Interesting, more charges, sentenced, Telia-related, scrutiny alert, ISO-37001 related, across the pond, so true, odd, it can work, and for the reading stack. It’s all here in the Friday roundup.
Interesting
According to this Global Investigations Review report based on documents received through the FOIA process, the DOJ approved $711,800 to spend on Hui Chen’s former compliance consultant position over two years. According to the report, Chen’s salary at the DOJ was greater than the DOJ criminal division chief, the deputy attorney general and the attorney general.
More Charges
This recent post highlighted the DOJ’s criminal charges against Joseph Baptiste “for his alleged role in a foreign bribery and money laundering scheme in connection with a planned $84 million port development project in Haiti.” As it often does when it appears that a criminal defendant is going to put the DOJ to its burden of proof, the DOJ piled on charges and recently filed this indictment adding Travel Act and money laundering cases against Baptiste.
Sentenced
Harris
As highlighted in this previous post, in January 2017 the DOJ announced an unusual individual FCPA enforcement action concerning a commercial building in Vietnam. What made the action unusual was that the alleged bribery scheme was unsuccessful and the third party intended to facilitate the bribery scheme simply pocketed the money for himself. That individual – Malcom Harris – was criminally charged (not with FCPA offenses) but with one count of wire fraud, one count of conducting monetary transactions in illegal funds and aggravated identity theft.
As highlighted here, in June 2017 Harris pleaded guilty and earlier this week the DOJ announced that Harris was sentenced to 42 months in prison.
Pierucci
As highlighted in this prior post, in April 2013 Frederic Pierucci (a French national) was among a group of current or former Alstom executives criminally charged in connection with an alleged bribery scheme in Indonesia. As highlighted here, in August 2013 Pierucci pleaded guilty to one count of conspiring to violate the FCPA and one count of violating the FCPA. Recently, Pierucci was sentenced to 30 months in federal prison and ordered to pay a $20,000 fine. The sentencing judge credited 14 months for time Pierucci has already being detained.
Richers
As highlighted in this prior post, in July 2011 Amadeus Richers (a former director of Cinergy) was criminally charged 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 actions. For years, Richers was a fugitive until his arrest and ultimate extradition from Panama earlier this year at which time he pleaded guilty. (See here). Recently, Richers was sentenced to time served and three years of supervised release.
If you are trying to figure out how an FCPA defendant who evaded the law for years and pleaded guilty only after his capture was sentenced to less time than numerous other FCPA defendants, well that is an informed thought. See here for the prior post titled “The Randomness of FCPA Sentences.”
Former Telia Execs Charged in Sweden
As highlighted in this report, a day after the Telia enforcement action (see here and here for prior posts)
“Swedish prosecutors have charged three former executives from theTelia Company with corruption a day after the telecom giant agreed to pay nearly $1 billion in penalties to help settle a years-long corruption probe involving bribes paid in Uzbekistan.
The Swedish Prosecution Authority said on September 22 that former chief executive Lars Nyberg and two other codefendants are suspected of paying large sums of money to Takilant, a Gibraltar-based company associated with Gulnara Karimova, one of the daughters of Uzbekistan’s late authoritarian leader, in return for a mobile-phone license.”
Scrutiny Alert
As noted in this recent Wall Street Journal article:
“Federal securities regulators are investigating an allegation by PepsiCo Inc. former top lawyer that the company fired her in retaliation for the way she handled an internal probe into potential wrongdoing in Russia, according to people familiar with the matter and internal documents.
Maura Smith, who was PepsiCo’s general counsel from May 2011 to June 2012, oversaw outside lawyers hired by the company to dig into business practices at Wimm-Bill-Dann, a big Russian maker of dairy products and juices that PepsiCo spent about $5 billion to acquire in 2011, the documents show.”
The article also states:
“PepsiCo engaged law firm Gibson, Dunn & Crutcher LLP to “tip over every rock” at Wimm-Bill-Dann, one of the people said. The investigation unearthed evidence of theft, improper land deals and millions of dollars in questionable consulting contracts and gratuities, including a company-owned Audi A8 sedan that was provided to a regional governor of Russia to use for free, according to internal documents. These practices had started when Wimm-Bill-Dann was an independent company, and some had continued after the PepsiCo takeover.
