In what my colleague Howard Sklar called the "opening of
Pandora's Box" and as reported by the FCPA
Blog with what are "new issues raised in a FCPA case", Costa Rica's
Instituto Costarricense de Electricidad (ICE), filed a Petition last week for
relief from and objections to Alcatel-Lucent's plea agreement and proposed
Deferred Prosecution Agreement (DPA), regarding its settlement of charges that
it violated the Foreign Corrupt Practices Act (FCPA). This Petition was filed
in the federal district court where the settlement and proposed DPA will be
As reported in the
FCPA Blog last week in an article entitled, "Costa Rican 'Victim'
Objects to Alcatel-Lucent Settlement", back in December, 2009,
Alcatel-Lucent S.A. agreed to pay $137 million for bribing officials in Costa
Rica, Honduras, Malaysia, and Taiwan. The company and three subsidiaries will
pay $92 million to resolve criminal charges with the Department of Justice
(DOJ) and $45 million in disgorgement to the Securities and Exchange Commission
(SEC). By agreeing to plead guilty, Alcatel-Lucent escaped substantive bribery
charges. In a two-count criminal information, the DOJ charged the company with
violating the internal controls and books and records provisions of the FCPA.
ICE claimed in its Petition that it was a victim of
Alcatel-Lucentand that as such it was entitled to protection by the DOJ in the
settlement of the matter. ICE objected the Plea Agreement and DPA for three
reasons: (a)The proposed settlement is inconsistent with 18 USC 3771;
(b) The proposed settlement is inconsistent with the interests of justice,
the public's interest and public policy; and (c) The Defendants have
already violated the DPA.
18 USC 3771
ICE alleges that 18 USC 3771, the "Crime Victims' Rights
Act", gives ICE the right to be kept informed by the DOJ, the right to be heard
in court and the right to "full and timely restitution." These rights are
mandatory and ICE claims that it has the full right to be heard at any hearing
resolving the matter regarding Alcatel-Lucent. ICE claims that it is a victim
of over-priced products and services from Alcatel-Lucent due to the bribery
that Alcatel-Lucent admitted to in the court filings related to the DPA.
Additionally, ICE makes separate business interruption and related losses that
are all subject to restitution under the Crime Victim Rights' Act.
in the Interest of Justice or Public Policy
In this claim ICE makes several arguments. (1) The DPA
fails to satisfy the fundamental requirements of law because it is too lenient
and hence it is not in the interest of either the public or in the interest of
justice. (2) The plea agreement fails to reflect the actual offense conduct.
(3) The methodology used to calculate the sentencing is flawed and fails to
take into account victim losses. (4) The plea agreement does not punish any
officers or directors of Alcatel-Lucent despite several references in the
documents to their criminal conduct. (5) The failure of the plea agreements to
follow standard mandatory pre-trial services.
III. The Defendants
Continue to Violate the DPA
In a very interesting section, ICE claims that
Alcatel-Lucenthas already and is continuing to violate the DPA. ICE alleges
that under the DPA, Alcatel-Lucent is prohibited from making statements
"contradicting their supposed acceptance of responsibility." However, ICE claims
that Alcatel-Lucent went into court in Costa Rica and announced, in a criminal
case involving Alcatel-Lucent's former agents, that Alcatel-Lucent had no
knowledge of the agents' actions and indeed Alcatel-Lucent "was a victim of
these ex-employees." (italics mine)
Although ICE claims that it has been in contact with the
DOJ and SEC regarding its allegations and claims, we are not aware of any
public statements made by these agencies regarding ICE's claims. Therefore, we
do not know the DOJ or SEC position on these claims by ICE. However, if ICE
does successfully assert a claim under the Crime Victims' Rights Act, it could
well open up court review of any DPA or other agreement, both in this case and
going forward. This could truly be a Pandora's Box for many settling defendants
if the people of Costa Rica can assert such a claim through ICE.
This week, Howard Sklar and I will discuss the ICE filing
as well as other topics. Please check us out at This Week in the FCPA.
If you are in Rutherford NJ or Washington DC, the World
Check FCPA Tour will be in your city this next week. Please come out and hear
about the most current FCPA best practices.
Wednesday, May 19 from 8-10 AM PDT at the Renaissance
Meadowlands Hotel, in Rutherford, NJ. For information and registration
details click here.
Thursday, May 20 from 8-10 AM PDT at Mayflower
Renaissance Washington, DC, in Washington, DC. For information and
registration details click here.
Visit the FCPA Compliance and Ethics Blog,
hosted by Thomas Fox, for more commentary on FCPA compliance, indemnities and
other forms of risk management for a worldwide energy practice, tax issues
faced by multi-national US companies, insurance coverage issues and protection
of trade secrets.
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The guilty verdict also is hard blow to the Partido Unidad Social Cristiana (PUSC), as Miguel Ángel Rodríguez is the second former president of that political party to face a trial and sentenced.