Friday FCPA Roundup for Week Ending April 26

Friday FCPA Roundup for Week Ending April 26

This article was reprinted with permission from FCPA Professor

Simply inexcusable, tell us who, an interesting case study, and for the reading stack.  It's all here in the Friday roundup.

Simply Inexcusable

The government holds those subject to the FCPA to high standards.  If the proverbial "right hand" in a company doesn't know what the "left hand" is doing, the government is likely to call that an internal control failure.

Ought not the government be held to the same standard?

What follows is simply inexcusable.

In February 2012, Judge Lynn Hughes (S.D.Tex.) signed this final dismissal of the FCPA enforcement action against John O'Shea.  The motion followed Judge Hughes granting O'Shea's motion for acquittal after the DOJ's case in chief in the FCPA trial.  (See here for the prior post).  During the case, Judge Hughes stated, among other things, as follows.  "The problem here is that the principal witness against Mr. O'Shea . . . knows almost nothing. . . .;  The government should have been prepared before they brought the charges to the Grand Jury. . . . You shouldn't indict people on stuff you can't prove.''

Following the acquittal and dismissal, O'Shea has attempted to resume a normal life without the specter of criminal charges and possible jail time occupying his mind.  It is understandable that O'Shea wants his reputation and "old" life back.  But removing the taint of being labeled a criminal law violator by the government has not come easy for O'Shea.

Case in point is the following story.

O'Shea was recently hired by a company and traveled to Canada for a business trip.  The trip was uneventful until O'Shea tried to enter Canada.  It turns out the relevant government databases were not updated to reflect the disposition of his case - something that happened 14 months ago!

O'Shea indicated that he spent the entire afternoon with officials of the Canadian government to persuade them that he should not be put on the next plane back to the U.S. with U.S. marshals.  O'Shea reports that the Canadian official was open-minded enough to visit internet sites suggested by O'Shea (including FCPA Professor) as proof that he was no longer a criminal defendant in the U.S.

After his business trip to Canada, O'Shea also had problems re-entering the U.S. from Canada and could not help but wonder whether someone would be waiting for him upon arrival in Houston.  O'Shea reports that thankfully his fears were not realized, but he can not help but wonder what would have happened if his business trip was to some country other than Canada.

In short, the government's internal control failure was simply inexcusable.

Tell Us Who

In the aftermath of this week's Ralph Lauren enforcement action (see here for the prior post) alleging payments to Argentine customs officials, the Argentine government wants to know who the customs officials are.

As noted in a Law360 article, "in a letter to U.S. Ambassador to Argentina Vilma Martinez, the head of Argentina's tax agency, Ricardo Echegaray, said that it was necessary for the Argentine government to have names and more detailed information about the alleged bribery to aid in a newly launched criminal investigation into the matter."  The article further stated as follows.  "While seeking the names of Argentine officials implicated in the scheme, Echegaray also put the blame on Ralph Lauren's customs brokers, who are not government officials, but rather private professionals hired to deal with trade matters. Echegaray likened these brokers' roles to those of a tax adviser or accountant which companies hire for assistance."

The question asked by the Argentine official is obviously a legitimate question.

But query whether the DOJ and/or SEC even know who the officials are.

As noted in this previous post concerning the SEC's briefing in the Jackson and Ruehlen case involving alleged payments to Nigerian customs officials, the SEC argued that the name, titles and exact positions of foreign officials allegedly bribed need not be known in order to state a claim under the FCPAs anti-bribery provisions.

As highlighted in this previous post, in ruling on Jackson and Ruehlen's motion to dismiss, Judge Keith Ellison (S.D.Tex.) noted in a footnote as follows.

"[T]he Court must disagree with Judge Hughes's oral statements in a recent criminal FCPA prosecution. [U.S. v. O'Shea] ("You can't convict a man promising to pay unless you have a particular promise to a particular person for a particular benefit. If you call up the Basurtos and say, look, I'm going to send you 50 grand, bribe somebody, that does not meet the statute."). This Court holds that asking a third-party to bribe a government official, in order to induce that official to act in one of the proscribed ways detailed in [the FCPA], would meet the statute. The government does not have to "connect the payment to a particular official."

Case Study

This post earlier this week regarding Wal-Mart noted that savvy investors should have recognized the NY Times induced "FCPA dip" of the company's stock as a buying opportunity because the market often overreacts to FCPA issues.

In this post earlier this week regarding Ralph Lauren Corp.'s (RLC) FCPA enforcement action, it was noted that the RLC enforcement action was a rare instance of an issuer not previously disclosing its FCPA scrutiny.  Thus, the first instance of public scrutiny appears to have been announcement of the enforcement action on Monday morning.  RLC's stock dipped approximately 2% on the news and closed at $165.93.  The "FCPA dip" lasted only a day, as Tuesday the stock rebounded and then some and closed yesterday at $175.38.

Reading Stack

Miller & Chevalier's seasonal FCPA alerts are always information reads.  The firm recently released its FCPA Spring Review 2013.

Is sex as a "thing of value"?   See here from Wendy Wysong (Clifford Chance) - with a particular focus on Asia.

Should you be looking for further citations that more FCPA enforcement is good for FCPA Inc., see this recent article in Lawyers Weekly, an Australian publication.  The article begins as follows.   "A crackdown on foreign bribery has created "a mountain of work" for lawyers, a Jones Day partner has said ahead of a major international anti-corruption conference."


A good weekend to all.

Read more articles on the FCPA by Mike Koehler at FCPA Professor.

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