The Anti-Corruption Report

The definitive source of actionable intelligence covering anti-corruption laws around the globe

Articles By Topic

By Topic: Judicial Decisions

  • From Vol. 7 No.23 (Nov. 14, 2018)

    Government and Defense Attorneys Discuss Hot-Button SEC Issues

    Despite limitations imposed by the Supreme Court and shrinking budgets, the SEC’s enforcement of the FCPA remains steady. During this year’s Securities Enforcement Forum in Washington, D.C., hosted by Securities Docket, current and former SEC enforcement officials and members of the defense bar came together to share their insights on the direction of SEC enforcement, touching on topics such as the evolution of the corporate monitor policy, deepening international coordination with more frequent penalty offsets, individual enforcement trends and continuing data privacy challenges because of the GDPR. See “SEC and DOJ Officials Predict That Current FCPA Enforcement Trends Will Continue, Defense Attorneys Agree” (May 2, 2018).

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  • From Vol. 7 No.22 (Oct. 31, 2018)

    Will the FCPA Be Used to Prosecute Domestic Bribery Cases?

    In 2016, the U.S. Supreme Court reined in the scope of the federal domestic bribery statute, holding in McDonnell v. United States that a bribe paid to a public official does not violate the statute unless it was paid in exchange for a narrowly defined “official act.” While it may seem that this decision would restrict the DOJ’s use of the anti-bribery provisions of the FCPA as well, David Bitkower, a partner at Jenner & Block, Nicholas Barnaby, assistant general counsel at General Dynamics Corporation, and Karthik Reddy, an associate at Jenner & Block, argue in this guest article that there are signs – including Panasonic’s recent DPA covering both foreign and domestic books and records issues – that the DOJ is envisioning a shift in the opposite direction: using the FCPA to more aggressively prosecute domestic bribery cases. See “Big Deals? Panasonic and Subsidiary Settle FCPA and Exchange Act Charges for $280 Million” (May 16, 2018).

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  • From Vol. 7 No.16 (Aug. 8, 2018)

    SEC v. Cohen: Calling Into Question the Future of Obey-the-Law Injunctions

    In SEC v. Cohen, Judge Nicholas Garaufis of the EDNY dismissed as untimely an FCPA case brought by the SEC, including its request for an injunction ordering the defendants to refrain from any future violations of securities laws, often referred to as an “obey-the-law” injunction. In dismissing the case, Judge Garaufis found that the injunction would serve as a penalty and therefore was subject to the five-year statute of limitations imposed by 28 U.S.C. § 2462, an issue left unanswered last year by the U.S. Supreme Court in Kokesh v. SEC. In a guest article, Justin Shur, a partner at MoloLamken, and associates Ray Hashem and Allison Gorsuch discuss how the Cohen decision is a significant setback for the SEC and confirms that § 2462 is a powerful tool for defense counsel to invoke in dealing with SEC investigations and litigation. See “How the SEC May Circumvent the Five-Year Statute of Limitations on Disgorgement Under Kokesh v. SEC” (Aug. 16, 2017).

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  • From Vol. 7 No.5 (Mar. 7, 2018)

    What the Digital Realty Trust Decision Means for FCPA Compliance

    Despite a seeming victory for companies in a recent Supreme Court decision holding that the anti-retaliation provisions of Dodd-Frank do not apply to an individual who has not reported a violation of securities laws to the SEC, corporations may very well be negatively affected by the high court’s decision. The Anti-Corruption Report talked to practitioners about the compliance implications of the decision in Digital Realty Trust. See “Promoting Values to Encourage Reporting and Discourage Retaliation” (Feb. 21, 2018).

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  • From Vol. 7 No.3 (Feb. 7, 2018)

    Maintaining Work Product Protection During Investigations After the Herrera Decision

    A recent decision in the Southern District of Florida calls into question whether disclosing information about an internal investigation to the government results in a waiver of the work product protection. In SEC v. Herrera, the court ordered a law firm to disclose the case notes and memoranda it created while conducting an internal investigation on behalf of General Cable Corp. In a guest article, Baker Botts partners Bridget Moore and Seth Taube, and associate Joseph Perry, discuss the implications of the Herrera decision and provide practical guidance for how companies and their advisors can maintain privilege in its wake. See The Anti-Corruption Report’s three-part series on protecting attorney-client privilege and work product while cooperating with the government: “Establishing Privilege and Work Product in an Investigation” (Feb. 1, 2017); “Cooperation Benefits and Risks” (Feb. 15, 2017); and “Implications for Collateral Litigation” (Mar. 1, 2017).

