Archive for the ‘Trevor Bruce’ Category

Developments From Across The Pond

Monday, June 8th, 2015

Across the PondA few developments from the United Kingdom worth highlighting.

The SFO Loses Another Bribery Trial

It is one thing for a law enforcement agency to allege a crime.

It is quite another for a law enforcement agency to prove a crime to someone other than itself.

In legal systems based on the rule of law, the later matters more than the former; however it seems that more attention is paid to the former rather than the later.

In December 2013, the U.K. Serious Fraud Office’s (SFO) case against Victor Dahdaleh on bribery and corruption charges collapsed after the SFO concluded there was no “longer a realistic prospect of conviction.”

Recently the SFO lost another bribery trial when put to its burden of proof.

As stated in this SFO release:

“Three employees of Swift Technical Solutions Ltd were found not guilty at Southwark Crown Court of corruption offences in relation to the tax affairs of a Nigerian subsidiary.  The jury was unable to reach a verdict on one count against the third defendant and was discharged.  The SFO today indicated in court that it did not intend to seek a retrial on that count and a verdict of not guilty was entered.

The defendants were:

Bharat Sodha (age 51) of Middlesex, the former International Tax Manager

Nidhi Vyas (age 49) of Middlesex, the former Financial Controller

Trevor Bruce (age 46) of Northern Ireland, the former Area Director for Nigeria

Bharat Sodha was acquitted of two counts of conspiracy to make corrupt payments. Nidhi Vyas was acquitted of one count of conspiracy to make corrupt payments on the direction of the judge at the close of the prosecution case and was acquitted by the jury of another similar count. Trevor Bruce was acquitted of one count of conspiracy to make corrupt payments and the jury was unable to reach a verdict on the other.

The prosecution case was that these defendants conspired to make corrupt payments to officials of two Nigerian Boards of Internal Revenue, one in Rivers State and the other in Lagos State.  Swift co-operated with the SFO, providing documents and making staff available for interview.  It was not charged with any offence.”

Despite the loss, the SFO deserves credit for issuing the above release.

By comparison, when the DOJ loses an FCPA trial, it’s as if it never happened because the normally robust DOJ press office suddenly develops a case of writer’s cramp (see here for the prior post).


SFO Official Gives U.S. Style Speech

Ben Morgan (Joint Head of Bribery and Corruption at the SFO) recently delivered this speech.  It was very much a U.S. style speech that encouraged corporates to engage early with the SFO and cooperate.  In the speech, Morgan also championed U.K. style DPAs.

Prior to excerpting the speech, a brief comment.

Regarding Morgan’s comment that corporates should “live your corporate values” by submitting to the SFO’s every wishes, corporate leaders on both sides of the Atlantic should reject such self-serving enforcement agency rhetoric that somehow it is immoral or unethical to do the following when faced with an internal potential bribery or corruption issue: thoroughly investigate the issue, promptly implement remedial measures, and effectively revise and enhance compliance policies and procedures – all internally and without disclosing to the enforcement agencies.

Such as response is a perfectly acceptable, legitimate, and legal response to potential bribery and corruption issues in but all the rarest of circumstances.

In pertinent part, Morgan stated as follows.

“Although I am billed in a section entitled “regulator update”, actually the SFO is not a regulator, and I’m not going to tell you how to “remain compliant in an evolving regulatory environment”. The SFO is a prosecutor, and that is not just a semantic distinction, it is a practical one. As our Director has memorably said in the past, “we are not in the business of telling people how not to rob banks”. We are in the business of catching those that do, and holding them to account.

We were created by the Criminal Justice Act 1987 and our statutory remit is to investigate and prosecute the most serious or complex fraud, a concept that includes bribery and corruption. The unusual feature of the SFO is that combination of both investigators and prosecutors under the same roof, something I think is absolutely essential for the work we do. So for any given case we will have a multi-disciplinary team from day one – investigators, accountants, digital forensic experts, lawyers, and other specialists, looking into the case, gathering evidence to understand whether any criminal offences have taken place.

