It’s all here in the Friday roundup.
Alleged Bribery at the United Nations
The United Nations does much preaching about bribery and corruption, yet perhaps it should look inward as once again one of its own is alleged to have engaged in bribery and corruption.
This recent criminal complaint charges John Ashe and others with a variety of criminal offenses. Ashe is described as having various positions at the U.N. including serving as the Permanent Representative of Antigua to the U.N. and recently serving as the President of the U.N. General Assembly.
According to the complaint, various other defendants (most of whom are alleged to be naturalized U.S. citizens, as well as a Chinese national who allegedly has a New York-based non-governmental organization) made bribe payments to Ashe in connection with a U.N. sponsored conference center in Macau, China and to influence business interactions with Antiguan government officials.
The alleged bribery is charged under 18 USC 666 (theft or bribery concerning programs receiving federal funds) on account of the U.N. receiving U.S. federal government funds.
However, Ashe is likely a “foreign official” under the FCPA given that the definition of “foreign official” includes individuals associated with “public international organizations” and the U.N. has been designated as such an organization.
Moreover, as highlighted above, the alleged payors of the bribes to Ashe are predominately naturalized U.S. citizens subject to the FCPA’s anti-bribery provisions. The Chinese national defendant is alleged to have engaged in conduct in the U.S. likely sufficient to satisfy the dd-3 prong of the FCPA.
The recent enforcement action is certainly not the first to involve bribery of a U.N. official.
As highlighted here, the Richard Bistrong enforcement action involved bribe payments to, among others, U.N. officials.
For additional coverage of the Ashe charges, see here.
Former Siemens Exec Pleads Guilty
Recently, the DOJ announced that Andres Truppel of Argentina, the former chief financial officer of Siemens S.A. – Argentina (Siemens Argentina), pleaded guilty to conspiring to violate the anti-bribery, internal controls and books and records provisions of the FCPA; and to commit wire fraud.
On social media, some commentators have tried to link the guilty plea to the recent Yates Memo. Such an attempt is off-target as Truppel and other former Siemens executives and agents were criminally charged in December 2011.
As highlighted in this prior post from nearly four years ago, the Siemens Argentina individual enforcement action was brought after the DOJ faced much scrutiny for not bringing any individual enforcement action in connection with a bribery scheme “unprecedented in scale and geographic reach” in which there existed at Siemens a “corporate culture in which bribery was tolerated and even rewarded at the highest levels of the company.” (Those are direct quotes from DOJ/SEC).
This scrutiny occurred, among other places, during the Senate’s November 2010 FCPA hearing in which hearing Chair Senator Arlen Specter gave me this homework assignment regarding the Siemens enforcement action.
As highlighted in the prior post, despite the Siemens Argentina individual enforcement action, the fact remains that only a sliver of the conduct at issue in the 2008 enforcement action against Siemens resulted in individual prosecutions. As alleged by the enforcement agencies, the corruption at Siemens involved more than $1.4 billion in bribes to government officials in Asia, Africa, Europe and the Americas. As alleged (see here) “among the transactions on which Siemens paid bribes were those to design and build metro transit lines in Venezuela; metro trains and signaling devices in China; power plants in Israel; high voltage transmission lines in China; mobile telephone networks in Bangladesh; telecommunications projects in Nigeria; national identity cards in Argentina; medical devices in Vietnam, China, and Russia; traffic control systems in Russia; refineries in Mexico; and mobile communications networks in Vietnam.”
Scrutiny Alerts and Updates
There has never been an FCPA enforcement action against a Canadian company, but recently Kinross Gold Corp (a company with shares listed on the NYSE) stated:
“In August 2013, Kinross received information regarding allegations of improper payments made to government officials and certain internal control deficiencies at its West Africa mining operations. Kinross takes such allegations very seriously and action was immediately taken in accordance with Kinross’ Whistleblower Policy. External legal counsel was immediately retained to conduct an objective internal investigation into the allegations.
In March and December 2014, and July 2015, Kinross received subpoenas from the United States Securities and Exchange Commission (the “SEC”) seeking information and documents on substantially the same subjects as had previously been raised. In December 2014, Kinross received similar requests for information from the United States Department of Justice (the “DOJ”).
