Archive for the ‘Greens’ Category

Friday Roundup

Friday, July 26th, 2013

A sign-off, no surprise, scrutiny alert, for the reading stack, spot-on, and the $10 million man.

Judge Leon Signs-Off On IBM Action

As highlighted in this prior post, in March 2011 the SEC announced an FCPA enforcement action against IBM concerning alleged conduct in South Korea and China.  The settlement terms contained a permanent injunction as to future FCPA violations and thus required judicial approval.  Similar to the Tyco FCPA enforcement action, the case sat on Judge Leon’s docket.  Last month, Judge Leon approved the Tyco settlement (see here) and yesterday Judge Leon approved the IBM settlement.

The common thread between the two enforcement actions would seem to be that both companies were repeat FCPA offenders.

Like Judge Leon’s final order in Tyco, the final order in IBM action states:

“[For a two year period IBM is required to submit annual reports] to the Commission and this Court describing its efforts to comply with the Foreign Corrupt Practices Act (“FCPA”), and to report to the Commission and this Court immediately upon learning it is reasonably likely that IBM has violated the FCPA in connection with either improper payments to foreign officials to obtain or retain business or any fraudulent books and records entries …””

For additional coverage of yesterday’s hearing, see here from Bloomberg.  The article quotes Judge Leon as follows.  IBM “has learned its lesson and is moving in the right direction to ensure this never happens again.” If there’s another violation over the next two years, “it won’t be a happy day.”

However, as noted in this previous post, IBM recently disclosed additional FCPA scrutiny.

No Surprise

This recent post highlighted the 9th Circuit’s restitution ruling in the Green FCPA enforcement action and was titled “Green Restitution Order Stands … For Now.”  As noted in the prior post, the decision practically invited the Greens to petition for an en banc hearing.

No surprise, the Greens did just that earlier this week - see here for the petition.

Scrutiny Alert

This February 2012 post detailed how Wynn Resorts $135 million donation to the University of Macau became the subject of an SEC inquiry.

Earlier this month, Wynn disclosed in an SEC filing as follows:

“On February 13, 2012, Wynn Resorts, Limited (the “Company”) filed a Report on Form 8-K disclosing that it had received a letter from the Salt Lake Regional Office (the “Office”) of the Securities and Exchange Commission (the “SEC”) advising the Company that the Office had commenced an informal inquiry with respect to certain matters, including a donation by Wynn Macau, Limited, an affiliate of the Company, to the University of Macau Development Foundation. On July 2, 2013, the Company received a letter from the Office stating that the investigation had been completed with the Office not intending to recommend any enforcement action against the Company by the SEC.”

According to this report:

“Speaking to The Associated Press from his boat on the Spanish island of Ibiza … CEO Steve Wynn said he never had any doubt federal investigators would clear the company.  ‘We were so sanguine that we never paid any attention to it; we had no exposure. It was a nonevent except for the damn newspapers.’”

For the Reading Stack

The always informative Gibson Dunn Mid-Year FCPA Update and Mid-Year DPA and NPA Update (through July 8th, approximately 30% of all DPAs/NPAs have been used to resolve FCPA enforcement actions).

Sound insight from Robertson Park and Timothy Peterson in this Inside Counsel column:

“Without putting too fine a spin on the matter, the discussion of the potential consequences faced by a company with potential anti-bribery exposure was fundamentally U.S.-centric. The dispositive question was often whether or not the potential misconduct was likely to fall under the umbrella of FCPA enforcement. Would U.S. authorities be interested in pursuing this matter? Would they find out about this matter? There were not many other concerns that mattered. Whether the site of the potential misconduct was in the European, Asian, South American or African sector, the substantial likelihood was that home authorities would have little interest in the matter, and even if they did it was likely an interest that would often frustrate and impede efforts by the Department of Justice or the Securities and Exchange Commission to investigate the matter. Cooperative enforcement was unlikely. This has changed. [...]  For companies that learn of a potential international corruption issue, the impact of this emerging global enforcement market means that the headache associated with scoping an internal investigation is now a migraine with diverse and complex symptoms. Companies investigating potential bribery have always faced the question of how, if at all, they plan to disclose any subsequent findings to government authorities. Now, initial assessments of investigative plans in anti-bribery matters must consider a broader array of potentially interested enforcement authorities. Companies must design their anti-bribery investigations at the outset to consider not only the FCPA enforcement regime in the U.S., but also a newly energized U.K. anti-bribery law, along with a growing list of ant-bribery measures in almost all of the important jurisdictions with business growth opportunities.”

