As noted in this Money News article, SEC Chairman Mary Jo White was recently interviewed by C-SPAN founder Brian Lamb as part of its Q&A series. (See here for the full interview).
As noted in the article,”Lamb spent roughly two-thirds of the program walking through White’s career as the chief prosecutor for Manhattan under both local and federal auspices, coupled with top-level private experience as head of litigation” for a large law firm.
As further noted, “during the last part of the program, Lamb listed cases settled under the Foreign Corrupt Practices Act involving leading U.S. corporations, and he asked, “What is wrong with us?” (The FCPA Blog posted the FCPA specific portion of the interview here).
Specifically Lamb asked “what is wrong with us” in connection with four corporate FCPA enforcement actions: Alcoa, ADM, Diebold, and Eli Lilly.
So – “what is wrong with us?”
Well, actually not much and perhaps the more appropriate question Lamb could have asked is what is wrong with the DOJ and SEC?
In other words, perhaps Lamb was not aware (as detailed in this prior post) that the Alcoa action was primarily based on conduct over 20 years old or that the consultant at the center of the alleged bribery scheme was criminally charged by another law enforcement agency, put the law enforcement agency to its burden of proof at trial, and the law enforcement agency dismissed the case because there was no ”realistic prospect of conviction” (see here for the prior post concerning the U.K. enforcement action of Victor Dahdaleh). Perhaps, Lamb was not aware that the SEC’s administrative cease and desist order in Alcoa specifically stated as follows. “This Order contains no findings that an officer, director or employee of Alcoa knowingly engaged in the bribe scheme.” Perhaps Lamb was not aware that the SEC’s enforcement action against Alcoa received not one ounce of judicial scrutiny. Indeed, as highlighted in this previous post, as SEC Chairman White stated that “the public airing of facts, literally in open court, creates accountability for both defendants and the government” and that “trials allow for more thoughtful and nuanced interpretations of the law in a way that settlements and summary judgments cannot.”
Regarding ADM, perhaps Lamb was not aware – as detailed in my article “Why You Should Be Alarmed By the ADM FCPA Enforcement Action,” that per the DOJ’s and SEC’s own allegations, ADM and its shareholders were the victims of a corrupt Ukraine government which did not have the money to pay VAT refunds that it owed to companies like ADM that sold Ukrainian goods outside of Ukraine. In my article I noted that the ADM enforcement action “will be blindly inserted into FCPA enforcement statistics and trotted out at every available opportunity to demonstrate how the U.S. is the leader in anti-bribery enforcement.” Lamb did just that.
Regarding Diebold, perhaps Lamb was not aware – as detailed in this prior post – that the enforcement action primarily focused on the conduct of two employees and that the SEC’s complaint specifically stated that these two employees received FCPA training in 2007, yet still continued their alleged improper practices. In addition, the SEC specifically stated that the employees “took further steps to hide the leisure nature of [the problematic] trips including, on at least one occasion, providing false information to the company’s auditors in China.”
Regarding Eli Lilly, perhaps Lamb was not aware – as detailed in this prior post – that a focus of the SEC’s allegations (there was no DOJ enforcement) was that sales representatives at Lilly-China submitted false expense reports for items such as wine, speciality foods, a jade bracelet, meals, visits to bath houses, card games, karaoke bars, door prizes, spa treatments and cigarettes. Perhaps Lamb was not aware that other allegations in the SEC’s complaint concerned conduct between 12 – 18 years ago.
Perhaps Lamb was not aware that the majority of the above enforcement actions, like most corporate FCPA enforcement actions, were resolved via non-prosecution or deferred prosecution agreements.
As to these resolution vehicles, it has been noted:
“To ensure that a company does not become that ‘rare’ case resulting in a corporate indictment with all of its attendant negative consequences, a company must not poke the government in the eye by declining any of its requests or suggestion of how a cooperative, good corporate citizen is to behave in the government’s criminal investigation. This template, in my view, can give prosecutors too much power.”
“[they have become] a semi-automatic response by the government in responding to corporate crime. Most cases of corporate crime should result in no action by the government against corporations that have responded appropriately to the wrongdoing and any remaining problems of controls, compliance and corporate culture.”
“[using alternative resolution vehicles] is almost becoming an automatic reaction in many cases beyond those where it should be used. Prosecutors are thinking – before we close out this case that involves any kind of corporate crime, we should get something from the companies.”
“[P]rosecutors are like anybody else – when they devote a lot of time and effort to a case, they want something to show for it. And so I fear the deferred prosecution is becoming a vehicle to show results.”
Perhaps Lamb was not aware that:
“the sweep of corporate criminal liability could hardly be broader … its breathtaking scope always bears repeating: If a single employee, however low down in the corporate hierarchy, commits a crime in the course of his or her employment, even in part to benefit the corporation, the corporate employer is criminally liable for that employee’s crime. It is essentially absolute liability.”
Perhaps Lamb was not aware that the person who made all of the above statements was Mary Jo White – the person he was interviewing. (See here for the prior post).