Kinross is fully cooperating with the SEC and DOJ and continues to diligently pursue its own internal investigation, which, over the course of the past 25 months, has not identified issues that Kinross believes would have a material adverse effect on the Company’s financial position or business operations. Our internal investigation is ongoing, and additional issues or facts could become known as the investigation continues.
It is important to note that the SEC subpoenas expressly state that: “This investigation is confidential and nonpublic and should not be construed as an indication by the Commission or its staff that any violation has occurred, nor as a reflection upon any person, entity or security.”
Kinross is committed to operating in accordance with the highest ethical standards and conducting business in an honest and transparent manner that is in compliance with the law. Kinross has a longstanding culture of ethical conduct and accountability consistent with its Code of Business Conduct and Ethics and related anti-corruption compliance program.”
Informed by my prior experience as an FCPA lawyer in private practice, I have long pinned one of causes for the inexcusable long duration of FCPA inquiries on the high attrition rates at the DOJ and SEC’s FCPA Unit.
Since leaving the DOJ, Paul Pelletier (former Acting Chief and Principal Deputy Chief of the DOJ’s Fraud Section and currently a partner at Mintz Levin) has offered an informed voice on the long duration of DOJ FCPA inquiries. (See here for instance).
Commenting on the Yates Memo in this recent FCPA Blog guest post, Pelletier writes:
“To avoid delay in the efficient and timely prosecution of business entities, implementation of the formal requirements of the Yates Memo will require the deft and even hand of prosecutors, both experienced in investigating and prosecuting complex corporate white collar crime and trained in the methods of real time prosecutions. This unique experience and specific training are required and essential.
From 2002 through 2010, the average Criminal Division tenure of a Fraud Section prosecutor exceeded 5 years and according to the OECD’s most recent Foreign Bribery Report, during that same time frame, the average duration of a foreign bribery investigation measured from the last act of the offense to resolution was approximately 3 years. Commentators have noted an increasingly high and troubling turnover rate in the Fraud Section since 2010, radically altering the average tenure of Section prosecutors. Moreover, since 2010 the average investigatory duration of foreign bribery matters has doubled to more than sixyears.
Whatever explanation may be offered for these jaw dropping statistics, the practical effect is that most FCPA investigations will be passed from prosecutor to prosecutor, almost certainly leading to unnecessarily protracted investigations—perhaps an exclamation point which highlights the critical consequences to FCPA investigations flowing from implementation of the Yates Memo, absent a root cause cure.
Given the formal requirements of the Yates Memo, no matter how good the prosecutors’ intentions or how noble their cause, without the DOJ’s commitment to sustained and focused training combined with a similar effort to retain prosecutors with the experience essential to the success of the endeavor, corporations (including employees and shareholders) caught up in the throes of an FCPA investigation, if they choose to cooperate, are likely to be forced to suffer the untold and unwarranted costs and disruptions of seemingly interminable investigations. That should not be the consequence of DOJ’s renewed focus.”
For the Reading Stack
This recent Wall Street Journal Risk & Compliance Journal article states:
“The Justice Department’s Foreign Corrupt Practices Act unit is focusing its enforcement efforts on quality rather than quantity. Spokesman Peter Carr said after years of handling smaller cases coming from corporate self-reporting, the unit is now putting more at stake and going after blockbuster cases. Initiatives to boost foreign corruption enforcement personnel and resources are being used to go after that high-profile wrongdoing, Mr. Carr said. Many of those programs began years ago. His comments came in response to news that the Department’s anti-bribery efforts were eclipsed by the Securities and Exchange Commission in the third quarter. “The department several years ago handled more cases based on self-reporting by companies, and as a result of that we saw more resolutions, but smaller cases,” Mr. Carr said in an email. “We are currently focusing on bigger, higher impact cases, including those against culpable individuals, both in the U.S. and abroad, and those take longer to investigate and absorb significant resources, but there are a lot of cases out there. In fact, the department is increasing its FCPA resources, and the three new FBI squads focusing on this issue are now staffed and operational.” [...] “Our investigations of FCPA cases are as robust as ever, and the resources we dedicate to FCPA cases continue to grow. These are sophisticated cases that can take years to investigate,” Mr. Carr said. “The number of public announcements about filed cases or resolutions will vary over time, but our commitment to FCPA cases is strong.”
A good weekend to all.