The headlines these days focus on the SEC whistleblower rules and the implications for corporations. While the whistleblower rules are important and justify vigilant compliance efforts, there is a more significant, and possibly damaging, trend for FCPA enforcement.
Corporations now have to consider the risk that the government will conduct wiretaps of target telephones.
In the Shot Show sting, the government demonstrated it was willing to use informants, undercover officers, and one-party consent audio and video recordings. The FBI wired hotel rooms, restaurant private rooms and other locations to capture conversations among the defendants and between the defendants and undercover officers.
The Raj Rajaratnam case is a testament to the government’s power through wiretaps to bring down a network of violators. The wiretaps were devastating at Raj’s trial. Wiretaps leave little room for many of the traditional defenses.
The Obama Administration has placed white collar crime on the same footing as organized crime and drug trafficking organizations. By doing so, it has given law enforcement access to the same tools as used to dismantle criminal organizations — undercover operations, search warrants, consensual recordings, surveillance and other tactics. Gone are the days of delivery of grand jury subpoenas with requests that the company preserve the documents.
For businesses, this raises serious risks. While legally authorized to listen to target telephones, law enforcement has access, with certain minimization limitations, to conversations which may touch on other topics involving legal compliance, such as antitrust, securities/accounting mistakes, or other potential legal issues which can undo a publicly-traded company.
It is only a matter of time until the Justice Department unveils a new enforcement case involving wiretaps. In fact, I suspect that such a case may be ongoing. Companies have never considered the implications of legally authorized wiretaps in the boardroom, but in today’s environment, it is something they need to consider.