Six ways to improve in-house compliance training from Ryan McConnell and Gérard Sonnier.

The reality of facilitation payments from Matt Kelly.

“… Facilitation payments are a fact of life in global business. Nobody likes them, and no compliance officer wants to pay a bribe disguised as a facilitation payment. But when the transaction truly fits the definition of a facilitation payment—money paid to a government official, to speed up some job duty he would normally perform anyway—there shouldn’t be any ethical or legal crisis in paying it. After all, we have facilitation payments domestically in the United States. If you want a passport from the State Department, you pay $165 in fees. If you want an expedited passport, you pay an extra $60 fee and get your passport in half the usual time. That’s a facilitation payment, pure and simple. Other countries have all sorts of facilitation payments as well, say, to get a visa processed quickly or to clear goods through customs rather than let them rot on the docks. Urgent needs happen in business, and facilitation payments get you through them. That’s life.”

The language of corruption from the BBC.

Spot-On

Regardless of what you think of former New York Attorney General Eliot Spitzer, he is spot-on with his observation that the so-called Arthur Anderson effect (i.e. if a business organization is criminally charged it will go out of business) is “overrated.”  As noted in this Corporate Crime Reporter piece, in a new book titled “Protecting Capitalism Case by Case” Spitzer writes:

“Almost all entities have the capacity to regenerate — even if under a new name, with new ownership and new leadership — and forcing them to do so will have the deterrent effect we desire.”

“Most companies would have no trouble continuing in operation once charged. They might suffer reputational harm, perhaps lose contracts, have certain loans be declared to be in default, and lose some personnel and public support. But that would probably be the proper price to be paid in the context of the violations of the law they committed.”

As noted in previous posts, the Arthur Anderson effect was effectively debunked (see here) and even Denis McInerney (DOJ, Deputy Assistant Attorney General) recently acknowledged (see here) that there is a very small chance that a company would be put out of business as a result of actual DOJ criminal charges.

In his new book Spitzer also writes as follows concerning the SEC’s neither admit nor deny settlement policy.

“I hope that the new leadership at the Securities and Exchange Commission will mandate that an admission of guilt is a necessary part of future settlements in cases of this stature or magnitude. The law and justice require such an acknowledgement — or else nothing has been accomplished.”

Speaking of neither admit nor deny, part of the SEC’s talking points defense of this policy is that the SEC is not the only federal agency that makes use of such a settlement policy.

On this score, it is notable – as detailed in this Law360 article – that Bart Chilton, a top official at the U.S. Commodity Futures Trading Commission, “said the commission should rethink its policy of allowing defendants to settle claims without admitting or denying the allegations.”  According to the article, Chilton stated:

“I understand there are certain circumstances where we might not want to require [admissions], but I think we at the CFTC should change our modus operandi.  The default position should be that people who violate the law should admit wrongdoing.”

$10 Million Man

Continuing with neither admit nor deny, one of the defenders of this settlement policy was Robert Khuzami while he was at the SEC as the Director of Enforcement.   As noted in this Kirkland & Ellis release, Khuzami joined the firm as a partner in the global Government, Regulatory and Internal Investigations Practice Group.  According to this New York Times article, Khuzami’s new position “pays more than $5 million per year” and is guaranteed for two years.  In joining Kirkland, the New York Times stated that Khuzami “is following quintessential Washington script: an influential government insider becoming a paid advocate for industries he once policed.”

