal year 2008. Did that conviction arise during the course of the current administration?
BREUER: It did, Senator. It was in — it did, Mr. Chairman. It was an ongoing investigation. And you’re right. Let me just add a little to what you say. First, Siemens, its total monetary penalties were actually $1.6 billion. That would include both from the U.S. and in Germany. The company was incredibly cooperative and very, very — very, very helpful in the information it provided over an extensive period. In making Siemens’ plea, we made it as an absolute explicit provision that there was absolutely no protection for any of the individuals of Siemens, and therefore the individuals, executives and others who were involved, remain exposed and the matter is not closed. The matter — simply all that we have done is have a plea against the corporation, we have not closed out nor have we claimed to have closed out investigations with respect to individuals. They’re ongoing. And, Mr. Chairman, I agree with you, I think the hallmark of an effective criminal justice plan must be that we will prosecute individuals when appropriate and ongoing. And I should say in that vein, Mr. Chairman, just two weeks ago we received the longest sentence in an FCPA case in the history of the FCPA when we attained an 87-month sentence against a fellow who had violated and was convicted of the FCPA. So we will continue to pursue that.
SPECTER: Well, you are saying that even though the case was concluded against the corporation that the matter is ongoing as to the individuals. Ordinarily a case is wrapped up once and for all and that before a corporation will pay a fine they want to know that that’s the limit of their liability.
BREUER: Right.
SPECTER: And there’s obviously a motivation to not have a jail sentence, for the corporation to pay a fine. And this morning we heard very extensive testimony — not that it was surprising — that fines are added into the cost of doing business. One testimony related to one defendant who paid $50 million and said if it had been a criminal prosecution he would have fought it to the teeth — tooth and nail. But you are saying that you’re really going to go after some people in this Siemens matter?
BREUER: Well, Mr. Chairman, what I’m saying is that I don’t want to say whether we are or not, for the reasons that I know you understand well. But I will say is the following. We’re not willing — and you’re absolutely right. Corporations do want to settle these cases. They do want to pay money, and they do want the assurance that the matters will be closed against the individuals of their company. We’re not — we’re not going to — we didn’t allow that to happen in that case, and we won’t let it happen, for the reasons you said. Now, in the Siemens case, I do want companies to feel an enormous incentive to come in and to disclose. And in Siemens, they did come in — they did come in. They did disclose. And they provided us with an enormous amount of information. And so there was a real judgment that there was a real merit to having closure with respect to that and for the company to be rewarded for providing us with almost unparalleled cooperation.
SPECTER: Did you (inaudible) the prosecution before they made the disclosures?
BREUER: I don’t think so, in that case. I think, Senator, I’ll have to go back. That’s a good question. So my — my colleague is right. In this case, of course, one of the challenges that I was going to go into is, in this particular case, the prosecution began in Germany. And then we, of course, as we try now, more and more, to deal with the challenges we have, are working closely with our international colleagues and partners. That was the case where it began with the German prosecutors. And, of course, many of the individuals involved are in Europe. But there — nonetheless, it began in Germany. The company — we reached out, I believe. The company provided us with an enormous amount of information.
SPECTER: Mr. Breuer, what I’m getting at is, did they provide you with information after you already had the case?
BREUER: No. I mean, Mr. Chairman, in a case like this, these are very complicated cases. And this, of course, was a massive example of — of violations of the FCPA in different countries. And so, there, there’s no question that the law firm providing us, and Siemens providing us with information, were able to provide us with information that we would not have had but for them giving us the information. It was all over the world. Frankly, we would not have had the resources to have investigated to the degree that the company provided us the information. And so they did get a benefit for that. The benefit they got was certainty in their — in the resolution of the corporate deal. What they did not get was closure for the individuals.
*****
As the above exchange demonstrates, Senator Specter also seems troubled that Siemens received cooperation credit even though the credit came after the company was busted.
The DOJ’s release (see here) states:
“The resolution of the U.S. criminal investigation of Siemens AG and its subsidiaries reflects, in large part, the actions of Siemens AG and its audit committee in disclosing potential FCPA violations to the Department after the Munich Public Prosecutor’s Office initiated searches of multiple Siemens AG offices and homes of Siemens AG employees.” (emphasis added).
If Senator Specter is troubled by this aspect of the Siemens enforcement action, he may want to take a close look at the Daimler enforcement action as well.
