Scrutiny alert, the irony of it all, just saying …, not sure why, no more third parties, and for the reading stack. It’s all here in the Friday roundup.
The company, a provider of aviation services with numerous U.S. government contracts, recently disclosed:
“The Company retained outside counsel to investigate possible violations of the Company’s Code of Conduct, the U.S. Foreign Corrupt Practices Act, and other applicable laws, relating to the Company’s activities in Nepal and South Africa. Based on these investigations, we self-reported these matters to the U.S. Department of Justice, the U.S. Securities and Exchange Commission and the UK Serious Fraud Office. The Company will fully cooperate in any review by these agencies, although we are unable at this time to predict what action, if any, they may take.”
As reported here:
“A federal grand jury in New York is investigating top Republican fundraiser Elliott Broidy, examining whether he used his position as vice chair of President Donald Trump’s inaugural committee to drum up business deals with foreign leaders, according to documents obtained by The Associated Press and people familiar with the matter. A wide-ranging subpoena the U.S. Attorney’s Office in Brooklyn recently sent to Trump’s inaugural committee seeks records relating to 20 individuals and businesses. All have connections to Broidy, his investment and defense contracting firms, and foreign officials he pursued deals with — including the current president of Angola and two politicians in Romania. Prosecutors appear to be investigating whether Broidy exploited his access to Trump for personal gain and violated the Foreign Corrupt Practices Act, which makes it illegal for U.S. citizens to offer foreign officials “anything of value” to gain a business advantage. Things of value in this case could have been an invitation to the January 2017 inaugural events or access to Trump. A statement released to the AP by Broidy’s attorneys said that at no point did Broidy or his global security firm Circinus have a contract or exchange of money with “any Romanian government agency, proxy or agent.” It also said that while Circinus did reach an agreement with Angola in 2016 there was no connection whatsoever to the inauguration or Broidy’s role on the inaugural committee.”
The Irony Of It All
While this column does a poor job of accurately summarizing the India conduct alleged in the recent Walmart enforcement action (see here and here for prior posts), the big picture observation is nevertheless interesting.
“The irony of it all is that while such crime of corruption is committed in India and goes unpunished, it is the American government that makes millions out of these crimes, through hefty fines, while India gets none.”
Just Saying …
Convicted FCPA felon Richard Bistrong likes to remind people about … well himself. (See here, here, here, here, here and here among other FCPA Blog posts as examples. By the way, seldom transparent in Bistrong’s many FCPA Blog posts is that he is the “brand ambassador for Gabbi, the compliance check-in app, that is sold by Recathlon LLC, the owner of the FCPA Blog. Moreover, Bistrong’s entity (Front-Line Anti-Bribery LLC) is a training partner for Recathlon LLC).
In the latest example, Bistrong provides advice “from his heart” that any FCPA defendant should seemingly waive trial and cooperate with the DOJ.
However, let the record reflect that not all individuals accused of FCPA violations have engaged in numerous other illegal acts. (See here). As stated by the jury foreman in the Africa Sting trial in which Bistrong testified “more than one juror voiced concern that it would be unjust for the defendants in this case to be convicted when the government relied so heavily on Mr. Bistrong who freely admitted on the stand more illegal acts than the entire group of defendants was accused of, yet was able to plead to only one count of conspiracy to violate the FCPA.”
In his recent FCPA Blog post, Bistrong discusses his cross-examination in the Africa Sting trial. (See here for the prior post from some of the attorneys who actually cross-examined Bistrong).
Not Sure Why
I am not sure why these commentators are calling risk the “new” star of DOJ Guidance.
For instance, the 2012 DOJ/SEC issued FCPA Guidance contains an entire section titled “Risk Assessment” which begins:
“Assessment of risk is fundamental to developing a strong compliance program, and is another factor DOJ and SEC evaluate when assessing a company’s compliance program. One-size-fits-all compliance programs are generally ill-conceived and ineffective because resources inevitably are spread too thin, with too much focus on low-risk markets and transactions to the detriment of high-risk areas.”
No More Third Parties
According to this article, Trafigura (a commodities trading company under FCPA and related scrutiny) “will end all of its “business development” agreements with agents by October, although it will continue to use security advisers, risk analysts and other specialist service providers such as port agents. The move by Trafigura follows a series of corruption investigations and allegations involving intermediaries and middlemen that have caused alarm at the highest levels of the commodity trading industry.”
Shearman & Sterling’s informative mid-year FCPA Digest is here. Among portions of the Digest that caught my eye were the following:
“Although the DOJ and SEC were rebuked in last year’s Hoskins decision for overly broad theories of jurisdiction, they have not retreated from their aggressive position. The expansive reach of the DOJ and SEC was fully on display in the DOJ and SEC’s enforcement actions against Fresenius Medical Care AG & Co. KGaA. To establish jurisdiction, the DOJ and SEC alleged that Fresenius used “internet-based email accounts hosted by numerous service providers located in the United States” to make improper payments to publicly-employed health and government officials in Angola and Saudi Arabia. The reliance of the DOJ and SEC on email accounts transited through U.S. servers remains a much criticized theory of territorial jurisdiction.”
Regarding the recent Walmart enforcement action:
“In recent years, most of the focus in terms of the application of the statutes of limitations has been on the SEC’s efforts to obtain disgorgement and injunctive relief for allegedly improper conduct that occurred well outside its statute of limitations for civil penalties. In this year, the Walmart settlement raises interesting questions as to how the DOJ approaches such issues, given that some of the payments, particularly in Mexico, apparently ended in August 2004, six and a half years before Walmart disclosed any of that conduct to the DOJ in December 2011 and almost fifteen years before the ultimate resolution of the investigation.
Finally, it does not help that neither the DOJ or the SEC were particularly transparent about which conduct resulted in financial penalties or, for that matter, how those penalties were calculated, something that would seem relevant both in calculating the purported Sentencing Guidelines penalty range referred to only in passing by the DOJ in the NPA without showing the actual Guidelines calculation and the SEC’s calculation of disgorgement in light of recent Supreme Court penalty. Even in the WMT Brasilia plea agreement, the sentencing guidelines calculations, which of course had to be justified to and accepted by the court, account for only a small portion of the parent’s penalties and, moreover, are apparently based on payments made within a limited period of 2009 to 2010. Thus, neither the basis for the government’s penalties nor the impact of the statute of limitations is at all apparent from the government’s own pleadings. That should give some pause to companies relying on the repose granted to such limitations periods.”
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