Khuzami and former Assistant Attorney General Lanny Breuer were the voice and face of the SEC and DOJ last November upon release of the FCPA Guidance.  As detailed in this prior post, Breuer is currently at Covington & Burling making approximately $4 million per year.

*****

A good weekend to all.

Green Restitution Order Stands … For Now

Friday, July 12th, 2013

Given the general lack of FCPA caselaw, anytime a court - let alone an appellate court - issues a decision that contains the words “Foreign Corrupt Practices Act,” it is a notable event even if the decision does not directly deal with FCPA issues.

As highlighted in this previous post, in September 2009 Gerald and Patricia Green were found guilty by a federal jury  of substantive FCPA violations, conspiracy to violate the FCPA, and other  charges in connection with a bribery scheme involving film festival contracts in Thailand.  As noted here, the judge rejected the DOJ’s 10 year sentencing recommendation and sentenced the Greens to six months in prison, three years’ supervised release and $250,000 in restitution.

On appeal to the Ninth Circuit, the Greens argued that the trial court violated the Supreme Court’s holding in Apprendi (that the Sixth Amendment reserves to juries the determination of any fact, other than the fact of a prior conviction, that increases a criminal defendant’s maximum potential sentence  ) “when it ordered them to pay restitution without a jury’s finding that there was ‘an identifiable victim or victims’ who suffered a ‘pecuniary loss.’”

This recent 9th Circuit opinion concerned the Greens’ appeal of the restitution order.

In a colorful, seemingly apologetic, opinion authored by Judge Alex Kozinski, the court acknowledged that the Supreme Court has “yet to hold whether Apprendi applies to restitution.”

On the other hand, the opinion states that the Ninth Circuit “has categorically held that Apprendi and it progeny don’t apply to restitution.”

On the other hand, the opinion states that the Supreme Court’s 2012 decision in Southern Union provides reason to believe that Apprendi might apply to restitution.  (As noted in this previous post, Southern Union held that Apprendi applies to the imposition of criminal fines).

One the other hand, the opinion states that Southern Union’s “strong signals aren’t enough” for a “three-judge panel to overrule circuit precedent.”

In conclusion, the court held as follows.

“Our precedents are clear that Apprendi doesn’t apply to restitution, but that doesn’t mean our caselaw’s well-harmonized with Southern Union.  Had Southern Union come down before our cases, those cases might have come out differently.  Nonetheless, our panel can’t base its decision on what the law might have been.  Such rewriting of doctrine is the sole province of the court sitting en banc.  Faced with the question whether Southern Union has ‘undercut the theory or reasoning underlying the prior circuit precedent in such a way that the cases are clearly irreconcilable,’ we can answer only:  No.”

Given the above language, the next step on this issue would seem to be obvious.

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An interesting topic of late is whether FCPA violations result in victims.  On this issue, the Ninth Circuit stated that FCPA convictions do not “necessarily imply a victim or a loss.”

Shades Of Gray

Tuesday, August 28th, 2012

As noted in other recent posts (here and here), while FCPA enforcement is largely devoid of judicial scrutiny, sentencing of individual FCPA defendants remains a judicial function and provides an opportunity for someone other than the DOJ to have input on some aspect of the DOJ’s positions when it comes to FCPA enforcement.  This is what makes FCPA sentencing transcripts such interesting reads.  The lawyer comments, and more importantly those of the judge, are unscripted and often telling.  I wish I had all FCPA sentencing transcripts to share and perhaps you can assist in that endeavor by sending a transcript my way at fcpaprofessor@gmail.com.

One FCPA sentencing transcript I recently received was the August 2010 transcript from Gerald and Patricia Green’s sentencing hearing.