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  • From Vol. 6 No.17 (Sep. 6, 2017)

    Policing the Banks: Analyzing India’s New Anti-Corruption Regulations for Private Banks

    After the Indian Supreme Court’s recent ruling that employees of privately owned banks qualify as “public servants” under India’s anti-corruption statute, a drastic regulatory shift for private Indian banks is expected. In a guest article, Pallav Shukla, an attorney at Trilegal, explains the Court’s ruling, discusses its general impact on policy, details the specific regulatory impact on the banking business in India and makes recommendations for how banks operating in India can protect themselves. See “Tailoring Compliance Efforts to Address Challenges in India” (Feb. 1, 2017).

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  • From Vol. 6 No.16 (Aug. 16, 2017)

    How the SEC May Circumvent the Five-Year Statute of Limitations on Disgorgement Under Kokesh v. SEC

    The U.S. Supreme Court’s recent decision in Kokesh v. SEC that the disgorgement remedy available to the SEC is restricted by a five-year statute of limitations was widely seen as a victory for entities that are subject to the enforcement arm of the SEC. However, in a guest article, Justin Shur, a partner at MoloLamken, along with associate Eric Nitz, argue that it is unlikely that the Commission’s Division of Enforcement will take the Kokesh decision lying down. Rather, the Commission is likely to adopt strategies to mitigate the impact of the Court’s decision on its ability to seek penalties and disgorgement from companies. Shur and Nitz outline those potential strategies and their impact on companies. See “SEC Enforcement After Kokesh” (Jun. 21, 2017).

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  • From Vol. 6 No.4 (Mar. 1, 2017)

    Protecting Attorney-Client Privilege and Attorney Work Product While Cooperating With the Government: Implications for Collateral Litigation (Part Three of Three)

    When a company conducts an internal investigation and cooperates with the government, collateral litigation can follow. To support their discovery efforts, litigants may try to argue, among other things, that the privilege and work product protection were waived as a result of the company’s cooperation with the government. This third and final installment in the three-part guest article series by Eric J. Gorman, a partner at Skadden Arps, and his associate, Brooke A. Winterhalter, analyzes strategies and legal arguments that companies may wish to consider as they seek to shield investigation materials shared with the government from third-party discovery requests in collateral litigation. For the first two installments in the series see “Establishing Privilege and Work Product in an Investigation” (Feb. 1, 2017) and “Cooperation Benefits and Risks” (Feb. 15, 2017).

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  • From Vol. 5 No.16 (Aug. 10, 2016)

    Swiss Court Acquits Four in Gazprom Case but New Law May Have Led to a Different Outcome

    After about seven years of investigation into the Gazprom corruption case, the Swiss Federal Criminal Court recently acquitted four individuals of corruption charges related to the construction of a gas pipeline because it determined that the Gazprom executives involved were not foreign officials. In a guest article, Shelby R. du Pasquier and Miguel Oural, partners at Swiss firm Lenz & Staehelin, discuss the implications of the acquittals. The heart of the case, they explain, lies in a series of payments totaling $7 million, made by Siemens Industrial Turbomachinery, a company acquired by Siemens in 2003, to senior executives of Gazprom. SIT entered into a settlement with Swiss authorities in 2013, a questionable decision in light of these recent acquittals. Meanwhile, new Swiss legislation criminalizing certain instances of commercial bribery could lead to drastically different outcomes for companies and defendants in similar situations going forward. See “Siemens’ Debarment Highlights the Crux of the Brazilian Business Challenge: Corruption Is Clear, But Anti-Corruption Law Is Ambiguous” (Mar. 19, 2014).

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  • From Vol. 5 No.16 (Aug. 10, 2016)

    Second Circuit Quashes Warrant for Microsoft to Produce Email Content Stored Overseas 

    A federal appeals court ruling has made it more difficult for the DOJ to obtain electronic content stored overseas, creating implications for an array of government investigations. The Second Circuit Court of Appeals agreed with Microsoft that a request to produce customer content it stored in Ireland was beyond the scope of the Stored Communications Act. “It’s an extremely significant decision [that the Act] does not authorize a U.S. district court to issue a search warrant to seize data being held by ISPs or remote computing services (cloud services) outside the territorial U.S.,” Edward McAndrew, a partner at Ballard Spahr, told The FCPA Report. “It is the first ruling of its kind on that issue from the U.S. Court of Appeals. See “Foreign Attorneys Share Insight on Data Privacy and Privilege in Multinational Investigations” (Jun. 28, 2016)

