Guilty plea, off-target, fear-based marketing, and for the reading stack. It’s all here in the Friday Roundup.
This recent post highlighted the DOJ’s money laundering case against Luis Enrique Martinelli Linares (a citizen of Panama and Italy) and his brother Ricardo Alberto Martinelli Linares (also a citizen of Panama and Italy), for “participat[ing] in the Odebrecht bribery scheme by, among other things, serving as intermediaries for bribe payments and the provision of other things of value that Odebrecht offered and provided to the Panama Government Official.
Yesterday, the DOJ announced that Luis Martinelli Linares pleaded guilty.
As stated in the DOJ release:
“Luis Martinelli Linares admitted that he agreed with his brother, Ricardo Alberto Martinelli Linares, and others to establish offshore bank accounts in the names of shell companies to receive and disguise over $28 million in bribe proceeds from Odebrecht for the benefit of his close relative, a high-ranking public official in Panama. To advance the scheme, Luis Martinelli Linares agreed with others to cause the wiring of the Odebrecht bribe funds into and out of the United States, and used some of the proceeds of the scheme to purchase a yacht and a condominium in the United States.
Luis Martinelli Linares pleaded guilty to one count of conspiracy to commit money laundering. He also agreed to a forfeiture amount of approximately $18.9 million. He is scheduled to be sentenced on May 20, 2022, and faces a maximum penalty of 20 years in prison.”
According to the release, “the United States continues its efforts to have Ricardo Martinelli Linares returned to the United States to face justice.
Here is Target’s Business Partner Code of Conduct.
In pertinent part, it states:
“Business partners are required to comply with all applicable anticorruption laws including but not limited to the U.S. Foreign Corrupt Practices Act. Under no circumstances may a business partner working for Target offer, promise, or provide anything of value directly or indirectly to a government official for the purpose of exerting improper influence or to obtain an improper benefit or business advantage.”
The relevant portion of the Code of Conduct is off-target as it does not convey the government’s broad interpretation of “foreign official” (the FCPA’s actual statutory term).
The term “surge” has been used frequently over the past two years – sometimes appropriately, often times not.
This recent Law360 article is titled “Best Practices In Preparation for FCPA Enforcement Surge” and states:
“It is clear that the DOJ is enhancing its ability to detect and prosecute bribery and corruption cases. In response, companies should reassess their bribery and corruption risk assessment methodologies, and their anti-corruption compliance policies, procedures and other risk-mitigation tools, to ensure best practices are employed to mitigate risks and protect the company if wrongdoing is alleged.
The Biden administration has clearly expressed its intentions and plans for a surge in FCPA enforcement efforts.”
While we await the “surge,” some facts.
FCPA enforcement in 2021 (with about four weeks left) is below historical averages.
For The Reading Stack
The most recent edition of the always informative FCPA Update from Debevoise & Plimpton is here.
As to Deputy Attorney General Lisa Monaco’s recent speech and accompanying memo, the Update notes:
“Consideration of Prior Misconduct in Charging Decisions
The latest guidance expands the past conduct prosecutors must consider when deciding whether to charge business entities. The Justice Manual previously required prosecutors to consider “the corporation’s history of similar misconduct.” But prosecutors are now directed to consider “all misconduct,” even if dissimilar to the conduct under investigation and involving different entities within a corporate family. Although the new guidance recognizes that some prior acts “may ultimately prove less significant,” prosecutors now “must start from the position that all prior misconduct is potentially relevant.”
DAG Monaco stated that this change would align the treatment of corporate and individual criminal histories. However, there is a difference between an individual recidivist – who presumably controls completely his or her own behavior and can choose not to violate the law in the future – and a large multinational company that employs hundreds of thousands of people around the world. As acknowledged in the Justice Manual (and repeatedly under both Republican and Democratic administrations), no compliance program in the world can prevent all misconduct.
The Monaco Memo does not address how prosecutors should view such factors as the passage of time or the fact that the prior conduct occurred in different regions or by different employees, or other distinguishing factors particular to companies in assessing “all prior misconduct.” Subject to future guidance, this change in DOJ approach could disadvantage large companies (or those part of large corporate families) and those operating in heavily regulated industries, such as financial services, natural resources, energy, and healthcare.
Perhaps anticipating such concerns, DAG Monaco suggested that prior misconduct is most relevant to assessing a company’s culture and compliance program. A record of past misconduct may indicate an absence of “appropriate internal controls and corporate culture to disincentivize criminal activity” and that proposed remediation may fail. Accordingly, companies defending themselves should expect to address how compliance systems implemented after a past episode or misconduct are relevant – or not – to the occurrence of conduct presently under DOJ investigation.”