This is the second part of a two-part series concerning George McLean, a historic individual in terms of Foreign Corrupt Practices Act history in that he was the first to put the DOJ to its burden of proof in FCPA history. And he won, both in terms of a pre-trial dismissal of substantive FCPA charges (see this prior post) and at trial on an FCPA conspiracy charge as he was found not guilty.
Part one of the series detailed McLean’s life prior to the criminal indictment in 1982, his views concerning the circumstances leading up to the case, and his decision to fight for his innocence and the impact it had on his life.
Part two of George McLean’s story has him waiting for the jury verdict in his case. McLean also comments on the DOJ calling his not guilty verdict merely a “sympathy verdict” and offers his perspective on the so-called Eckhardt Amendment (see this prior post) no longer being a part of the FCPA. You will learn what McLean (78 years old) is up to today as well as his observations regarding FCPA enforcement and FCPA Inc.
George McLean continues his story in his own words.
*****
Q. Describe your feelings just prior to the jury rendering its verdict?
A. I had been waiting on a hard wooden bench near the entrance to the courtroom. In fact, I spent most of the 2 to 3 hours wait stretched out asleep. I had been severely sleep deprived for the 2 weeks prior to the trial and the 3 weeks of the trial. My wife was waiting with me and reading a book. I was feeling extremely confident, but there was the glimmer of apprehension that something would go wrong as the jury weighed the evidence. I just wanted it to be over. The verdict was rendered quickly considering the length of the judge’s instructions and the minimum time it would take the jury to go through the necessary steps prescribed. When we were given notice that a verdict had been reached after the quick deliberation the signs surely signaled an acquittal. The expression on the faces of most of the jurors when they returned to the courtroom, some of whom were making direct eye contact with me, was a dead giveaway of the verdict. On the other hand the prosecutor was looking very nervous.
Q. Describe your feelings after learning of the jury verdict?
A. I expected an acquittal verdict, but nevertheless there was a tremendous feeling of relief. I jumped off my chair and exclaimed loudly, “Up the Irish.” I then hugged my Irish wife who was in the front row and I embraced my magnificent lawyer Charlie Sullivan. I noticed that the lonely prosecutor looked stunned which he shouldn’t have been because, knowing the facts, he should have never brought me to trial. My wife said later that it must have taken 10 minutes for the blood to move from his toenails back to his face.
Q. In press reports, the DOJ prosecutor is quoted as saying that the not guilty verdict did not exonerate you, but that it was merely a sympathy verdict by the jury. How did you feel about that statement?
A. It was pure sour grapes by the prosecutor who at that point had to be concerned about his future at the DOJ which as it turned out ended shortly thereafter in 1986. I contacted the Wall Street Journal shortly after my acquittal which they hadn’t found fit to report on. I challenged the fact that they had reported on the Crawford indictment and Harvester plea bargain in front page articles that portrayed me as being guilty. Only then did they place a short article on an inside page which included the prosecutor’s quote after they had contacted him. I appeared at the office of the editor of the San Diego Union-Tribune who had run a front page article and devoted a full inside page to my indictment which included generous contributions from the prosecutors who were trying to make a home run to their careers. The Union -Tribune then ran a minimal article on my acquittal. The NY Times and other newspapers picked up on the WSJ article including the prosecutor’s quote.
After the trial, while in the courtroom, I talked in length to one of the male jurors who was anxious to relate to me how the deliberation process had gone. He had personally decided early on that the charge never should have gone to trial and that the government had no case. After the jury went through the judge’s deliberation instructions the first vote was taken with ten in favor of acquittal and two against. The juror described the two as being very conservative and religious and they couldn’t believe the government would indict someone who wasn’t guilty. It didn’t take long for this juror and the forewoman to explain the situation to the two and have them again review the exculpatory evidence. They quickly changed their minds and the second vote was unanimously in favor of acquittal.
As I recall, the judge either appointed or recommended the election of the forewoman to her position. She was obviously a very intelligent professional. I had a short conversation with her in the courtroom and she expressed similar sentiments as the other juror. Several weeks later, by chance, I ran into this woman in a departure area at Houston International airport. We had a 15 to 20 minute conversation wherein she expressed her opinion that my prosecution was a travesty of justice and she wished me good luck as I resumed my business career and normal family life. She commented that at the beginning of the trial, the jury concluded that the lovely woman in the front row of spectator benches had to be my wife.
