Is “Conscious Avoidance” Sufficient to Establish Knowledge under the FCPA? Depends Which Court You Ask.


In 2011, the Department of Justice and the Securities and Exchange Commission continued their aggressive enforcement strategy to hold individuals accountable for FCPA violations. Facing the real possibility of jail time, individuals started fighting back in the courts rather than accepting settlements. As a result, now more than any time since the FCPA was enacted in 1977, the contours of the government’s expansive interpretation of the FCPA are being shaped by judicial decisions. That is not to say, however, that judicial analysis has been entirely consistent.

At the end of 2011, the U.S. Court of Appeals for the Second Circuit affirmed Frederic Bourke’s conviction arising from a scheme to bribe government officials in Azerbaijan in connection with the planned privatization of the state-owned oil company.

Bourke—co-founder of the luxury handbags line Dooney & Bourke—was indicted in 2005 for participating in a consortium of investors organized by Viktor Kozeny, an international businessman whose questionable reputation had earned him the nickname the “Pirate of Prague.” The government alleged that Kozeny arranged for payments of tens of millions of dollars to various Azerbaijani officials that were intended to secure the privatization of the state-owned oil company. Ultimately, the company was not privatized, and Kozeny—along with the other investors including Bourke—lost their entire investment in the venture.

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