The Danger Of FCPA “Proactive” Investigations


informantsThe old adage – if something is too good to be true, it probably is not – applies with equal force in the world of bribery and intrigue.  The recent arrest of the mining executive for obstruction of the Justice Department’s FCPA investigation of bribery of foreign officials in Guinea underscores the risks of undercover operations.

At the recent Dow Jones Compliance Symposium in Washington, D.C., an FBI official warned the attendees that the Shot Show debacle would not deter law enforcement from using proactive investigations techniques.  It was a stark warning because it was realized in less than thirty days.

According to the charging documents, the FBI enlisted a cooperating witness who wore a wire to record various conversations with the defendant.  In those conversations the defendant made bold claims of intent to destroy documents and cajole witnesses to cover up a bribery scheme to pay foreign officials in Guinea.

When law enforcement warns the business community, executives should listen.  Chief compliance officers and general counsels need to redouble their efforts.

In the last few years, law enforcement is using the same tactics against white-collar criminals as they have used against drug trafficking groups and organized crime.

Proactive investigations are usually very successful – they involve the careful use of confidential informants, cooperating witnesses, recorded telephone calls and video and/or audio recorded meetings.  Juries are often persuaded when they see or hear the defendants.  Prosecutors have to pay attention to potential entrapment issues since that is usually the last refuge available to defendants in these cases.informants3

Proactive evidence is particularly powerful when combined with historical evidence from cooperating witnesses which outline historical criminal activity by a defendant.  Often, historical evidence is a key to defeating any claim of entrapment.  In combination, the two types of evidence can be devastating.

It is important for business development and sales staff to be reminded of the risks of proactive enforcement.  Email evidence can quickly be turned into important corroboration of an undercover operation.  Business development and sales staff have to be reminded that it is possible that anyone outside the company can be recording their conversations on the telephone or even face-to-face.

informants2The risk of proactive investigations is particularly significant in industries and in countries where corruption is known to exist.  Law enforcement will naturally focus on areas where they are likely to succeed.  In some cases, cooperating witnesses can sometimes drive an investigation into a particular industry in which the cooperating witness was involved, i.e. the Shot Show sting case.  As proactive FCPA enforcement techniques develop, law enforcement will rely on a network or cooperating witnesses to investigate appropriate targets for which there is a factual predicate of suspected violations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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