I learned from reliable sources that the prosecutor was advised by his superior to drop the case against me after the “nolo” deal that removed all the other defendants and denied him the opportunity of his big show trial featuring his remaining high-profile defendant, Don Crawford, a Houstonian. The highest profile potential defendant, former “Dow 30” company International Harvester, was previously ordered removed from the indictment by the Associate Attorney General to the chagrin of the government’s trial attorneys and the Associate Attorney General left them the inglorious task of negotiating their guilty plea. And I am sure it bothered the prosecutor that I had for over two years in hearings and pleadings, accused the prosecution of wrongdoings such as lying and destroying grand jury evidence which I was able to do with impunity because I was not an officer of the court bound to treat the prosecutors with professional courtesy. So for whatever his reasoning, the prosecutor ignored the advice of his superior and went forward with my trial because I wouldn’t plead guilty to a charge similar to Uriarte. The trial cost the government a bundle which the prosecutor had argued two years earlier they couldn’t afford in answer to my motion for separation and a speedy trail.
The prosecutor showed up for trial on his own, without his high-powered Washington team who reportedly had seen enough of me and could read the writing on the wall. The prosecutor not only made a fatal decision in bringing me to trial probably for emotional reasons, but he conducted the trial like a rank amateur. First of all, he had to know from the credible evidence that I was not guilty. He had to know from pre trial hearings that the trial judge felt I was not guilty. He had to know from my offer to give evidence without immunity to the Houston grand jury that I was not guilty. He had to know that calling several Solar present and former employees as prosecution witnesses not knowing how they would answer his questions would be a risky business. Most importantly he had to know that the accusatory proffers of their star witness made while he was plea bargaining were suspect. The investigators had obviously not bothered to carefully check out the facts surrounding their star witness’s proffers. As it turned out this witness was easily unmasked on cross-examination and shown to be a plea bargaining liar the prosecutor wanted to believe. The cooperation agreement negotiated with this witness in May 1981 states in article 2, that “if the proffers are inaccurate or untruthful..…this agreement shall be null and void at the discretion of the United States.” If this was deemed as such the witness “shall thereafter be subject to prosecution for any federal criminal violations.” It is understandable that the government never prosecuted this witness for violating his Cooperation Agreement because of the added embarrassment it would cause the government prosecutors on top of losing the trial.
The prosecutor certainly made a poor decision when he insisted, against good advice, to bring me to trial alone. After several years of good work, the government had secured pleas from the guilty ones as well as Uriarte and Harvester who were not guilty and then they risk tainting their record. The cost of my trial certainly ate into the millions of dollars in fines they had collected from some of the guilty defendants. In a way, I sympathize in the way the prosecutor screwed up when his ego got in the way. I agree, a not guilty verdict does not unfortunately constitute exoneration because it does not erase the stigma of a grand jury indictment no matter how it was obtained.
Q. After the conclusion of your case, describe the rest of your life and career up to the present moment?
A. Later in 1985 I co-founded a business partnership, Turbo Power Systems, between a major Houston energy company, two European engineering/manufacturing companies I had been consulting for, an electronics company in Houston and myself. The purpose of the partnership was to commercialize a high-efficiency electric power plant design I had developed and patented. The patent is registered as the “Triple Combined Cycle.” It also received “Qualifying Facility” (QF) renewable energy status from the U.S. Department of Energy.
In 1986, I also co-founded Pipeline Compressor Systems, Inc. (PCSI) in Houston, Texas for the purpose of commercializing my design of the high-tech natural gas pipeline compressor that became known as the MOPICO, an acronym for MOtor PIpeline COmpressor. My partners included high-tech engineering companies based in Switzerland, Belgium, France and Italy who manufactured all the components. After several years, it became evident that trying to manage a venture with participants from five different countries wasn’t going to work because all the participants were marching to corporate drummers with differing objectives. A decision was made to consolidate the management of the MOPICO and related products under Sulzer Brothers Turbo Div. in Zurich. I sold my interest in the venture to Sulzer in December 1999, but continued to do some consulting for them. In the meantime, Sulzer Turbo was sold to MAN in Germany one of the largest engineering companies in the world. I am proud to say the product is now highly successful and continues to be developed for advanced applications around the world in the oil and gas business.
