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Friday Roundup


Motion to dismiss filed, guilty plea, role reversal, adequate procedures, for the reading stack, and viewing suggestion. It’s all here in the Friday roundup.

Motion to Dismiss Filed

As highlighted in this prior post, in November 2017 the DOJ announced that Chi Ping Patrick Ho (of Hong Kong, China) and Cheikh Gadio (of Senegal) were criminally charged with conspiring to violate the Foreign Corrupt Practices Act, violating the FCPA, conspiring to commit international money laundering, and committing international money laundering.

Earlier this week, Ho filed this motion to dismiss certain of the FCPA and money laundering charges.

In pertinent part, Ho argues that “the government has ignored the fundamental distinction between the provisions of the FCPA applicable to domestic concerns and those applicable to non-domestic concerns” by so-called double-charging Ho under both the dd-2 and dd-3 portions of the statue.

Guilty Plea

As highlighted in this prior post, in a case that just keeps on giving, in February 2018 the DOJ announced additional criminal charges  “against five former Venezuelan government officials for their alleged participation in an international money laundering scheme involving bribes made to corruptly secure energy contracts from Venezuela’s state-owned and state-controlled energy company, PDVSA.”

Among the defendants was Cesar David Rincon Godoy (Cesar Rincon) described as a citizen of Venezuela who was employed by PDVSA and its subsidiaries, including Bariven (a PDVSA procurement subsidiary responsible for equipment purchases) and is alleged to be a “foreign official.” Cesar Rincon was charged with two counts of conspiracy to commit money laundering and four counts of money laundering.

Earlier this week, the DOJ announced that Rincon pleaded guilty. As stated in the release: “Cesar Rincon admitted to conspiring with others to launder at least $7,033,504.71 in proceeds from the various bribery schemes in which he participated.” The release further states: “Cesar Rincon becomes the latest individual to plead guilty as part of a larger, ongoing investigation by the U.S. government into bribery at PDVSA.  Including Cesar Rincon … the Justice Department has announced the guilty pleas of a total of 11 individuals in connection with the investigation.”

Role Reversal

Companies believe a foreign law enforcement agency has gone off-the-rails and become the world’s de facto enforcer of a specific area of law. What particularly irks the companies is that the law enforcement agency extracts multi-million settlements without any judicial review. This gives the foreign law enforcement agency more leeway than peer law enforcement agencies who have to go to court to obtain financial penalties against companies.

And you thought the above was describing foreign company grumbling about U.S. DOJ and SEC FCPA enforcement.

Nope. See here for a recent Wall Street Journal article European Union antitrust enforcement and the belief among some American companies that they are being unfairly targeted.

Adequate Procedures

In this recent speech, Camilla de Silva (Joint Head of Bribery and Corruption at the U.K. Serious Fraud Office) talks about adequate procedures, DPAs, and cooperation. As to adequate procedures, she states:

“Just as an aside, we saw last week the argument run for the first time and a jury rejecting a section 7 defence in a CPS prosecution. [See here for the prior FCPA Professor post]. I can not comment on the prosecution as I was not a party to the detail of the proceedings.  But, plainly if you are relying on the section 7 defence, corruption has been proved to have taken place which your procedures failed to prevent.  The case is perhaps a salient reminder to corporates to ensure their compliance procedures are sufficiency robust and the high bar that will need to be reached for a section 7 defence to succeed.  The starting point is about having bespoke compliance procedures in place, but it is more about the substance of the procedures and about them actually working in the first place.

It is well known that our current DSFO, David Green, has stated we do not give advice on what a good compliance programme looks like, or provide official guidance on adequate procedures.   We are a prosecution agency, not a regulator, and that’s not our job.  And of course, what is applicable to your business is dependent on the type of business we are talking about and so it would be pretty artificial for me to stand here and lecture you on what are adequate, or reasonable compliance procedures for your particular organisation.

However, in my view, the absence of official guidance from the SFO on a major case dealing with adequate procedures does not mean there is a vacuum of information available to you.  You will be aware of the Secretary of State’s guidance published pursuant to section 9 of the Bribery Act and other sources of information such as the OECD’s helpful case studies.  Furthermore, the compliance-related comments contained in the Rolls Royce and Standard Bank DPA documents, whilst obviously being fact specific, could be a useful source of information from a compliance perspective, as to where issues arose, suggestions for enhancements and what is needed for remediation.

They warrant careful study and I’m sure you would do a forensic job of extracting some useful pointers.  I’ll leave you to do that, but there are some points which stand out for me, for example the interaction between and impact of the compliance team on the business unit, a top level commitment from the Board for proper governance and organisation of compliance and this effort being properly resourced, and, crucially a bedding in of a compliance culture.  For example, the Statement of Facts for Standard Bank sets out the failings which led to the firm not considering or identifying the corruption risks, resulting in these risks not being adequately considered.  In the Rolls Royce documents we see the steps taken to enhance its ethics and compliance personnel in key positions of seniority, as well as additional compliance officers being appointed who were sufficiently empowered and whose reporting lines were independent of the business divisions, as well as the appointment of local ethics advisers in areas and jurisdictions of high risk to the business.”

See here for a recent FCPA Flash podcast with de Silva in which she discusses many of the same topics.

For the Reading Stack

This recent post highlighted a long-standing Freedom of Information Act (FOIA) request battle between Dylan Tokar (a reporter for the publication Just Anti-Corruption) and the DOJ regarding monitor selections in FCPA enforcement actions. In pertinent part, the court was called upon to decide “whether DOJ’s decision to withhold … the names of the individuals nominated but not selected to be monitors … was permissible” under certain FOIA exemptions. The DOJ argued “that releasing the names of these individuals, or the release of information that would allow the public to identify them, would be an “unwarranted invasion of personal privacy.” The court disagreed and stated:

“while DOJ has demonstrated that these individuals have more than a de minimis privacy interest in their anonymity, the public interest in learning these individuals’ identities outweighs that privacy interest, and therefore, the individuals’ names and firms must be released.”

For more, see this Corporate Crime Reporter interview of Tokar.

Viewing Suggestion

Interested in the behavioral aspects of compliance, check out “The Push” on Netflix.

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