Anti-Bribery: Prosecutorial Misconduct, Private Suits, IRS Enforcement, China, Mexico, and Other Updates

For your reference, a roundup of recent law firm commentary touching upon some of the issues central to the ongoing, global fight against bribery and corruption:

DOJ’s FCPA Trial Record (Michael Volkov)

“The O’Shea case was an unfortunate result. The judge was no friend of DOJ. He has a reputation as an anti-government judge, and he certainly knows that the government cannot appeal a decision to grant a Rule 29 motion for judgment of acquittal. The Lindsey case was an aberration. If the government had disclosed all the evidence it withheld, the government would still have won the case. The judge’s decision to reverse the Lindsey convictions reflects a sloppy and inexperienced approach to the trial. It does not undermine DOJ’s judgment in bringing the criminal case. The evidence was strong and the government should have won the case.” Read more»

Prosecutorial Misconduct: The Risks Inherent in Criminal Discovery (Duane Morris LLP)

“On Dec. 1, 2011, a California federal judge overturned a conviction in the first Foreign Corrupt Practices Act case against a corporation to proceed to a jury trial, citing ‘flagrant’ prosecutorial misconduct where the government: (i) failed to turn over Brady evidence, (ii) obtained a search warrant with an application that contained false and misleading information, and (iii) intercepted a defendant’s confidential communications with her attorney. The combined weight of these disparate acts of misconduct drove the court’s decision and is an object lesson both for government lawyers and the defense bar.” Read more»

Anti-bribery Enforcement with Chinese Characteristics: Not All Official (K&L Gates LLP)

“In 2012, expect to see the global trend of increasing anti-corruption enforcement persist as regulators around the world continue to show zeal in enforcing anticorruption laws. This is not to say, however, that anti-corruption enforcement will pose the same types of risk in different jurisdictions across the globe. In fact, understanding the differences in the kinds of bribery and corruption subject to stricter enforcement vigilance will be critical to formulating effective compliance strategies to mitigate risks on the ground in key markets.” Read more»

Off to the Races in 2012: DOJ’s Fast Start in FCPA Enforcement (Michael Volkov)

“Talk about seeing the forest from the trees – during the same week that Judge Hughes granted the defense motion for judgment of acquittal in the O’Shea case, the Justice Department announced a $56 million settlement in the Marubeni case, and Biomet disclosed it was planning on an FCPA settlement in the $30 million range. Late last year, two major companies announced they were close to significant criminal settlements in major cases. The number one trend/prediction for 2012 looks like it is coming to fruition – DOJ is back to collecting major criminal fines from corporations. It looks like the Justice Department is off to a fast start.” Read more»

Another Nigerian Bribery Scandal Settlement and the NL MVP Award (Thomas Fox)

“… there is a new entry into the Nigerian-Bonney Island Bribery Scandal. That entrant is the Japanese trading company, Marubeni Corporation, which the Department of Justice announced it had settled an enforcement action with this past week. As reported by the FCPA Professor, Marubeni was retained by the joint venture, TSKJ, ‘to help it obtain and retain business in Nigeria, including by offering to pay and paying bribes to Nigerian government officials.’” Read more»

Private Suits Under FCPA — An Ill-Advised Idea (Ifrah Law – Strategic Defense in Federal Investigations)

“The FCPA prohibits bribing foreign government officials. The proposed bill would amend the statute to allow for private lawsuits against foreign concerns for alleged violations of the statute’s anti-bribery provisions. These lawsuits could be brought by (1) any issuer, defined as an entity that issues securities under U.S. securities laws and its employees; (2) any domestic concern, defined as any U.S. citizen, national, or resident, or any business that is principally located in the U.S. or incorporated in the U.S.; or (3) any other United States person, defined as any person or business entity other than an issuer or a domestic concern.” Read more»

Proposed Bill to Allow Private Enforcement of the FCPA (Patterson Belknap Webb & Tyler LLP)

“Despite its limited scope, H.R. 3531 could potentially lead to a substantial increase in private litigation. The treble damages provision gives domestic parties a strong incentive to bring actions against competing foreign concerns, particularly in situations where the domestic party has been unable to compete in international markets due to uneven enforcement of antibribery prohibitions. In addition, although the requirement that the violation be committed in United States territory might limit the availability of such suits, recent government enforcement actions under § 78dd-3 suggest that minimal acts in United States territory might be sufficient to ground jurisdiction.” Read more»

Prosecution of Foreign Companies and Foreign Individuals (Michael Volkov)