In the mid 1980’s I provided, as a consultant, the conceptual design for the only peat fired power plant ever built in the U.S. It is located in Maine. I received a fee of $300,000 which was very welcome considering the financial licking I had taken during my prosecution. The plant was constructed by a Belgium company and its operation was subsidized as a renewable energy project by the U.S. Department of Energy as part of the 1970’s program to make the U.S. energy independent.
In the mid 1990’s, I was commissioned as a consultant, by a group of Canadian energy industry entrepreneurs in Calgary to provide conceptual compressor station designs for a proposed high pressure (up to 1,935 psi) 2300 mile gas pipeline from northeastern British Columbia to Joliet, Il. outside Chicago. This line went into service in December 2000.
At the conclusion of my trial in 1985, my suit against Harvester was still in its early stages of adjudication. I filed my original complaint, George S. McLean v. International Harvester, pro se on October 22, 1984, in the midst of defending myself in the criminal case and trying to make a living as a consultant. Some months later, I hired Charles Sullivan (who also represented me at trial) on a contingency basis and thereafter he filed several amended complaints as depositions were taken and discovery progressed. Harvester’s outside lawyers, fought us tooth and nail and hired a former favorite clerk of the judge as their local Houston representative presumably to give Harvester a political advantage. The judge made some unfavorable and unfair decisions particularly in the period surrounding my trial. The court dismissed counts 1 through 7 of the 3rd amended complaint, limiting discovery, and denying as moot my motion to file a 4th amended complaint.
The 5th Circuit affirmed the district court on the above except for count 6, indemnification where they determined Harvester must reimburse me for my legal expenses in my criminal defense. McLean v. Harvester, 817 F. 2d 1214 (5th Cir. 1987). The adjudication continued and Sullivan remained in the case until the fall of 1989 when he withdrew by mutual agreement. Incidentally Charlie Sullivan is one of the finest people I have ever known. At this point I was again proceeding pro se. About this time the old trial Judge finally retired and the case was taken over by a new Judge who denied me two of the forms of indemnification I demanded. I filed a very long and complete appellant’s brief which was successful. The 5th Circuit remanded the case back to the district court to award me appropriate indemnification for expenses I incurred in my expungement action and appropriate pro se attorney’s fees if the district court should determine I was forced to conduct my defense pro se because of “unscrupulous conduct” by Harvester. McLean v. Harvester, 902 F .2d 372 (5th Cir. 1990).
At this point late in 1990, I was then in position to hire a lawyer to prepare for trial. The case continued toward trial when unexpectedly at the urging of the judge in a pre trial hearing, Harvester agreed to negotiate. I assume they didn’t want to risk being found guilty of “unscrupulous conduct” toward a former loyal employee. Our primary witness was going to be Harvester’s former chief counsel and managing partner at its outside law firm who convinced the Associate Attorney General to pull them from the indictment and negotiated their guilty plea and later became chief counsel of General Motors and then president and CEO of the prestigious Aspen Institute. After seven long years, the case was settled financially “on the courthouse steps” as jury selection was imminent.
After the criminal trial I was able to reestablish more of a normal family life as well as resuming my business career. However, the pursuit of Harvester continued to take away from my time until December 1991 when the case was settled.
My daughters were 5 and 8 when I was indicted and they were subject to embarrassment and derision by some of their friends and classmates because of the wide local news coverage and the usual whispering campaigns by narrow-minded adults. Most of that had stopped 2 ½ years later when I was acquitted.
But once you are indicted one is seldom exonerated in the eyes of some people no matter what the circumstances. I almost completely lost 2 ½ years of being a father and husband during such a critical time in our daughter’s young lives. They were keen on sports including soccer, softball, golf, tennis, skiing, swimming and sailing in their elementary school and high school days. I unfortunately missed most of their team sports events during the period of the criminal case. After the case, I got involved in coaching their youth softball and soccer teams and we introduced them to golf and sailing. Shortly after the trial, we bought a 25 ft. sailboat and we started sailing on weekends as a family. That summer we also bought a 1985 VW camping van that we used for camping in the Sierra’s, etc. We still have the van with 180,000 miles and a new engine.