So that is the world we are in – one in which the SFO is investigating precisely what has happened in order to pursue the most appropriate criminal justice outcome if the evidence of an offence is there. It is important to emphasise that if you do find yourself in our world there are a range of possible outcomes and that is why I’d like to explain to you what the SFO is doing at the moment; so that you have a chance, if you want to, to positively influence what happens if something does go wrong.

If there is one message to take away from what I say today it’s this – if you find out about a problem I think it is overwhelmingly in your best interests to engage with us early and to do so fully, honestly and with integrity. Just as you urge those in your business not to treat the compliance process as a passive, box-ticking exercise but rather something that needs substance more than just form, so too engaging with us at the back-end of that process needs substance. If it is worth doing at all, it is worth doing properly.

There are three reasons why I say that I think engaging with us properly is in your interests, and I’ll expand on those in the time I have left. The first is that we will be unimpressed if we find out about a problem from someone other than you, and there is a good chance we will. The second is that when we do find out about it, if the evidence is there we will prosecute those who didn’t tell us about their own wrong-doing, or who did so in an artificial, less-than-frank way. And thirdly – a more positive note- for those who do engage with us properly, there is an opportunity to deal with a problem in something other than a traditionally adversarial way. And while we don’t start from this point, it seems to me this option has the potential to be, by some distance, the most effective commercial outcome for a responsible company wanting to resume honest business quickly.

Taking these three things in turn then – what if the SFO finds out about a problem from someone else? Well, it is more likely than ever that we will so if anyone is thinking that just sitting on something is a sensible strategy they need to reflect on that. In complex business like yours there are just too many people in the know, too many channels through which the truth might surface.


[W]e know the problem is there and we are working with whistle-blowers, disgruntled competitors, domestic partner agencies and international colleagues who share our interest to find out what’s happening. I think the very existence of a conference like this, on this scale, and this well attended, shows we are on the same page in terms of appreciating the inherent risk in the mining sector. There are obviously problems, so I would urge you to come and talk to us about yours before someone else does. It is easy for you to do, but it is just as easy for someone else to do, so be careful assuming you have a head start on us.

My second point is that if you don’t tell us, or you do and don’t engage with us properly, prosecution is a likely outcome. As I said earlier, the SFO is a prosecutor first and foremost and our Director has made it very clear that that is our function. We are not in the business of cosy deals, short-cuts or easy targets. We have the stamina and resources to take on the most demanding cases …


Not only do we have that case load though, but in terms of trial outcomes relating to corruption we have built a good trajectory over the last year – we’ve had our first contested conviction of individuals for overseas corruption (senior managers of Innospec who got custodial sentences), our first contested conviction of a corporate for overseas corruption (Smith & Ouzman, paying bribes into Africa, in relation to election ballot papers, of all things), and our first convictions of individuals under the Bribery Act – and in total the SFO convicted 18 defendants (corporates and individuals) in the last calendar year. If that trajectory continues through our current case load, then common sense tells you that we will soon have convictions of major organisations under the Bribery Act – the kind of work the SFO exists to do, and the public expect us to deliver. So if you try to hide a problem, or engage with us in anything less than a full and frank way, if the evidence is there you can expect to be prosecuted.