In terms of background, as noted in this previous post, in September 2009, the Greens were found guilty by a federal jury of conspiracy to violate the FCPA, substantive FCPA violations, and other charges.  See here for the DOJ New Release.  As noted in the release, evidence introduced at trial showed that “beginning in 2002 and continuing into 2007, the Greens conspired with others to bribe the former governor [Siriwan] of the Tourism Authority of Thailand (TAT) in order to get lucrative film festival contracts as well as other TAT contracts.”

As noted in this previous post, in August 2010 District Court Judge George Wu (Central District of California) rejected the DOJ’s 10 year sentencing recommendation and sentenced both Gerald and Patricia to six months in prison.

The sentencing transcript (here) indicates that Judge Wu believed that the Greens helped make the TAT a success, performed the services it was engaged to perform in a professional manner, and increased revenue for the country.

Wu stated as follows.

“Insofar as the nature of the crimes are concerned, the jury found that the defendants bribed the head official of the TAT in order to obtain contracts to operate the Bangkok International Film Festival between 2002 and 2006.  The Court finds that by engaging in that scheme the defendants were not trying to get money from the Thai government without performing the services or even to engage in those services in a slipshod manner.  Prior to the Greens’ involvement, the Bangkok  International Film Festival was not a particularly successful endeavor in any sense of the word. Through the Greens’ management the Bangkok International Film Festival gained in stature, reputation and increased revenue for the country.  The defendants are claiming that the nation of Thailand profited in the sum of 140 million. I find that that figure is somewhat excessive. Although, I do feel that the evidence does show that there was a profit when everything was said and done, including any payments that were made either to the Greens or to Ms. Siriwan.  Therefore, the Court would find that the Greens’ efforts and also actually their scheme did not actually cause any monetary loss for the country.”

Elsewhere in the sentencing transcript, Judge Wu and DOJ attorney Jonathan Lopez had the following exchange as to whether the contracts at issue benefited Thailand.

“MR. LOPEZ:  [...] It’s hard to argue that providing film festivals [provides a substantial benefit to the country].

THE COURT: It depends on the amount of money that’s involved and that’s generated. If it was successful, which it was, that does in turn engender jobs of one sort or another to the tourist industry having films being made in the country and things of that sort.

MR. LOPEZ: Well, their sentencing papers have not established any sort of direct link of that nature, if that argument was even relevant.

THE COURT: I think they proffered the evidence of it. The government may not find that evidence to be substantial, but the defense did proffer it.”

The transcript also indicates that Judge Wu (1) was not persuaded by the DOJ’s position that the reputational harm to Thailand was a proper issue to consider at sentencing; and (2) was troubled by the DOJ’s presumption that the Greens corrupted the Thai official when the opposite could equally be true – that the Thai Official corrupted the Greens.

The following exchange between Judge Wu and DOJ attorneys Jonathan Lopez and Bruce Searby is interesting.

“MR. LOPEZ:  One thing that the Court I don’t think is taking — or that I’d like to ask the Court to take into fuller consideration is, setting aside the economic harm, the reputational harm corruption has, that is the reputational harm that comes to a city domestically or internationally or a state internationally where corruption exists.  There is a reputational harm to the system, to the people, to the integrity of the government when corruption is not punished swiftly. That is one of the reasons why the FCPA has been enacted is to promote the ending of corruption. Corruption in and of itself is a crime, and these two defendants engaged in pure corruption with the governor in this scheme.  Your Honor looks as though he may be confused by something I’m saying.

THE COURT: No. I’m not confused by what you are saying. It’s just that when you were making that argument, I presume you were referring to the United States.

MR. LOPEZ: Well, I’m referring both to the United States and to Thailand. You had mentioned Thailand is not a monetary victim. These defendants victimized Thailand reputationally as well, and I don’t want that point to be lost. I can expand further.