Since selling my compressor business interests to my European partners, I have confined my business activities to investing. I was involved in corporate finance for many years as part of my business responsibilities as well as studying economics and financing at the senior executive program of the MIT Sloane graduate business school. I limit my investment activities and research to a couple of hours a day. I spend several hours each day reading, writing, working outside, exercising and running errands. I follow world political, social equality and certain business and sports activities closely.
Q. Do you keep informed on FCPA issues and enforcement actions? If so, what is your reaction to this “new era of FCPA enforcement?
A. Over the years since my case, I have read every article I noticed concerning the FCPA in a newspaper or magazine. The articles have usually related to plea bargain settlement with the DOJ or SEC for violations by U.S. headquartered companies. Earlier on, there were frequent articles about potential major revisions to the FCPA legislation.
I kept my eyes open for comments on the Eckhardt Amendment. I was dismayed when the legislators did away with Eckhardt in 1988. I assume the DOJ lobbied Capital Hill hard to get rid of it. When the Associate Attorney General pulled Harvester out of the indictment, discovered records show that the prosecutors knew immediately they had an Eckhardt problem prosecuting Uriarte and myself. It was an interesting catch-22 situation as I detailed earlier in my answers. They needed our convictions to legitimize the bogus Harvester guilty plea. They vainly tried to convince the trial court and 5th Circuit that Harvester’s guilty plea satisfied the requirement of Eckhardt to allow them to prosecute Uriarte and myself on the 43 counts.
I hate to imagine the number of employees who have been made scapegoats for their U.S. employers and left hung out to dry since the Eckhardt Amendment was eliminated.
I also noticed reports on the attempts by the OECD and OAS countries to cooperate in attacking the international bribery situation. The attempts at writing meaningful protocols at the end of their several bribery conventions that accomplished little must have been interesting.
The activity in government prosecutions in the last several years especially by the SEC certainly shows that FCPA Inc. is alive and thriving. The enforcement activity seems to have dropped off in the last two years probably more the result of the worldwide business recession than effective compliance to the law as a result of successful prosecutions.
I have also taken notice of more recent anti-bribery actions in Britain, Germany and other OECD countries several of whose foreign offices were known to have formerly supported their manufacturer’s worldwide bribery activities. And of course more recent FCPA actions or scrutiny against BAE, Siemens, Wal-Mart and others have been widely covered in all the media far beyond the business pages.
As far as I see it, the “new era of FCPA enforcement” is nothing more than a change in the tactics within FCPA Inc. The FCPA legislation signed into law by Jimmy Carter in 1977 seemed little more than a well-intentioned, but ill-conceived, attempt by our government to export our U.S. business morality around the world. To begin with, the U.S. system of lobbyists influencing federal legislators and legislation via super PAC donations is basically corrupt, but it is now federally regulated and therefore legal. And of course, it is domestic and not foreign. Foreign countries have to look at the hypocrisy of the U.S. anti bribery statutes and enforcement with skepticism. I ask the question, how is the U.S. going to deal with the problem of corruption in our trade with growing economies like China and India where systems of tributes and bribery became part of their cultures in ancient times.
It is well established that in many friendly countries U.S. manufactured military material is sold with tributes being made or some other quid pro quo. These transactions are legal when the Pentagon is the middle man between the manufacturer and the foreign government, and justified for “national security” reasons.
The recent FCPA guidance issued by the government appears to be of limited value to the U.S. exporters in furtherance of their conforming to the inadequate statute and limited case-law. Another basic question is how should the countries of the world legislate against international bribery in various foreign countries where the payment of tributes has been part of their culture for hundreds of years and where the foreign participants are experts in soliciting and extorting bribes? The answer has not been found by the OECD and OAS conventions on the subject or by the U.S. Congress, DOJ, SEC, State and Commerce Departments, etc. Perhaps the answer lies in regulation and a system of licenses or fees. This has worked in the alcohol business in most countries around the world as well as fueling the governments’ coffers. The marijuana business in the U.S. seems to be heading in that direction as the only practical solution. The regulation of marijuana seems to work in the Netherlands.