So what about that more positive note I mentioned earlier? Well, there is an alternative. If you have a problem somewhere in your network and you are prepared to engage with us honestly then we can have a different relationship. The Deferred Prosecution Agreement regime provides a structure for those wanting to resolve their criminal liability to do so quickly and with a degree of control and certainty largely absent from traditional prosecution. A DPA responds to criminal liability – as I said, no cosy deals – so don’t be under any illusion. In a process scrutinised by a Crown Court judge, criminal proceedings will be commenced against the organisation but immediately suspended pending compliance with the terms of the agreement. Those terms can pack a hefty punch too – a fine, compensation, remedial measures, in some cases a monitor and other possible terms. But it has a lot going for it too – speed and certainty, as I have said; a level of compatibility that enables us to get a bit closer to that hallowed ground of a global resolution for conduct that crosses borders, as I suspect much of the activity in your sector inevitably would; and also the chance to really live your corporate values – integrity around facing up to what’s gone wrong and putting it right rather than being on the back foot, having to be defensive. That’s a much better message for your stakeholders is it not? – employees, customers, shareholders, potential investors, the media, regulators even. You could show that it isn’t just rhetoric: that the ‘tone from the top’ means something in real life in your business, not just on paper. And while it’s not my area of expertise, from attending conferences like this one I always get the impression that the way you talk about compliance and ethics now isn’t about moral high ground, nor about threat even, but actually about adding commercial value. Well if that’s right, I put it to you that genuine engagement with us is the consistent extension of that message; the appropriate and commercial way to fix problems that your well-considered compliance procedures identify.

So those are my three reasons for cooperating with us – if you don’t, we stand a good chance of finding out anyway; anything other than proper cooperation risks prosecution; yet proper cooperation offers the chance to resolve risk sensibly.

The final thing I want to say is a word on proper cooperation. I’ve mentioned a few times how important it is to do things properly if you do choose to engage with us, if you set off down that fork in the road as opposed to electing to be a traditional adversary. And it is really important – it’s what I want you to take away from this. We are no longer, at the SFO, in the world of having to talk up DPAs like some sort of salesmen; corporates want them and some will get them. We have issued our first invitation letters giving corporates the opportunity to enter into DPA negotiations. Where we are now is working with corporates on how best to go through that process – not “why DPA”, but “how DPA”. And when it comes to “how”, the DPA Code is clear; we and the court need you to cooperate fully with our investigation. I and others at the SFO have spoken in some detail about what that looks like so I’m not going to go over that ground extensively again, I will just say this. We have made clear what we expect. It’s all there in the DPA Code. Crucially, where suspicions of corrupt activity arise, we do not require you to carry out internal investigations; investigation is our job. And while we do understand that up to a point you will need to do some work to look into allegations of bribery, we find internal investigations that ‘trample over the crime scene’ to be unhelpful. Our stance is to ask for genuine cooperation with our investigation, not duplication of it. We don’t expect you to keep us in the dark while you carry out extensive private investigations and some months or even years later present us with a package of your findings. If there is suspected criminal conduct, that is our job and there are some important issues around access to, and integrity of, evidence (especially regarding witness accounts) and we expect those to be respected in the same way they would be in any other criminal investigation. We expect you to engage with us early, and to work with us as we investigate, not to rush ahead and, whether intentionally or not, complicate the work we need to do. This is, we appreciate, to some extent a departure from the way things used to be and the way certain practices have built up in other jurisdictions, but we make no apology for that. Our job is to investigate possible criminal offences and we take a very dim view of anything anyone does that makes that job more difficult than it needs to be.

You should know that from where I sit, there appear to be emerging two schools of practice among those advising companies like yours. There are those who seem to view our requests for cooperation as some sort of game, to be instinctively resisted but, I’m sure they would think, cleverly managed nevertheless. They roll out the same stale tactics we have come to know well. And then there are those who seem to actually listen to what we are saying, and take the more innovative approach of genuinely trying to respond to it. It is very clear to me which of those approaches is in the respective companies’ best interests, but until the examples of those who have co-operated filter out across the market I suppose there will continue to be people who want to do things the old way. That’s fine, but you can expect no credit for doing your minimum legal duty. You don’t have to cooperate with us, it is your choice. If you do want to then you have to move beyond that, really make the effort to make our job of investigating a possible crime easier. That is what it takes – not the “impression of cooperation”, saying one thing while really working a more guarded agenda (we know all about that) but actually helping us, being fully frank and honest with us, as little by little, some companies now are.