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  • From Vol. 5 No.11 (Jun. 1, 2016)

    Supreme Court of Canada Weighs in on International Corruption Investigations

    Domestic prosecutions of international corruption cases are inherently challenging. In Canada, there has only been one guilty verdict following trial under Canada’s equivalent of the FCPA, the Corruption of Foreign Public Officials Act (CFPOA), in addition to a number of pre-trial guilty pleas. The lack of civil enforcement and resolution options for foreign corruption violations makes Canadian anti-corruption enforcement more challenging – the state must always meet the higher standard of proof required in criminal prosecutions. The Supreme Court of Canada was recently called upon to consider the application of the CFPOA in the context of a criminal trial and the disclosure obligations of the state to the accused. In a guest article, Mark Morrison and Michael Dixon, partners at Blake, Cassels & Graydon, and Alexandra Luchenko, an associate there, analyze that case, World Bank v. Wallace, and its effect on the enforcement landscape. See “The Essentials of the New Canadian Anti-Corruption Requirements” (Mar. 20, 2013).

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  • From Vol. 5 No.8 (Apr. 20, 2016)

    District Court Order Threatens Confidentiality of Monitor Reports

    Reports of compliance monitors retained in accordance with corporate settlements have generally been kept out of public view – until now. Finding that a compliance monitor’s report is a judicial record and the public has a First Amendment right to see it, Judge John Gleeson of the Eastern District of New York granted, in large part, the pro se request of an HSBC mortgage customer to unseal the first annual report of the compliance monitor HSBC retained in connection with its $1.9 billion settlement with the DOJ. The matter is stayed pending appeal. A similar case is pending in the D.C. District, where 100Reporters has asked for the Siemens monitor report stemming from that FCPA enforcement action. See also “How to Find a Business-Minded Compliance Monitor and Minimize Reporting Requirements When Negotiating an FCPA Settlement (Part One of Three)” (Feb. 20, 2013); Part Two (Mar. 6, 2013); Part Three (Mar. 20, 2013). 

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  • From Vol. 5 No.6 (Mar. 23, 2016)

    U.S. District Court Addresses Definition of “Public International Organization”

    Adding to a scant body of FCPA case law, the U.S. District Court for the Eastern District of Pennsylvania sheds light on the term “public international organization" and consequently the definition of foreign official. The defendant was charged with violating the FCPA, the Travel Act and money laundering laws by funneling bribes to an official of the European Bank for Reconstruction and Development by making payments to the official’s sister. The Court upheld every count of the fourteen-count indictment in its pre-trial ruling. We summarize the facts of the case and the Court’s key findings. See also “What the Eleventh Circuit’s ‘Instrumentality’ Decision Means for FCPA Practitioners” (May 28, 2014).

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  • From Vol. 4 No.19 (Sep. 23, 2015)

    For Now, Hoskins Sets a Limit on the FCPA’s Jurisdictional Reach

    A recent decision in a high-profile FCPA case in the District of Connecticut, U.S. v. Hoskins, has clarified that the reach of the FCPA is not as unlimited as the DOJ contends.  As Arnold & Porter attorneys Mara V.J. Senn and Brandie Weddle explain in a guest article, the Hoskins court has created a road map that delineates the limits of the government’s FCPA jurisdiction.  They discuss the potential repercussions of the decision for FCPA enforcement.  See also “One U.S. District Court in New York Affirms Broad Jurisdictional and Temporal Reach of the FCPA While Another Dismisses FCPA Case for Lack of Contacts,” The FCPA Report, Vol. 2, No. 4 (Feb. 20, 2013).

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  • From Vol. 3 No.23 (Nov. 19, 2014)

    Supreme Court’s Refusal to Review Crime-Fraud Case Could Have Chilling Effect on Attorney-Client Relationship

    The Supreme Court has declined to review a Third Circuit decision compelling an attorney in a foreign bribery case to testify against his client, raising concerns among members of the FCPA bar that companies could be discouraged from seeking legal advice on whether payments could violate the FCPA.  “I do think it has the potential to have a chilling effect on the attorney-client privilege,” a veteran FCPA attorney told Policy and Regulatory Report, The FCPA Report’s sister publication.  See also “D.C. Circuit Confirms Applicability of Attorney-Client Privilege to Internal Investigations,” The FCPA Report, Vol. 3, No. 16 (Aug. 6, 2014).

