Last week, the Justice Department filed the first FCPA case of 2015 when it indicted Dmitrij Harder, the former owner and president the Chestnut Consulting Group in Huntingdon Valley, Pa. Here’s a summary paragraph from DOJ’s indictment:
"Between in or around 2007 through in or around 2009, defendant HARDER engaged in a scheme to pay approximately $3.5 million in bribe payments for the benefit of a foreign official to corruptly influence the foreign official’s actions on applications for financing submitted to the European Bank for Reconstruction and Development (“EBRD”) by the clients of defendant HARDER and the Chestnut Group, and to corruptly influence the foreign official to direct business to defendant HARDER and the Chestnut Group, and others.
The case is interesting to me for at least four reasons. First, the European Bank for Reconstruction and Development is based in the United Kingdom, not a high-risk country for corruption issues. Second, the case doesn’t involve third party sales agents, as so many FCPA cases tend to do in one way or another. Instead, if the indictment is to be believed, here we have a company president’s single-minded determination to pay some bribes to win business, one way or the other. Third, the case invokes the “public international organization” facet of the foreign official element to establish jurisdiction over the conduct at issue. Doesn’t happen very often!
Also, Harder himself is surely the person who’s the least happy about this indictment. But let’s pause for moment to remember his (surely former) lawyer. Do you remember “Attorney” from In re Grand Jury Subpoena, 745 F.3d 681 (3d Cir. 2014)? In that case we learn that before Harder allegedly made the payments in question, he met with Attorney to discuss his plan. Attorney advised Harder not to make the payments, and Harder told Attorney he didn’t really care, he was going to make the payments anyway. If Attorney had stopped there, we might not be talking about their conversations at all. But soon, DOJ learned about the matter from the U.K. authorities and sent a subpoena for Attorney’s testimony, invoking the crime-fraud exception to the attorney-client privilege to obtain the content of Attorney’s discussions with Harder. Suddenly Attorney wasn’t just advising Harder about a criminal matter, but participating in one. As the Third Circuit put it:
"In addition to the advice Attorney provided to Client that he should not make a payment, Attorney also provided information about the types of conduct that violate the law. We cannot say that the District Court abused its discretion in determining “that there is a reasonable basis to conclude that [Attorney’s] advice was used by [Intervenors] to fashion conduct in furtherance of [their] crime.” Specifically, Attorney’s questions about whether or not the Bank was a governmental entity and whether Banker was a government official would have informed Client that the governmental connection was key to violating the FCPA. . . . Of course, it is impossible to know what Client thought or how he processed the information gained from Attorney. But the District Court did not abuse its discretion in determining that Client “could easily have used [the advice] to shape the contours of conduct intended to escape the reaches of the law.”
I guess. It’s hard for me to figure what Attorney should have done here. Asking questions about the prospective payees’ identities hardly seems unreasonable in helping a client assess whether the payments might have been appropriate. But watch out. If a client comes to you and asks about prospective bribes, just know that too much information could allow that client to understand exactly what the law is. That might sound like the goal of legal advice, but it could lead you to a grand jury room to explain everything you discussed. Have fun with that.