Remember also that engaging with us doesn’t necessarily mean a criminal sanction at all. We are not looking for scalps. If the evidence is not there then we must conclude that it is not a matter that should be prosecuted. That is an entirely valid and appropriate outcome, and one we are perfectly content to reach. We must be – and will be – fair, and make decisions based on evidence and the public interest alone. So there is that safety-valve built into any engagement you have with us. You can come to us early, before you have gone to the four corners of the earth to form a final view of what has happened, and we can work together to understand what has happened. It could well be the case that having done so, no further action on our part is appropriate – you are not committing yourselves to an inevitable sanction, but you are giving yourselves the best shot at a controlled outcome if it turns out there is criminal conduct that needs to be resolved.”

Friday Roundup

Friday, December 21st, 2012

Better late than never, Judge Leon pulls a Judge Rakoff, Edmonds sentenced, it’s official, whistleblower statistics, it ought to stop marketing, China related issues, ICE melted quickly, and a U.K. enforcement action.  It’s all here in the Friday roundup.

The Foreign Corrupt Practices Act Under The Microscope

Academic publishing is seldom quick. Yet before the calendar flips into another year, I am pleased to share my article concerning 2011 FCPA enforcement.  The abstract of ”The Foreign Corrupt Practices Act Under The Microscope” (see here to download) recently published in the University of Pennsylvania Journal of Business Law is as follows.  Information in the article is current as of January 16, 2012.

For most of the Foreign Corrupt Practices Act’s history, key decisions concerning its scope and enforcement were made behind closed doors around conference room tables in Washington, D.C. The FCPA took on a life of its own and, in many instances, the statute came to mean whatever the DOJ or SEC could get putative corporate FCPA defendants (mindful of the consequences of actual prosecuted charges) to agree to behind those closed doors. However, as the enforcement agencies continued to push the envelope on enforcement theories and practices, and as the DOJ brought more individual FCPA enforcement actions, including through manufactured sting operations, business entities and individuals alike began to openly fight back. While many FCPA enforcement decisions and procedures remain opaque, 2011 witnessed the most intense year of public scrutiny in the FCPA’s history. This Article (i) provides an overview of 2011 FCPA enforcement and discusses certain problematic enforcement trends, and (ii) highlights how in 2011 the FCPA was subjected to the most meaningful public scrutiny in its history. FCPA enforcement trends and scrutiny demonstrate that as the FCPA nears its thirty-fifth year, basic legal and policy questions remain as to the purpose, scope, and effectiveness of the FCPA.

Start your collection of FCPA Year in Reviews.  For my 2011 (short version), see here.  For 2010, see here (short version), here (long version).  For 2009, see here (long version).

Judge Leon Pulls a Judge Rakoff

My post concerning the SEC’s March 2011 enforcement action against IBM was titled “Questions Abound in IBM Enforcement Action.”  (See here).  Among the issues I discussed were the following.  That in December 2000, IBM resolved an FCPA enforcement action and consented, as part of the settlement, to the entry of an Order that requires IBM to cease and desist from committing or causing any future violation of [the FCPA's books and records provisions].  I noted that because the March 2011 enforcement action alleged FCPA books and records charges, that IBM was thus in clear violation of the 2000 court order.

The case was assigned to Judge Richard Leon (of Africa Sting fame) and lingered for a long time.  This Wall Street Journal Corruption Currents post and this Bloomberg article report that Judge Leon has refused to approve the settlement.

As stated by Bloomberg – “The heart of the dispute is that Leon, who has had the case under review for 22 months, wants reporting on a broader range of possible wrongdoing than the company is willing to turn over.  Leon, who spoke loudly and angrily, asked why the regulator would agree to limit such requirements for a company with a history of books-and-records violations. [...]   “I guess you want that $10 million judgment on your list of achievements this year,” Leon told [the SEC lawyer]. “Well, it’s not going to happen.”  He scheduled a hearing for Feb. 4.”

As stated by Wall Street Journal Corruption Current – “Leon also questioned broader SEC settlement policies and warned that he was among “a growing number of district judges who are increasingly concerned” by those policies.”

