Ng Files Motion To Dismiss
As highlighted in this prior post, in November 2018 the DOJ criminally charged former Goldman Sachs executives Tim Leissner and Ng Chong Hwa (Roger Ng) (along with Low Taek Jho – Jho Low) with Foreign Corrupt Practices Act offenses for paying bribes to various Malaysian and Abu Dhabi officials in connection with 1Malaysia Development Berhad (1MDB), Malaysia’s state-owned and state-controlled investment development company.
Leissner pleaded guilty and in October Goldman Sachs resolved a net $1.66 billion FCPA enforcement action based on the same conduct. (See additional posts here and here).
Ng is mounting a defense and recently filed this motion to dismiss (an entire section of which is redacted). As highlighted below, Ng argues that the DOJ’s case against him suffers from several factual errors and legal deficiencies. Ng also suggests that the DOJ scripted Leissner’s guilty plea and that Goldman’s DPA was entered into for reasons of risk aversion and otherwise compromises his ability to defend himself.
SEC Commissioners Peirce And Roisman Hit Internal Controls Home Run
For years, these pages have highlighted off-the-rails enforcement of the Foreign Corrupt Practices Act’s books and records and internal controls provisions (see here, here, here, here, here, here, here and here among other posts).
Among other things, the prior posts have discussed FCPA legislative history, the FCPA’s statutory text, SEC v. World-Wide Coin Investments (believed to be the only judicial decision to directly address the substance of the books and records and internal controls provisions) and prior FCPA enforcement agency guidance – all in an effort to highlight the difficulty of reconciling existing legal authority and even enforcement agency guidance with certain FCPA books and records and internal controls enforcement theories in recent years.
Last week, SEC Commissioners Hester Peirce and Elad Roisman issued this statement to explain why they voted against the SEC’s recent settled action against Andeavor LLC (see here in which the company agreed to pay $20 million). As highlighted below, Commissioners Peirce and Roisman discussed the same concepts and cited the same authority which have been highlighted on these pages for years and in the process hit an internal controls home run.
The FCPA Doesn’t Answer Many Of The Questions Compliance Professionals Have
Naturally, and understandably, those tasked with Foreign Corrupt Practices Act compliance within a business organization want clear answers to many questions.
However, the FCPA rarely provides clear answers and this is particularly true with the internal controls provisions.
The provisions are not rule-based, but principle-based in the sense that the key statutory language is that issuers shall “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances” certain financial objectives are met. The FCPA then defines “reasonable assurances” to mean “such level of detail and degree of assurance as would satisfy prudent officials in the conduct of their own affairs.”
Goldman – What Should Happen When Compliance Is Decent (And Often Good), But Not Great?
The recent Foreign Corrupt Practices Act enforcement action against Goldman Sachs was the largest in FCPA history in terms of actual settlement amount ($1.66 billion).
Yes, the conduct at issue involved large bribe payments (according to the DOJ approximately $1.6 billion). Yes, the conduct at issue resulted in (according to the DOJ) Goldman obtaining “in excess of $600 million in fees and revenue across its divisions, and increased Goldman’s stature in SE Asia.” Yes, the conduct of the culpable Goldman employees criminally charged (Tim Leissner and Roger Ng) was egregious.
Viewed through the strict lens of respondeant superior, perhaps the record-setting FCPA enforcement action was justified. In this regard, the Goldman press release nicely stated in plain English: “We all share in the benefits when our colleagues perform well for our clients. The opposite must be true as well. When a colleague knowingly violates a firm policy, or much worse, the law, we – as a firm – have to accept responsibility and recognize the broader failure that individual behavior represents for our firm.”
However, based on the DOJ’s (and SEC’s) allegations, the Goldman enforcement action was much different than certain other top ten FCPA enforcement actions.
DOJ / SEC Announce Net $1.66 Billion (The Largest Of All-Time) FCPA Enforcement Action Against Goldman Sachs In Connection With 1MDB Fund
As highlighted in this prior post, in November 2018 the DOJ announced criminal charges against former Goldman Sachs employees Roger Ng and Tim Leissner, and Low Taek Jho (Jho Low – an individual “known to be close to various high-ranking officials in Malaysia and Abu Dhabi” who “worked as an intermediary in related to 1MDB and other foreign government officials on numerous financial transactions and projects involving Goldman and others) for paying bribes to various Malaysian and Abu Dhabi officials in connection with 1Malaysia Development Berhad (1MDB), Malaysia’s state-owned and state-controlled investment development company.
This prior post asked: what does this mean for Goldman Sachs?
We now know the answer as the DOJ and SEC announced (here and here) a net $1.66 billion FCPA enforcement action against Goldman Sachs and a related entity. This represents the largest FCPA enforcement action of all-time (see here for the prior top ten list).