THE COURT: Obviously, when one has a bribe, one has to have the person receiving the bribe. I suppose that that is some sort of reputational harm. But conversely, however, this Court can only decide the issue of punishment as to the defendants it has here insofar as Ms. Siriwan is concerned, and the issue as to whether or not Ms. Siriwan  has somehow sullied the reputation of Thailand is something that this Court can’t deal with.

MR. LOPEZ: The government posits that the defendants assisted in the sullying of the reputation of the Thai government system by assisting in corrupting that system through their actions.  No other American company was able to bid on these projects. No other Thai company was able to bid on these projects because the defendants had a lock on it, and the statement that contracts should be awarded based on merit and not pay, the jury found that those two defendants paid for all of those contracts. That’s a corruption of the system.

THE COURT: And I understand that they have to suffer the consequences of that, but vis-a-vis the reputation of Thailand, again, the fact that I punish these defendants in one way or another is not going to affect the reputation of Thailand. It’s up to the Thai government to take steps vis-a-vis its own officials as to whether or not it feels that those officials deserve some sort of punishment one way or another.

MR. LOPEZ: I believe you can, Your Honor.

THE COURT: I can only do the punishment insofar as these defendants are concerned. I can’t affect Thailand’s reputation one way or another by my sentencing.

MR. LOPEZ: I believe you can, Your Honor. I believe it sends a message, both domestically and both internationally, that the United States citizens are not going to promote corruption in other countries and add to that. That’s the United States’ side of it.

THE COURT: But, unfortunately, for those persons in Thailand, there might be other countries with other persons who may attempt to do corruption in a similar fashion. They are not governed by United States law. So, therefore, unless the Thai government takes steps in that regard, I don’t understand how the Thai — Country of Thailand’s reputation vis-a-vis corruption or not corruption is affected.

MR. LOPEZ: The fact remains that these two defendants corrupted the Thai system, and they are before this Court.

THE COURT: Or vice versa. It might very well be that Siriwan posed the endeavor to the Greens. There is no evidence one way or the other on that. [...] In which case we would have a situation where the Thai high governmental official corrupted two persons whom do not have any criminal convictions prior to this point in time, whose reputation at least amongst the persons who have provided letters to this country was unsullied, and it was that Thai official who corrupted the otherwise incorruptible citizens of this country.

MR. LOPEZ: First of all, Your Honor, I think you are basing your –

THE COURT: I’m using your argument in the same way. Since there is no evidence as to who corrupted who, your presumption is that the defendants corrupted the Thai official. It might have very well been that the Thai official corrupted them.

MR. LOPEZ: Your Honor, I think the Court is confused as to what my argument is. It does not center around whose idea it was. It does not center around that.  It centers around the corruption that took place period.  From 2002 to 2007 these defendants engaged in a conspiracy, no matter whose idea it was initially, to corrupt the Thai system as well as to sully the reputation of the United States and its businesses that operate out of the United States. I submit to the Court that that is a harm. That is a harm to both Thailand and to both the United States and that these –

THE COURT: I would agree that obviously when bribery becomes a issue there is a reputational harm.

MR. LOPEZ: Yes.

THE COURT: But again, to make a strong point vis-a-vis the sentencing, before I would have any sort of position as to what effect that would have on how I sentence, I would have to know such things as who corrupted who. Otherwise, what difference does it make.

[...]

THE COURT:  What I did is to utilize that argument vis-a-vis [Lopez's] contention that in this particular situation the defendants are somehow to blame because of the bribery situation without placing any equal blame on the part of Ms. Siriwan who was involved as well.

MR. SEARBY: Your Honor, I would happily place equal blame on Governor Siriwan for what has happened, no doubt about it.

THE COURT: All right.

MR. SEARBY: However, the defendants here dived into bribery with both feet because they initially started bribing the governor in one contract.

THE COURT: I understand your position.

MR. SEARBY: Basically, they ran wild in these various other contracts.

THE COURT: I understand your position.