In the meantime, young lawyers continue to be educated on the FCPA, then join the prosecution forces at the DOJ and SEC and finally end up at the defense side at white-collar law firms or corporate legal staffs. The games played in the world within the reach of FCPA Inc. have evolved in a similar manner as the individual and corporate tax games. I see no incentive to lawyers and legislators to kill the game.
Q. You are in a unique situation of having participated, pro se, in defending yourself in a high-profile DOJ criminal indictment and a civil suit as well as participating, pro se, in your related civil action against International Harvester. Do you have any additional relevant observations of the justice system as a result of your cases?
A. Yes, first of all, the use of plea bargaining in a multi defendant criminal case is ripe for abuse especially by sloppy or unscrupulous prosecutors. I suspect it is still particularly useful in FCPA cases particularly without the obstacle of the Eckhardt Amendment. In my case, the government’s star witness, in his proffers, accused me of being in a conspiratorial meeting that never occurred. The facts were obviously never checked out. In my grand jury appearance, at least two of the jurors slept through most of the session, three jurors showed no interest and only one was properly attentive.
The government altered a key part of the transcript of my Washington grand jury testimony to support my indictment and the Harvester guilty plea offer of proof. My altered grand jury testimony was read to the indicting Houston grand jury. My offer to testify before the Houston grand jury was refused by the prosecutors. The grand jury should have made that decision. The Houston grand jury was upset when Harvester was pulled out of the indictment at the last moment and they protested to the DOJ management in Washington who quelled the protest. In my case, the prosecutors obvious abused their management of the Houston grand jury and I believe they broke the law as well.
The original trial judge in the criminal case was suffering from terminal cancer and he had to unfortunately leave the bench in the middle of the case. He seemed very competent to me and he suffered through my lack of courtroom experience with patience and understanding which I appreciated. He unfortunately couldn’t recognize the prosecutor’s use of dirty tricks against me which I brought to the court’s attention on several occasions. I have already commented on the first judge in my civil action. It irritated me that sometimes trial judges acted like god almighty and were very stingy in writing opinions to their orders.
On the other hand, Chief Justice Singleton performed like god almighty and wrote clear opinions and a well thought out and equitable set of jury instructions at my trial. In pre-trial hearings when I questioned the honesty of the prosecutors, the judge always found in favor of the prosecutors because they are members of the court. That was unfortunate but understandable.
The 5th Circuit showed great insight in making their two key findings in my favor. When I made my oral argument in the government’s appeal of the trial court’s dismissal of the 43 counts, one of the 3 judges helped me through my presentation with a string of questions that showed he had read my brief with great care. In my unsuccessful appeal of the trial court’s denial of my motion to expunge my name from the Harvester guilty plea court documents, the 5th circuit said that my naming was of no advantage to the prosecution in my criminal case. However, six years later in my Harvester civil action, the 5th Circuit, in their lengthy favorable opinion, indicated that they then fully understood what the government’s game was in naming me as Harvester’s scapegoat. On the other hand in my brief for the appellant, I was able to detail exactly how the government was using my naming in trying to get around the Eckhardt Amendment. When I was struggling with my pro se defense I often got helpful advice on procedures from clerks at the district court in Houston and the 5th Circuit in New Orleans.
In summary, I think the guilty plea system is a necessary evil that is easily abused by prosecutors. The same can be said for the federal grand jury system. Federal trial judges have a tough job and they are not all up to the same standard. The 12 jurors found the right answer quickly in my trial, but that apparently it is not always the case.
FCPA Inc. and the laws surrounding worldwide corruption need urgent fixing and the situation is not receiving proper attention because it is basically impractical to effectively legislate the business morals of differing cultures worldwide, friend or foe, to march to the beat of a common moral drummer. It is certainly impossible in many countries to stamp out the cultural practice of the traffic cop or customs official soliciting bribes as well as paying tribute to the head of state in order to do business in his country.
So the U.S. will probably maintain an effort of enforcing the present FCPA that very few seem to like and pursuing the violators of the present FCPA statute and fining them. Most companies probably treat the fines as a normal cost of doing business and they hire lawyers to minimize the expense and keep their executives out of jail. And at the end of each year, a growing number of law firms will issue their marketing reports as to how their part of FCPA Inc. performed during the year. And these law firms and the SEC and DOJ will continue to advise the Congress not to radically change the legislation that provides so many billable hours at outrageous rates and million of dollars in fines to the government.
