Remember those “issue spotting” exams in law school?
Well, here is one.
A Japanese company (without shares traded on a U.S. exchange) participated in a joint venture operating in Nigeria. The joint venture operated through three Portuguese special purpose corporations. The joint venture hired a U.K. citizen who, along with his Gibraltar corporation, allegedly paid bribes to Nigerian government officials. The U.S. Department of Justice starts an investigation as to your Japanese company client. Consistent with your duty to zealously advocate on behalf of your client, discuss likely legal defenses your client may raise to a U.S. enforcement action based on the described conduct?
Got the answer?
Your answer includes jurisdictional issues does it not?
In fact, a lawyer representing the Japanese company would likely fall short of his/her professional duties without raising a jurisdictional defense.
Why am I even talking about this?
Because of this troubling sentence in the recent JGC Corporation of Japan deferred prosecution agreement (here p. 3) – “after initially declining to cooperate with the Department based on jurisdictional arguments, JGC began to cooperate, and has agreed to continue to cooperate, with the Department in its ongoing investigation of the conduct of JGC and its present and former employees, agents, consultants, contractors, subcontractors, subsidiaries, and other relating to violations of the FCPA.”
The above sentence – save for the portion in italics – is standard fare in DOJ resolution agreements.
However, the portion in italics is troubling.
For starters, what does it mean to decline “to cooperate with the Department based on jurisdictional arguments?”
The DOJ’s Principles of Federal Prosecution of Business Organizations (“Principles”) (here) talk about the “Value of Cooperation” (at 9-28.700), but the discussion focuses on issues such as “identifying potentially relevant actors and locating relevant evidence, among other things, and in doing so expeditiously.” Further, 9-28.720 discusses cooperation as disclosing “relevant facts.”
However, nothing in the Principles suggest that raising legal arguments obviously implicated by the DOJ’s investigation is not cooperating.
Surely the DOJ carries a big stick and has juicy carrots at its disposal. Thus, cooperation – along the lines outlined in the Principles – may be warranted in certain cases.
However, is the message tucked in the JGC DPA that the DOJ now expects FCPA counsel to roll over and play dead and that the failure to do so will be adverse consequences for the client?
After all, JGC’s total culpability score under the U.S. Sentencing Guidelines (a score that impacts the ultimate fine amount) was only reduced by -1 whereas the other joint venture partners that previously resolved enforcement actions (Technip, Snamprogetti, and KBR) all received a “better” -2 reduction.