MR. SEARBY: There is no doubt they were willing participants and enthusiastic participants in bribery. In fact, as the evidence came out at trial, they had practically no other revenue other than TAT contracts that they obtained through bribery.

MR. LOPEZ: Your Honor, I want to make sure this point is clear. Of course, the governor has an equal share of blame in this regard, but the governor is not before you.  These two defendants are before you. That’s one of the reasons why I’m a little confused as to the government’s emphasis on what’s happening in Thailand.  The government submits that this Court’s opinion should not be governed by what Thailand does with its own citizens. That should not be a relevant factor. It’s not the situation where if Thailand doesn’t punish their person we shouldn’t punish our people. Two wrongs don’t make a right.  It’s the same type of argument that people have said about foreign bribery; well, that’s what you have to do in that country, so obviously it’s okay. Well, no, that’s not what you have to do in that country. Punishment should not be withheld from one defendant because another defendant is still going through the process. We don’t know what’s going to happen with that other defendant. [See here for a recent post concerning the DOJ's enforcement action against Siriwan]. There is a process in place. Because we are further along does not mean that, that process is not happening. These are the defendants before you. These defendants have that blame.

THE COURT: I understand. What else from the government?”

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Bribery is seldom a black and white issue.  There are many shades of gray.  However this color often appears only during sentencing of FCPA  individual defendants when someone other than the DOJ is defining the colors.

From the Dockets

Thursday, September 15th, 2011

This post details developments as to FCPA or related litigation previously reported.

Haiti Teleco Case

Previous posts (here and here)  detailed Joe Esquenazi’s and Carlos Rodriguez’s motion for acquittal or a new trial based on statements made (and then seemingly retracted) by Jean Max Bellerive (Prime Minister of Haiti) concerning the ownership of Haiti Teleco – the entity at the middle of the bribery scheme.  In the DOJ’s response (here) to the defendants’ motion, the DOJ argues, among other things, that “the Government did not seek the first Bellerive declaration from the Republic of Haiti, and there is no need for an evidentiary hearing as to when or how the Government obtained it.”  As to the second Bellerive declaration, the DOJ stated that “the Government assisted Mr. Bellerive in preparing the declaration” in which Bellerive, as noted in the prior post, stated that the first declaration was strictly for internal purposes and he did not know it was going to be used in criminal legal proceedings in the U.S. or that it was going to be used in support of the argument that Teleco was not part of Public Administration of Haiti.

Substantively, the DOJ argues that the first Bellerive declaration does not “contain newly discovered evidence” because the jury “heard most of” the points addressed in the first Bellerive declaration from Garry Lissade, the DOJ’s expert witness, who testified as to the legal status of Haiti Teleco after “he conducted extensive research, including legal research and interviews, in reaching his conclusions.”

The DOJ’s position in many FCPA enforcement actions concerning state-owned or state-controlled entities seems to be that the ownership structure of the entity at issue should be obvious and easily ascertainable to defendants.  If so, why did Lissade (Haiti’s former Minister of Justice) have to “conduct extensive research, including legal research and interviews, in reaching his conclusion” that Teleco was a Haitian public entity?

Africa Sting Case

The second Africa Sting trial involving defendants John Mushriqui, Jeana Mushriqui, R. Patrick Caldwell, Stephen Giordanella, John Godsey, and Marc Morales is set to begin on September 22nd.  The second trial will be more narrowly focused than the first Africa Sting trial that resulted in a mistrial (as well as dismissal of certain counts including money laundering conspiracy charges).

Why?  Because the DOJ did not oppose defendants’ motion to dismiss the money laundering conspiracy charges.  In pre-trial briefing, the DOJ stated as follows.  “At the conclusion of the government’s case-in-chief in the first trial, the Court granted a motion for judgment of acquittal on Count Forty-Four of the Superseding Indictment with respect to the defendants in the first trial. The government continues to believe that the Court should not have granted the motion and that Count Forty-Four should have been submitted to the jury. But the government understands the Court’s ruling and will not object to the Defendant’s motion. The government’s position in this filing recognizes the Court’s past ruling, and in no way suggests that the government will not seek to bring similar charges in future cases.”

