After years of litigation and twists and turns, Mr. Bourke finally entered jail to serve his one year and one day sentence. Whatever you may think about the facts of the case, we can all agree on one thing – the result certainly would have been different if Mr. Bourke had a compliance officer at his side. It is interesting to think about the facts in the case and analyze how, if at all, a compliance solution may have looked.
I completely admit that, looking back with perfect 20-20 hindsight, it is easy to come up with ways that the criminal scheme could have been derailed or avoided. My point is only that, if a compliance officer was seated at Mr. Bourke’s table, the line defining right from wrong would have been clearly defined and possibly caused Mr. Bourke to step back from the illegal venture.
Bourke was convicted by a jury based on a contested “head-in-the-sand” jury instruction, meaning that the jury was allowed to infer that he acted with the requisite intent based on facts showing that he ignored facts and circumstances which would have established the illegality of his actions.
Bourke became involved in a venture to acquire the state-owned oil company in Azerbaijan, State Oil Company of Republic of Azerbaijan (:SOCAR”). At the heart of the case, was the fact that Bourke “knew” that government officials were receiving bribes for privatizing SOCAR and promised future business interests in the new private company. Bourke who was an owner and investor in the venture and eventually was convicted based on four important facts.
First, Bourke “knew” that his business partners in the venture had a reputation for corrupt dealings.
Second, Bourke was told by a co-conspirator that foreign government officials would receive an ownership interest in the venture.
Third, Bourke sought advice from an attorney concerning the limits of investor liability under the FCPA if he learned that a partner paid bribes.
Fourth, Bourke set up a separate company to funnel his investments in order to shield himself and claim that he had little knowledge of the illegal scheme.
If a compliance officer knew about these facts in advance and was instructed to comply with the FCPA, the compliance officer would have recommended a number of important steps to identify relevant risks and issues.
Due Diligence: Bourke would have been required to conduct a due diligence inquiry in accordance with established policies and procedures. Bourke’s partners would have had to complete detailed questionnaires on issues relating to each partner’s background, connections to foreign officials in Azerbaijan, knowledge of anti-corruption laws and willingness to certify and commit to comply with such laws. In addition, Bourke would have searched an open source intelligence database to see if any partner had a reputation for corruption or had been involved in any corruption or law-breaking activity. If red flags were identified, these flags would have been investigated.
Foreign Ownership Interest: As part of the due diligence process, Bourke would have investigated whether or not there was a foreign ownership interest in the proposed pipeline venture. To address this possibility, Bourke would have retained a due diligence company to conduct an enhanced due diligence inquiry either by a due diligence company or an even deeper dive conducted by a law firm.
In order to protect himself even further against an undisclosed foreign interest, Bourke would have secured written representations and warranties, as well as a certification from his partners that there was no foreign ownership interest in the pipeline venture.
Even with these protections, Bourke would have designed appropriate monitoring tools and sought repeated certifications to minimize any potential risk of undisclosed ownership interests. As part of this effort, Bourke could have implemented additional training programs and compliance reminders to ensure compliance with the FCPA.
Good Faith Legal Interpretation: Bourke would have worked with his attorney to develop a documented record of a good faith interpretation of the law to support his actions and overall compliance with the FCPA. Rather than enlisting his attorney as a co-conspirator, Bourke needed to rely on his attorney to build a record of good faith analysis concerning the legality of the oil pipeline venture.
Business Justification: Bourke also needed to develop, in consultation with other professionals, a business justification for the corporate structure used in the investment. Instead of relying on a corporate structure designed to shield his criminal liability, Bourke needed to adopt an appropriate investment structure to minimize his business risks. In other words, he needed to develop a separate business justification for the structure of his investment.
The Bourke case is just one example of how compliance officers can add value to an organization’s business and make sure the company seeks important business development projects while avoiding FCPA liability.