Daimler, like Siemens, was another “bribery, yet no bribery” case as to the parent entity that orchestrated the bribery scheme (per the DOJ’s own allegations). However, unlike Siemens, Daimler was not required to plead guilty to anything – it received a deferred prosecution agreement.
In arriving at a fine amount, Daimler, like Siemens, also received cooperation credit.
The DOJ’s sentencing memorandum (see here) notes that Daimler received a sentencing credit (a credit which reduces the overall fine amount) because the “organization fully cooperated in the investigation and clearly demonstrated recognition and affirmative acceptance of responsibility for its criminal conduct.”
This despite the fact that elsewhere in the sentencing memo the DOJ notes that the entire investigation started in March 2004 when a “former Daimler employee filed a whistleblower complaint with the U.S. Department of Labor Occupational Safety & Health Administration … allege[ing] that he was terminated for voicing concerns about Daimler’s practice of maintaining secret accounts, including accounts in its own books and records, for the purpose of bribing foreign government officials.”
In other words, even though the Daimler enforcement action was hatched by an internal whistleblower, the company still received a sentencing credit for cooperating in the eventual investigation.
The sentencing range set forth in the DOJ memo is $116 – $232 million.
The ultimate $93.6 million DOJ penalty was 20% below the bottom fine range of $116 million.
DOJ justified this reduction by stating that such a “reduction is appropriate given the nature and extent of Daimler’s cooperation in this matter, including sharing information with the Department regarding evidence obtained as a result of Daimler’s extensive investigation of corrupt payments around the world.”
The DOJ further stated, “indeed, because Daimler did not voluntarily disclose its conduct prior to the filing of the whistleblower lawsuit, it only receives a two-point reduction in its culpability.” However, in a rather odd statement, DOJ then said that it “respectfully submits that such reduction is incongruent with the level of cooperation and assistance provided by the company in the Department’s investigation.”
In other words, Daimler, like Siemens, received cooperation credit even though disclosure of the conduct at issue was involuntarily. Also, the DOJ gave Daimler cooperation credit greater than that allowed under the guidelines.
In conclusion, the DOJ noted that the disposition “promotes respect for the law, provides just punishment, and affords adequate deterrence to criminal conduct for Daimler and the marketplace generally.”
*****
Mr. Breuer had a busy week last week (see here for a prior post). During his Council of Foreign Relations speech, Breuer was asked about some of the DOJ’s “old cases.” See here for the Main Justice story and his response.
As We Say, Not Necessarily As We Do
Yesterday Lanny Breuer (Assistant Attorney General – Criminal Division) spoke before the Council on Foreign Relations. The title of his speech (see here) was “International Criminal Law Enforcement: Rule of Law, Anti-Corruption and Beyond.”
Breuer begins, “I am pleased to be able to share with you today how the Criminal Division seeks to promote the Rule of Law in our increasingly global society.” Breuer notes that “perhaps in no area has the Criminal Division’s” approach “had more dramatic results for the international Rule of Law than in that of corruption.”
Breuer then sketches a brief history of the FCPA and notes that “when the U.S. enacted the [FCPA] in 1977, and as recently as the 1990’s, some developed countries continued to argue that a certain amount of corruption might be desirable in developing nations; and it has been only in the last decade that some developed countries have eliminated tax deductions for foreign corrupt practices.”
On this point, I fully agree that the DOJ is the undeniable leader in prosecuting bribery and corruption, and for this, it deserves credit.
Breuer then “spreads the FCPA gospel” (as Christopher Matthews at Main Justice recently termed it – see here).
Verses included: the “increased emphasis on charging individuals is part of a deliberate enforcement strategy to deter and prevent corrupt practices in the future;” “gone are the days when we relied solely on tips from whistle-blowers to build cases – instead we are now bringing the tools of organized crime investigations to white collar investigations.”
The speech ends – “I would welcome any questions you might have.”
I’ve got some questions.
During Breuer’s tenure, two signature enforcement actions were the BAE and Daimler bribery, yet no bribery enforcement actions (see here and here for prior posts).
In both actions, the DOJ alleged facts sufficient to charge the companies with FCPA anti-bribery violations. Yet in both cases, no anti-bribery violations were charged.
Included in the Rule of Law is the notion that the law is to be applied equally to all subject to the law. Under the Rule of Law, certain companies in certain industries who may sell certain products to certain customers are not immune from the law.