Gibson Dunn concluded that the car and the consulting contracts “likely constitute potential violations” of accounting provisions of the Foreign Corrupt Practices Act, a law that bars U.S.-listed companies from paying bribes to foreign officials and requires firms to maintain strong internal controls. The investigation found no conclusive evidence of more serious violations of the law’s antibribery provisions, according to the documents.”
ISO 37001 Related
See here for latest laughable ISO 37001 post.
For starters, “industry sweeps” are properly thought of as an SEC (not DOJ) tool. As explained in this post from a leading FCPA practitioner: “Industry sweeps are often led by the SEC which has broad subpoena power as a regulatory agency, arguably broader oversight authority than prosecutors.”
More substantively, the notion that a company needs an ISO 37001 certification to act consistent with established best practices is just not true. There is a wide body of best practices metrics in the public domain long before ISO 37001 was released in Oct. 2016 and all of these metrics (but not ISO 37001) are specifically cited in the DOJ’s Feb. 2017 policy document titled “Evaluation of Corporate Compliance Programs.”
As to the assertion that “ISO 37001 is written in straightforward business language — rather than complex legal jargon that permeates guidance provided by anti-bribery enforcement agencies in the U.S. and UK,” I have read all sources of best practices and my opinion is that ISO 37001 is the most difficult to read because it is full of so much ISO jargon.
Across the Pond
The U.K. Serious Fraud Office recently announced:
“F.H. Bertling Ltd and six current and former employees have been convicted of conspiracy to make corrupt payments to an agent of the Angolan state oil company, Sonangol, in relation to F.H. Bertling’s freight forwarding business in Angola and a contract worth approximately $20m. One defendant was acquitted of the charges.
On 1 September 2016, Jose Morreale (62) and Stephen Emler (49) pleaded guilty to the charges.
On 17 March 2017, Joerg Blumberg (71), Ralf Petersen (now deceased), Dirk Juergensen (46) and Marc Schweiger (47) pleaded guilty.
On 1 August 2017, F.H. Bertling Ltd pleaded guilty.
Peter Ferdinand (78) was acquitted by a jury at Southwark Crown Court on 21 September 2017.”
In the release, SFO Director David Green stated:
“F.H. Bertling sought to obtain contracts through bribery. Corrupt practice by British companies such as this undermines the UK’s reputation as a safe place to do business and distorts the market, not to mention the damage it causes in the countries where the bribes are paid. This is a clear example of the SFO holding a company and its senior executives to account for corrupt behaviour, following an investigation that required skill, energy and determination to detect the extent and reach of this criminality.”
So True
This recent FCPA Blog post states:
“I am all for academics trumpeting themselves having the answer to a complex problem. But it is not meaningful to spout the obvious and then pretend that you have detected what nobody else knew.”
So true in the FCPA context.
Related to the above topic, is this recent Prawfsblawg post including comments concerning the “norms of giving proper credit when ideas or even writing came from someone else” and that “no one should make a claim about originality unless is it absolutely true. Students [I would expand this to the public at large] are easily tricked by professors who claim to make original arguments but are actually just rehashing existing work.”
Again, so true in the FCPA context.
Odd
In this recent speech, Deputy Attorney General Rod Rosenstein stated: “If corporate fraud spikes, it may take resources away from other important issues like drug enforcement, national security, violent crime, and cyber hacking.”
Related to the FCPA enforcement context, I find the statement odd.
Government enforcement programs feed themselves. Thus, if the DOJ’s FCPA Unit is running out of FCPA cases to process, it might manufacture FCPA cases (as it has in the past), not shift prosecutors to street crimes. If the DOJ’s FCPA Unit is running out of FCPA cases to process, it might (as it has in the past) come up with new and creative ways of interpreting the statute to exercise its leverage, not shift prosecutors to street crimes.
It Can Work
As informed professionals know, in several FCPA enforcement actions the government has identified decentralized business structures as an internal control deficiency. Thus, I took note of this WSJ article about Amazon which states that “one defining element of Amazon’s business practices” is its “highly decentralized structure with small siloed team” which is the equivalent of “1,000 independent businesses.”
For the Reading Stack
A solid critique of non-prosecution and deferred prosecution agreements by Professor Peter Reilly.
The latest edition of the always informative FCPA Update by Debevoise & Plimpton is here.
The New York Times goes in-depth on Unaoil.
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