In not ”rubber stamping” the SEC – IBM settlement, Judge Leon pulled a Judge Rakoff.  Judge Rakoff of the S.D. of N.Y. has been a frequent focus on this site – see here, here, here and here.  See also, the discussion of Judge Rakoff in my 2010 article “The Facade of FCPA Enforcement.”

Edmonds Sentence

This past June, David Edmonds, a defendant in the long-running “Carson” enforcement action involving former employees of Control Components Inc., agreed to plead guilty on the eve of trial to substantially reduced charges. (See here for the prior post).  Earlier this week, Judge James Selna sentenced Edmonds to four months in prison and four months of home confinement.  (See here for Judge Selna’s sentencing memo).  As noted in the DOJ’s sentencing memo (here), the DOJ sought a 14 month prison sentence.

Other defendants previously sentenced in the case are Stuart Carson (4 months in prison followed by 8 months of home detention), Hong Carson (3 years probation to include 6 months of home detention) and Paul Cosgrove (13 months home detention).

It’s Official

Imagine a foreign country in which the president is actively seeking and accepting corporate money to fund inaugural festivities.  All sorts of red flags right?

But wait, this describes the United States and President Obama’s upcoming inauguration.  As detailed in this prior post, President Obama’s fundraising advisers “have urged the White House to accept corporate donations for his January 2013 inaugural celebration rather than rely exclusively on weary donors who underwrote his $1 billion re-election effort.”

It’s now official.  As noted by this recent New York Times article “President Obama’s finance team is offering corporations and other institutions that contribute $1 million exclusive access to an array of inaugural festivities.”  As noted in the article, Obama’s finance team is offering four different packages “with differing levels of access depending on the level of contribution.”

Our FCPA enforcement agencies are bringing enforcement actions against companies for conduct that includes providing $600 bottles of wine, Cartier watches, cameras, kitchen appliances, business suits, and executive education classes to individuals employed by foreign companies that are allegedly state-owned or state-controlled.  (These are all allegations found in recent FCPA enforcement actions).

But remember, as Assistant Attorney General Lanny Breuer recently declared (see here), “we in the United States are in a unique position to spread the gospel of anti-corruption.”

Whistleblower Statistics

The Dodd-Frank Act enacted in July 2010 contained whistleblower provisions applicable to all securities law violations including the Foreign Corrupt Practices Act.  In this prior post from July 2010, I predicted that the new whistleblower provisions would have a negligible impact on FCPA enforcement.  As noted in this prior post, my prediction was an outlier (so it seemed) compared to the flurry of law firm client alerts that predicted that the whistleblower provisions would have a significant impact on FCPA enforcement.

So far, there have not been any whistleblower awards in connection with FCPA enforcement actions.  Given that enforcement actions (from point of first disclosure to resolution) typically take between 2-4 years, it still may be too early to effectively analyze the impact of the whistleblower provisions on FCPA enforcement.

Whatever your view, I previously noted that the best part of the new whistleblower provisions were that its impact on FCPA enforcement can be monitored and analyzed because the SEC is required to submit annual reports to Congress.  Last month, the SEC released (here) its annual report for FY2012.

Of the 3,001 whisteblower tips received by the SEC in FY2012, 3.8% (115) related to the FCPA.  As noted in this similar post from last year, in FY2011 (a partial reporting year)  3.9% of the 334 tips received by the SEC related to the FCPA.

It Ought to Stop Marketing

In this previous post titled “It Ought to Stop” I focused on the FCPA conference industry and how conference firms drive attendance to their events by touting the public servants who will speak at the event.

Here is how conference firm C5 touts its upcoming conference in a press release (here).