Yet, in the eyes of many, the BAE and Daimler enforcement actions stand for the proposition that certain companies are indeed “above” the FCPA and essentially immune from FCPA anti-bribery charges.
So, my questions are:
How was the Rule of Law advanced in the BAE and Daimler enforcement actions?
How was the Rule of Law advanced when a company (BAE) that “provided support services to [a Saudi official] while in the territory of the U.S.” including “ the purchase of travel and accommodations, security services, real estate, automobiles and personal items” (these are the DOJ’s words) is not charged with FCPA anti-violations? [Particularly when the DOJ alleges that over $5 million in invoices for benefits provided to the Saudi official were submitted by just one BAE employee during a one year period.]
How was the Rule of Law advanced when a company (Daimler) that “engaged in a long-standing practice of paying bribes to ‘foreign officials'” (these are the DOJ’s words) is not required to plead guilty to anything?
As noted above, the DOJ is the undeniable leader in prosecuting bribery and corruption, and for this, it deserves credit. However, with leadership comes responsibility and accountability.
When preaching, the preacher is subject to criticism, particularly when urging his parishioners to do as he says, not necessarily as he does.
The DOJ did some FCPA / Rule of Law preaching yesterday.
For extolling the virtues of the Rule of Law in the face of several recent high-profile examples where Rule of Law principles were seemingly ignored, the DOJ has set itself up for criticism.
Kyrgyzstan, Thailand, Tobacco, and Piranha Fishing
The SEC announced today (see here) an FCPA enforcement action involving “multiple payments of bribes to foreign officials in Kyrgyzstan and Thailand by senior executives and employees of Dimon, Inc. (“Dimon”) and Standard Commercial Corporation (“Standard”), predecessor companies of Alliance One International, Inc. (“Alliance One”), during the period from 1996 through 2004 in violation of the Foreign Corrupt Practices Act…”
In 2005, Dimon and Standard merged to form Alliance One (see here) and its stock is listed on the New York Stock Exchange.
Kyrgyzstan
According to the SEC complaint (see here), “from 1996 through 2004, Dimon International Kyrgyzstan (“DIK”), a wholly-owned subsidiary of Dimon, paid more than $3 million in bribes to Kyrgyzstan government officials in order to purchase Kyrgyz tobacco for resale to Dimon’s largest customers.”
The complaint alleges that “these payments were made to various government officials, including officials of the JSC GAK Kyrgyztamekisi (“Tamekisi”) [an entity established by the Kyrgyz government that had authority to issue and control licenses for the fermentation and export of tobacco] and local public official (“Akims”)” and “DIK also made improper payments to Kyrgyzstan tax officials.”
According to the compliant: (i) defendant Bobby Elkin Jr., Dimon’s country manager, “authorized, directed, and made these bribes in Kyrgyzstan through a DIK bank account under his name (the “Special Account);” (ii) defendant Baxter Myers, Dimon’s Regional Financial Director, “authorized all fund transfers from a Dimon subsidiary’s bank account to the Special Account;” and (iii) defendant Thomas Reynolds, Dimon’s International Controller, “formalized the accounting methodology used to record the payments made from the Special Account for purposes of internal reporting by Dimon.”
The complaint alleges that in September 1996 “the Kyrgyzstan government imposed a requirement that all exporters of fermented tobacco have an export license,” and that “Tamekisi acted as the issuing authorize and controlled the issuance of export licenses, thus effectively controlling all tobacco purchases in Kyrgyzstan.”
According to the complaint, Elkin “periodically delivered bags filled with $100 bills to a high-ranking Tamekisi official” and that from 1996 to 2004, Elkin, on behalf of Dimon, “paid more than $2.6 million to a high-ranking Tamekisi official…” The complaint also alleges that Elkin “also paid bribes to local government officials in Kyrgyzstan known as the Akims, who controlled the tobacco regions.” The complaint says that “DIK needed the support and consent from each local Akim in order to continue to purchase tobacco from local growers or agricultural collectives” and that “as governors, Akims had the power and influence to prevent the purchase of tobacco in the region, even if a company had an export license.” The complaint also states that “Akims could also send the police to block the entrance to buying stations or install a lock box to prevent the transfer of tobacco.” According to the complaint, “Elkin authorized and paid more than $260,000 to the Akims…”
Finally (at least as to Kyrgyzstan), the complaint details how DIK was “frequently subjected to audits by Kyrgyz tax officials” and that “during one audit, the tax officials determined that DIK failed to submit two reports to the tax office.” Accordingly, the complaint states that the tax officials imposed an approximate $172,000 fine against DIK and the “tax authorities also threatened to seize DIK’s bank accounts and tobacco inventory for tax violations.” However, according to the complaint, “the tax authorities later offered to reduce the tax penalties levied against DIK in exchange for a cash payment.” The complaint then alleges that Elkin “made a cash payment to the tax authorities” and that from 1996 through 2004 Elkin, on behalf of Dimon, “paid approximately $82,850 to Kyrgyz tax officials.”
