The DOJ’s Foreign Corrupt Practices Act (“FCPA”) trial woes continue. On February 21, a federal judge in Washington, D.C. dismissed the remaining sixteen defendants in a high-profile FCPA prosecution, criticizing the case as a “long and sad chapter in the annals of white collar criminal enforcement.” An FBI sting operation had led to charges being filed against twenty-two defendants alleging that they all participated in a scheme to bribe the defense minister of the small African nation of Gabon with $1.5 million to win a lucrative $12 million defense contract. Such bribes to foreign officials to obtain or retain business are prohibited by the FCPA. The dismissals in the Washington case came after a pair of trials in which three codefendants were acquitted while the jury could not reach unanimous verdicts against seven others. Three defendants had earlier pled guilty, although their guilty pleas may now be in jeopardy in light of the court’s dismissal of charges against the last sixteen defendants in the case.
The United States Department of Justice treats prosecutions of individuals in FCPA cases as a “cornerstone” of its FCPA enforcement strategy according to remarks made by Lanny Breuer, Assistant Attorney General for the Criminal Division, at a national FCPA forum in November 2009. While most recent FCPA cases against companies have been resolved short of trial, through non-prosecution or deferred prosecution agreements, where the company accepts responsibility and agrees to institute additional compliance measures, many cases against individuals are resolved through plea agreements in which the individuals are required to plead guilty to one or more criminal charges.
Only two companies appear to have ever put the government to its proof at trial on FCPA charges, and neither case ended with glory for the government. The first company, Harris Corporation, a defense contractor accused of paying bribes earmarked for Colombian officials to obtain government business, was acquitted in 1991 by the San Francisco federal judge hearing the case without the case even being submitted to the jury. Then, just last year, Lindsey Corporation, accused of paying bribes intended to win contracts from Mexican officials, was first convicted at trial in Los Angeles federal court, only to have the convictions thrown out by the presiding judge due to apparent misconduct by agents and prosecutors in the investigation and prosecution of the case.
In light of The DOJ’s usual unwillingness to resolve FCPA cases against individuals on the same favorable terms usually extended to their corporate employers, it is unsurprising that individuals have proceeded to trial considerably more frequently than corporations have. At least recently, that has been a very wise strategy. Aside from the acquittals and mistrials in the African sting operation cases in Washington, another individual, John O’Shea, never even saw his FCPA charges submitted to the jury in Houston in January; instead, the district judge granted his motion for judgment of acquittal during trial, finding that the government’s chief witness had provided “abstract and vague” answers and the government had failed to meet its burden of proof. Before those inauspicious results, the government had seen its convictions against the individual defendants in the Lindsey case in Los Angeles thrown out along with the convictions of the corporation in a case that the judge described as having “gone badly awry.”
While a spokesperson for the Department of Justice recently defended its FCPA prosecutions of both individuals and companies since enforcement was stepped up beginning in 2009, and over the last five to ten years, individual defendants in FCPA cases have not fared very well at trial, the last three months have revealed that the government’s FCPA cases against individuals are anything but airtight. For the individual defendant facing FCPA charges, pleading guilty is by no means a foregone conclusion. Between scrutinizing the government’s investigative and prosecutorial conduct and attacking the government’s proof of actual knowledge and intent to bribe or cause to be bribed an actual foreign government official, real opportunities may exist to put the government to its proof at a trial.