Siriwan “Foreign Official” Case

A previous post (here) detailed how Juthamas Siriwan and Jittisopa Siriwan (the “foreign officials” in the Green FCPA enforcement action) were fighting back against DOJ criminal charges.  As noted in the post, the Siriwans argued as follows.  “This is the first judicial challenge to a novel prosecutorial approach the Government recently developed to charge foreign officials allegedly involved in corruption.  That approach is aimed at overcoming a fundamental FCPA limitation.  The FCPA does not criminalize a foreign public official’s receipt of a bribe.  Nor can the Government employ an FCPA conspiracy charge against a foreign public official.  Accordingly, these new enforcement initiatives require expansive interpretations [of] “promotion money laundering” [under the Money Laundering Control Act].”  The Siriwans further argued as follows.  “Congress has extensively amended the FCPA, yet it deliberately has not extended FCPA liability to foreign officials.  If the Government wishes to extend U.S. criminal penalties to foreign officials accepting a bribe, it must go back to Congress, rather than employ dubious charging tactics to evade the direct and repeated congressional choice not to apply FCPA criminal liability to such officials.”

In its opposition brief (here) filed last week, the DOJ stated as follows.  “Upon analysis of defendants’ arguments, it is quickly evident that, in support of their positions, defendants routinely conflate and confuse multiple statutes, interpret and argue the elements of uncharged statutes, and ignore case law relevant to the statutes actually charged.”  Among other things, the DOJ stated as follows.  “That foreign officials cannot face liability for FCPA offenses does not give foreign officials a free pass to commit other, entirely separate, crimes.”  The DOJ noted that the Siriwans are not charged with accepting a bribe, or conspiring to violate the FCPA, but rather with “the separate, and entirely analytically distinct, crime of international transportation money laundering to promote the Greens’ violation of the FCPA.”  The DOJ noted that just because Siriwan ”was a foreign official at the time of these offenses, and therefore, not charged under the FCPA does not change the analysis.”

As reported by Samuel Rubenfeld at Wall Street Journal Corruption Currents, a hearing on Siriwans’ motion to dismiss is scheduled for Oct. 20.

A “Foreign Official” Fights Back

Thursday, August 25th, 2011

The Foreign Corrupt Practices Act addresses the payment of bribes, not the receipt of bribes.

For instance, in U.S. v. Castle, 925 F.2d 831 (5th Cir. 1991), the court was called upon to consider whether “foreign officials” who are excluded from prosecution under the FCPA itself, could nevertheless be prosecuted under the general conspiracy statute (18 USC 371) for conspiring to violate the FCPA.  The court held that “foreign officials”  could not be prosecuted for conspiring to violate the FCPA and adopted the rationale set forth in the trial court opinion (see 741 F.Supp. 116).   That rationale was that Congress, in passing the FCPA, only chose to punish one party to the bribe agreement and the DOJ could not therefore  ”override the Congressional intent not to prosecute foreign officials for their participation in the prohibited acts” through use of the conspiracy statute.  The trial court stated as follows.  “The drafters of the [FCPA] knew that they could, consistently with international law, reach foreign officials in certain circumstances. But they were equally well aware of, and actively considered, the ‘inherent jurisdictional, enforcement, and diplomatic difficulties’ raised by the application of the bill to non-citizens of the United States.”  The trial court observed that prosecution and punishment of “foreign officials” (in the Castle case alleged Canadian “foreign officials”) ”will be accomplished by the government which most directly suffered the abuses allegedly perpetrated by its own officials, and there is no need to contravene Congress’ desire to avoid such prosecutions by the United States.”  For those of you scoring at home, Castle represents a DOJ loss in a contested FCPA matter.