According to the complaint, although the Special Account used to make the above-described payments “was funded by a Dimon subsidiary in the United Kingdom, the financial reporting on the Special Account by that subsidiary, and all other consolidated subsidiaries, went directly to Dimon’s corporate headquarters in the United States…”
Thailand
The complaint also alleges that “from 2000 to 2003, Dimon paid bribes of approximately $542,590 to government officials of the Thailand Tobacco Monopoly (“TPM”) in exchange for obtaining approximately $9.4 million in sales contracts.” According to the complaint, defendant Tommy Williams, Dimon’s Senior Vice President of Sales, “directed the sales of tobacco from Brazil and Malawi to the TTM through Dimon’s agent in Thailand” and that he “authorized the payment of bribes to TTM officials and characterized the payments as commissions paid to Dimon’s agent in Thailand.”
The complaint alleges that a “portion of Dimon’s selling price to the TTM” included “kickbacks paid as commissions through Dimon’s agent to certain members of the TTM in exchange for the sales contracts.” The complaint alleges that these bribes to the TTM were authorized “by Dimon’s U.S. and Brazilian personnel,” in particular Williams.
The complaint also alleges that “Williams also knew about a purported business trip to Brazil that actually was a sightseeing trip arranged by Dimon and others for TTM officials.” According to the complaint, the “sightseeing trip occurred in May 2000 and included, among other things, trekking in the Amazon jungle, piranha fishing, and visits to Argentina and various Brazilian waterfalls.” The complaint also alleges that in 2002 Williams arranged a trip for a TTM delegation to travel from Bangkok to Brazil “purportedly to look at tobacco blends and samples.” According to the complaint, “the return portion of the TTM delegation’s trip included a one-week stay in Madrid and Rome that was unrelated to the inspection and purchase of tobacco by the TTM.”
Based on the above conduct, the SEC charged Elkin, Myers, Reynolds, and Williams for violating the SEC’s antibribery provisions and for aiding and abetting violations of the FCPA’s internal controls and books and records provisions.
According to the SEC release, “without admitting or denying the allegations” in the complaint, Elkin, Myers, Reynolds, and Williams consented to the entry of final judgments permanently enjoining violations of the FCPA. Myers and Reynolds also agreed to pay a civil monetary penalty of $40,000 each.
The SEC release notes that the settlement with Elkin “takes into account his cooperation” with the SEC’s investigation and “acknowledges of the assistance” of the DOJ and the FBI.
*****
This is the second SEC FCPA enforcement action of the year which seems, according to the facts, to be based, in whole or in part, on extortion or something close to it. For a previous post on the NATCO enforcement action (see here). In addition, earlier this week I had a post “Facilitating Payments or Bribes” (see here). The Kyrgyzstan facts would seem relevant to that issue.
The FCPA, as part of the securities laws, has a statute of limitations of five years. The conduct at issue occured between 1996 and 2004. Perhaps there was a tolling agreement in place or perhaps this is another example where it is difficult to square black-letter law concepts with an FCPA enforcement action.
Step Up to the Podium Friday
Today’s post includes FCPA excerpts from various speeches/comments made by enforcement officials over the past couple of days.
Stepping to the podium will be Assistant Attorney General Lanny Breuer; Mark Mendelsohn – Deputy Chief of the DOJ Fraud Section; and Cheryl Scarboro – the head of the SEC’s newly formed FCPA unit.
Lanny Breuer
Breuer spoke at the ABA National Institute on White Collar Crime in Miami. See here for his comments.
As to the FCPA, here is what Breuer had to say.
