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
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
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
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
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
The question asked by the Argentine official is
obviously a legitimate question.
But query whether the DOJ and/or SEC even know who the
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."
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
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.
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
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