FCPA Criminal Enforcement: DOJ Returns With A Vengeance (Part I Of II)

by Michael Volkov

imagesCAYE1VIELet me remind everyone about the FCPA doomsayers – those who were worried and fretted over the absence of FCPA enforcement actions in the first quarter of 2013.  Remember the articles which wondered about the FCPA “slowdown” or whether DOJ prosecutors were gun shy after the Shot Show debacle.  Well, DOJ has put an end to all of these misguided prognostications.

It is clear that FCPA enforcement for 2013 will go down as the year of criminal prosecutions of individuals.  Everyone should start writing their articles now.  The second quarter of 2013 was an explosive one for criminal enforcement and I expect the trend will continue through the rest of the year.

The message from DOJ should be loud and clear:

  • DOJ is going to prosecute individuals when they have strong evidence of criminal conduct;
  • DOJ is reviewing prior corporate settlements and will pick those individual cases where prosecutions are warranted;
  • DOJ will use all investigative techniques to build criminal cases including wiring up cooperating witnesses and recording telephone calls to make their criminal cases; and
  • DOJ will prosecute officials when they have evidence of obstruction or witness tampering.

The late Senator Arlen Specter made a simple point at the November 2010 FCPA oversight hearing concerning deterrence of criminal conduct – the best way to stop white collar crime by corporations was to prosecute individuals and send them to jail.  Whether you agree with him or not, the Justice Department is following his advice and have returned to bread and butter criminal cases against corporate officers under the FCPA.

The 2013 second quarter criminal prosecutions include:corporationjail

BizJet:  DOJ prosecuted four officials involved in the BizJet bribery scheme.  BizJet voluntarily disclosed the bribery scheme, earned extraordinary cooperation, and paid a fine of $11.8 million.  Based on the company’s cooperation, four individuals were selected for prosecution, two of whom agreed to plead guilty and cooperate.  They were both sentenced to 8 months home detention after earning a sentencing reduction for their cooperation.  Two remaining officials have been indicted but have not been apprehended.

Alstom:  DOJ broke off a piece of the ongoing (and massive) investigation against Alstom and charged three individuals in connection with a scheme to bribe Indonesian officials for a $118 million electricity project.  One of the individuals was arrested when he arrived under New York.  DOJ demonstrated that it will charge defendants with indictments filed under seal and wait for them to arrive at the border to arrest and unseal indictments against individuals.

Cilins:  DOJ initiated an investigation after a guinea commission conducted an inquiry into bribes paid by a mining company to a government official, who is now deceased.  After seeking information from the deceased official’s wife, DOJ persuaded her to cooperate and wear a wire to record conversations in which Cilins was seeking to pay the wife to destroy evidence and execute a false affidavit.  The wife also had helpful historical information about the bribery scheme since she was going to help dispose of some of the bribery proceeds.

criminalBANDES:  An SEC examination of Direct Access Partners (“DAP”) revealed a bribery scheme involving two traders and a foreign official at a Venezuelan development bank.  The two traders paid bribes to a bank official to refer all trades to the two brokers.  The trading activity was so brazen that the defendants traded the same bonds back and forth in one day.  The bank official was charged with criminal violations of the Travel Act.  Recently, DAP’s Miami supervisor was arrested for his role in bribery scheme.

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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Michael Volkov

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