“… As I’m sure many of you are aware, in a recent FCPA investigation, the Criminal Division’s Fraud Section used undercover law enforcement techniques to uncover what we allege to be widespread fraud and corruption. As a result, 22 executives and employees of companies in the military and law enforcement products industry were indicted for their involvement in schemes to bribe foreign government officials. This investigation involved the most expansive use ever of undercover techniques to uncover FCPA violations.”
Note – per the DOJ, there was no actual involvement by any real “foreign government official.” This dynamic raises some legal issues – see here.
Back to Breuer’s comments.
“Let me say a few more words about our very robust FCPA program, because it, in many ways, typifies how we are approaching crime in corporate America.”
“The FCPA investigation I just referenced is the largest single prosecution of individuals in the history of DOJ’s enforcement of the FCPA. It thus vividly illustrates one cornerstone of our FCPA enforcement policy: the aggressive prosecution of individuals. Put simply, the prospect of significant prison sentences for individuals should make clear to every corporate executive, every board member, and every sales agent that we will seek to hold you personally accountable for FCPA violations. As we focus on the prosecution of individuals, we will not shy away from tough prosecutions, and we will not shy away from trials. We are ready, willing, and able to try FCPA cases in any district in the country—as we demonstrated with our three FCPA trial victories just last year.”
Note – In one of the trials, William Jefferson was acquitted of FCPA substantive charges. He was convicted of, among things, conspiracy, a verdict that may or may not have, included conspiracy to violate the FCPA. See here. In another trial, Frederic Bourke was convicted of conspiracy to violate the FCPA. He was sentenced to 366 days in prison. At sentencing, Judge Shira Scheindin said – “After years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crook or a little bit of both.” See here.
Back to Breuer’s comments.
“To be sure, we are not focusing on individuals to the exclusion of corporations. We will continue to insist on corporate guilty pleas or to bring criminal charges against corporations in appropriate cases – when the criminal conduct is egregious, pervasive and systemic, or when the corporation fails to implement compliance reforms, changes to its corporate culture, and undertake other measures designed to prevent a recurrence of the criminal conduct. We will continue to insist on appropriately stiff corporate fines, applying a consistent, principled approach that considers the facts and circumstances within the Department’s established framework and that is guided by the Sentencing Guidelines in arriving at an appropriate sanction.”
“I also want to assure you that the Department’s commitment to meaningfully reward voluntary disclosures and full and complete corporate cooperation will continue to be honored in both letter and spirit. I know that many of you often grapple with the difficult question of whether to advise your client to make a voluntary disclosure. I strongly urge any corporation that discovers an FCPA violation – or any other criminal violation, for that matter – to seriously consider making a voluntary disclosure and to cooperate with the Department. The Sentencing Guidelines and the Principles of Federal Prosecution of Business Organizations obviously encourage such conduct, and your clients will receive meaningful credit for that disclosure and cooperation.”
Mark Mendelsohn
Mendelsohn recently spoke at the Dow Jones Global Ethics Summit in New York City. DOJ has not released a transcript of his remarks, but a collection of media sources covered his comments.
As to the Africa Sting case, Main Justice reports the following from Mendelsohn:
That the government is “in a strong position because of the massive volumes of information it has collected. “That should give you an idea of the strength of our case,” he said. Specifically, Mendelsohn said that a simple meeting in a New York hotel to discuss a bribery scheme would fall under the FCPA, even if the rest of the scheme took place entirely outside the U.S. Money and, potentially, e-mails, electronically transferred through the U.S. could bring a bribery scheme under the jurisdiction of the FCPA, he said.”
Cheryl Scarboro
Scarboro, an SEC veteran, was recently appointed to lead the SEC’s new FCPA unit (see here). Jesse Sunenblick at Main Justice recently sat down with Scarboro for a Q&A (see here).
As to the new FCPA unit Scarboro said:
“… [T]he new unit will give us the resources and the ability to do even more going forward. People on the ground will be focusing exclusively [on FCPA investigations], making them smarter about industry practices problem areas. We will be able to leverage resources and leads we get from others. There are ongoing investigations exactly like oil for food: not just concerning one company, but looking beyond into widespread practice in particular areas. I would expect filed cases in the short term, in a matter of months. These cases will be an illustration of what we’ve already been doing. But the new unit will allow us to do even more of it. We have areas and industries we are focusing on—pharmaceutical is one.”