Ask the U.S. DOJ and U.S. SEC directly how your company can remain compliant

Hear the latest on the newly released FCPA guidance. Along with the U.S. Securities & Exchange Commission’s, Charles E. Cain, the Deputy Chief of the FCPA Unit, Enforcement Division, we will have Matthew S. Queler, from the Criminal Division at the U.S. Department of Justice, presenting comprehensive, insightful and practical details of the U.S. government’s interpretation of the guidance, and highlight recent examples designed to help prevent future violations.  Their session at 14:00 on Day 1, will help you navigate the ever evolving markets and recognize the current enforcement trends; giving you the tools to reanalyse risk profiles and minimize areas of exposure. Finally, to top off the hour you will be given an exclusive opportunity to have your FCPA questions answered. The only way to obtain answers directly from the U.S. DOJ and U.S. SEC is to register for this forum!

The event, depending when you register and which package you select, costs between €4341 – €1795.

It ought to stop.

China Related Issues

An occassional topic of discussion on this site is Chinese state-owned enterprises (SOEs) and how such companies are frequently doing business outside its borders, including here in the U.S. (See here, here, and here for prior posts).

Wall Street Journal Columnist Dennis Berman “hit the nail on the head” in his recent column when he noted that one of “the most intriguing business stories of the past month has been taking place in San Francisco, where a group of U.S. developers is planning the biggest real-estate expansion there since the 1906 earthquake. The group—which includes Lennar Corp., Ross Perot Jr. and others —isn’t getting financing from an American bank or pension fund. No, the money, some $1.7 billion of it, is coming from the China Development Bank, a policy arm of the Chinese state.  As Berman further notes, a financing contingency is that China Railway Construction Corp. – a state-owned infrastructure builder with roots in the People’s Liberation Army—take part in the projects, which will develop up to 20,000 new homes.

Another occasional topic of discussion on this site is how Chinese companies are listing shares on U.S. exchanges and thus becoming “issuers” for purposes of the FCPA.  (See here for a prior post).  A core FCPA enforcement action of a Chinese issues has never occurred, but I predict it will some day – diplomatic and foreign policy issues aside.  Only now, the universe of potential targets is shrinking.  As noted in this recent Wall Street Journal article, several Chinese companies have delisted from U.S. exchanges.  The article provides the following information.  “At the peak, at year-end 2010, 167 Chinese companies were listed on Nasdaq and 99 on the NYSE. That compares with 84 China-based companies on NYSE and 129 on Nasdaq as of Nov. 30, 2012, according to the exchanges.”  For more, see this recent article from the New York Times.

ICE Melted Quickly

This recent post highlighted the cert petition of Instituto Constarricense de Electricidad of Costa Rica (“ICE”) to the Supreme Court related to victim issues in connection with the December 2010 Alcatel-Lucent FCPA enforcement action.  After several unsuccessful 11th Circuit appeals, ICE petitioned the Supreme Court to hears it case (see here).  The question presented for review is as follows.  “Whether a crime victim who is denied rights conferred by the federal Crime Victims’ Rights Act has a right to directly appeal the denial of those rights.”

The ice melted quickly as recently the Supreme Court denied ICE’s petition.

U.K. Enforcement Action

Earlier this week, the U.K. Serious Fraud Office announced (here) charges against former employees of Swift Group (an oil and gas services provider) following “a two-year investigation into allegations of corruption in relation to the tax affairs of Swift Technical Energy Solutions Ltd, a Nigerian subsidiary of the Swift Group of companies.”  According to the SFO release,  ”the value of the bribes alleged to have been paid is approximately£180,000.”

The SFO release notes that Paul Jacobs (the former Chief Financial Officer of Swift), Bharat Sodha (the former Tax Manager of Swift), Nidhi Vyas (the former Financial Controller of Swift), and Trevor Bruce (the former Area Director for Nigeria of Swift) were charged in relation to “bribes to tax officials to avoid, reduce or delay paying tax on behalf of workers placed by Swift.  The charges relate to payments said to have been made to agents of the Rivers State Board of Internal Revenue and the Lagos State Board of Internal Revenue, both in Nigeria. The payments were made in 2008 and 2009.”


A happy holiday season to all.