In recent years, however, the DOJ has used other laws in an attempt to reach “foreign officials.”  This trend has been profiled here and here.  For instance, in January 2010, in connection with the Gerald and Patricia Green FCPA enforcement action, a criminal indictment was unsealed against Juthamas Siriwan and Jittisopa Siriwan.  According to the indictment, Juthamas “was the senior government officer of the Tourism Authority of Thailand (TAT)” and she is the “foreign official” the Greens were convicted of bribing.  Jittisopa is the daughter of the “foreign official” and also alleged to be an “employee of Thailand Privilege Card Co. Ltd.” an entity controlled by TAT and an alleged “instrumentality of the Thai government.”  The charges against the Siriwans were not FCPA charges, but largely conspiracy to money launder and “transporting funds to promote unlawful activity.”

As detailed in this Wall Street Journal Corruption Currents story by Joe Palazzolo, the Siriwans are fighting back.  On behalf of the Siriwans, lawyers at Kelley Drye & Warren LLP recently field this motion to dismiss to the indictment.

In summary, the Siriwans state as follows.  “This is the first judicial challenge to a novel prosecutorial approach the Government recently developed to charge foreign officials allegedly involved in corruption.  That approach is aimed at overcoming a fundamental FCPA limitation.  The FCPA does not criminalize a foreign public official’s receipt of a bribe.  Nor can the Government employ an FCPA conspiracy charge against a foreign public official.  Accordingly, these new enforcement initiatives require expansive interpretations [of] “promotion money laundering” [under the Money Laundering Control Act].”  The Siriwans state as follows.  “Congress has extensively amended the FCPA, yet it deliberately has not extended FCPA liability to foreign officials.  If the Government wishes to extend U.S. criminal penalties to foreign officials accepting a bribe, it must go back to Congress, rather than employ dubious charging tactics to evade the direct and repeated congressional choice not to apply FCPA criminal liability to such officials.”

As noted in Palazzolo’s article, the DOJ has yet to respond to Siriwans’ motion and U.S. District Judge George Wu (C.D. of California) has scheduled a hearing on the motion for October 20th.

In a development that goes straight to a point raised by the Castle court, Thailand’s National Counter-Corruption Commission (NCCC) has reportedly found sufficient grounds to believe that Juthamas Siriwan received money from the Greens and that Jittisopa Siriwan was an accomplice in the bribery case.  The NCCC has reportedly forwarded its conclusion to the Thai Attorney-General for legal action against the Siriwans.  For more, see here from the Bangkok Post.

The Siriwan’s challenge is the latest in “this year of FCPA judicial scrutiny.”  Previously this year, there was the first judicial challenge to the DOJ’s “foreign official” interpretation that made extensive use of the FCPA’s legislative history (see here); the first dd-3 judicial challenge (see here); the first victim petition under the FCPA (see here); and the first Travel Act judicial challenge (see here).

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In a related development (see here), the DOJ has dropped its appeal of Gerald and Patricia Green’s sentence.  As detailed in this prior post, in September 2009, Gerald and Patricia Green were found guilty by a federal jury of substantive FCPA violations, conspiracy to violate the FCPA, and other charges.  After several sentencing delays, in August 2010 (see here), Judge Wu rejected the DOJ’s 10 year sentencing request for both Gerald and Patricia Green and sentenced the Greens to six months in prison, followed by three years probation.  In its sentencing brief, the DOJ urged the court to “disregard defendants’ efforts to obscure the landscape of FCPA sentencing, which generally reflects significant prison terms for convicted individuals.”  I asked at the time whether the “landscape of FCPA sentencing” truly reflected “significant prison terms” as stated by the DOJ – a statement even more true now (see the FCPA Sentences tab under the Search page).

I was surprised to learn that the DOJ was appealing the Green sentences and I am thus not surprised to learn that the DOJ has dropped its appeal.  In short, do you think the DOJ wants anything FCPA related before the 9th Circuit?