“One of the more interesting trends in FCPA enforcement is the DOJ’s willingness to prosecute foreign companies and individuals. Some may argue that DOJ needs to focus on US companies which engage in foreign bribery and leave the prosecution of foreign companies to foreign prosecutors in their respective countries. Foreign companies become even more concerned when it comes to the prosecution of foreign officers and employees who are required to serve prison time in US jails.” Read more»

The Mañana Syndrome? (Matteson Ellis)

“Mexico recently received a poor bill of health with respect to fighting foreign bribery. A recent OECD Working Group report assessed the implementation of Mexico’s commitments under the OECD Anti-Bribery Convention and highlighted ‘deficiencies’ and ‘shortcomings’ in implementing the Convention’s requirements. While it acknowledged ‘some improvements to [Mexico’s] legislative framework for fighting bribery’ and Mexico’s ‘efforts to promote awareness, prevention and detection of foreign bribery within the private sector,’ it paints overall a picture of delay.” Read more»

IRS Joins FCPA Enforcement (Thomas Fox)

“So what does the IRS bring to a FCPA investigation? Edmonds stated that the IRS has skills and experience in looking at financial patterns and tracing money. He noted that usually FCPA violations are tied to other legal violations, for example money-laundering or fraud, and that the IRS can comb through financial records to find patterns in payments. He also stated that the IRS has significant experience in investigating corporate shell structures which can be part of an ongoing criminal attempt to obtain bribes and then conceal the location of the money.” Read more»

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Related Commentary and Analysis:

Don’t Expect Too Much From DOJ’S Upcoming “New FCPA Guidance” (Sheppard Mullin Richter & Hampton LLP)

“After the last few years of extremely aggressive DOJ prosecutions under the Foreign Corrupt Practices Act, white collar practitioners and the business community generally can be forgiven if they saw a ray of hope in the recent comments of Lanny Breuer, the head of DOJ’s criminal division. Breuer, speaking at a November 2011 FCPA conference in Washington, announced that in 2012, DOJ would be releasing ‘detailed new guidance’ on criminal and civil FCPA enforcement. The chairman of the conference characterized Breuer’s announcement as a ‘big step’ that was ‘pretty significant.’” Read more»

Third Party Checkup (Thomas Fox)

“In a recent White Paper … Marjorie Doyle and Diana Lutz posit that in most foreign business partner relationships, your company will be held responsible for the actions of third parties which work for and with your company. The new global expectation is that ‘you know who they are, you have vetted them and you are in control of the activities for which you hired them.’ They further believe that such is even more important when anti-corruption and anti-bribery laws, such as the Foreign Corrupt Practices Act, UK Bribery Act or other OECD based legislation, are applicable.” Read more»

Risky Business: The Unexpectedly Broad Application of the FCPA’s “Business Purpose” Element (Matteson Ellis)

“Companies and individuals subject to the U.S. Foreign Corrupt Practices Act often misunderstand the scope of subject activity. They assume that bribes are illegal only if they relate to a company’s core business. As a result, they might focus anti-corruption compliance efforts in areas like public procurement. But they might not think it necessary to do so in other areas of their business, like managing tax liabilities or setting up business registrations in new markets. By ignoring these areas, they expose themselves to important risk.” Read more»

Conduit to Compliance or First Line of Defense – the Local Compliance Point Person (Thomas Fox)

“As compliance programs mature, it is becoming increasing clear that one size does not fit all. Moreover, there may be several different approaches to creating the most effective compliance program for your organization. This past week I attended the ACI FCPA Boot Camp in Houston. Many of the presentations dealt programs, procedures and process companies had developed specifically for the compliance issues they have faced around the globe. One of these was in a session entitled “Compliance Programs 2.0” where one of the subjects discussed was who to embed as a local compliance representative in an international business unit.” Read more»

No Strings Attached: The Latest Expansion of the Lacey Act (Sheppard Mullin Richter & Hampton LLP)

“Importers of plants and plant products have good reason to be concerned about running afoul of the Lacey Act given the uncertainty created by 2008 amendments making violations of foreign law regarding plants a basis for violations under the Act. The recent saga of the Gibson Guitar Corp., maker of the iconic Les Paul guitar, has only confirmed that such concern is well-founded. As Gibson’s case exemplifies, the Department of Justice can disagree with foreign officials to rely on its own interpretation of foreign law to seize and seek forfeiture of goods, and even bring criminal charges.” Read more»

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