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  • From Vol. 3 No.21 (Oct. 22, 2014)

    Avon Class Action Dismissal Illustrates Challenges of FCPA-Related Shareholder Derivative Suits

    FCPA allegations can have wide-ranging collateral consequences, even before the resolution of an enforcement action.  One such consequence is a civil lawsuit like the one Avon, a company that has conducted an extensive and costly corruption investigation, was facing in federal court in New York.  Avon has successfully moved to dismiss that civil case brought by shareholders who alleged that they were misled by the company and two of its former senior executives.  They claimed the company misrepresented the efficacy of Avon’s compliance program and touted Avon’s sales successes in China without revealing that those successes stemmed from bribery.  We analyze the case and the judge’s reasoning.  See also “Non-FCPA Liability for Alleged FCPA Violations,” The FCPA Report, Vol. 1, No. 1 (Jun. 6, 2012).

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  • From Vol. 3 No.20 (Oct. 8, 2014)

    Hoskins Provides an Opportunity for Judicial Determination of the FCPA’s Jurisdiction

    According to the DOJ and SEC, the FCPA gives the government authority to regulate the extraterritorial behavior of foreign entities and nationals who have never stepped foot inside the United States.  In a guest post, Mara V.J. Senn and Brandie Weddle of Arnold & Porter LLP argue that, until now, the DOJ and SEC have been unchecked in the exercise of such authority over foreign entities and individuals.  However, one British national, Lawrence Hoskins, has asked the U.S. District Court for the District of Connecticut to rein in the DOJ and dismiss an indictment against him for actions he alleges occurred completely outside U.S. territory.  Senn and Weddle detail the arguments and potential ramifications of this case.  See also “How Broad Is the FCPA’s Reach Over the Acts of Foreign Nationals?,” The FCPA Report, Vol. 2, No. 6 (Mar. 20, 2013).

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  • From Vol. 3 No.19 (Sep. 24, 2014)

    Defendant in Alstom/Marubeni Bribery Prosecution Tests FCPA’s Definition of “Agency” and its Reach Over Foreign Nationals

    Cases that test the government’s interpretation of the FCPA tend to be few and far between.  Lawrence Hoskins, a foreign national who worked for Alstom Holdings, SA has been charged with criminal violations of the FCPA and money laundering in connection with bribes paid by an Alstom/Marubeni consortium to secure contracts to build power plants in Indonesia.  Hoskins has moved to dismiss the indictment, challenging the government’s claim that he was an agent of Alstom’s U.S. subsidiary for purposes of FCPA liability.  He also argues that the FCPA is unconstitutionally vague and that it does not apply extraterritorially to foreign nationals in his situation.  This article examines both parties’ briefs.  See also “How Broad Is the FCPA’s Reach Over the Acts of Foreign Nationals?,” The FCPA Report, Vol. 2, No. 6 (Mar. 20, 2013).

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  • From Vol. 3 No.17 (Aug. 20, 2014)

    Supreme Court Asked to Review Landmark “Foreign Official” Decision

    After years of public debate on the topic, the definition of “foreign official” in the FCPA statute may be considered by the Supreme Court of the United States.  Joel Esquenazi and Carlos Rodriguez, sentenced to 15 and 7 years, respectively, for bribing employees of Haiti’s telecommunications company, have petitioned the high court to review the Eleventh Circuit’s decision on the meaning of an “instrumentality” of a foreign government, employees of which are deemed “foreign officials” under the FCPA.  See “What the Eleventh Circuit’s ‘Instrumentality’ Decision Means for FCPA Practitioners,” The FCPA Report, Vol. 3, No. 11 (May 28, 2014).  The FCPA Report discussed the case with Michael A. Sink, counsel for Joel Esquenazi.

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  • From Vol. 3 No.16 (Aug. 6, 2014)

    Delaware Supreme Court Gives Wal-Mart Shareholder Access to Attorney-Client Privileged Documents

    Despite the American legal system’s reverence for the attorney-client relationship, the attorney-client privilege is not unlimited.  The interest of shareholders in investigating possible breaches of fiduciary duty or other misconduct by a corporation’s officers or directors may, in appropriate circumstances, defeat the privilege.  In 2012, a Wal-Mart shareholder sought access to documents – including documents subject to the attorney-client privilege and related work-product doctrine – relating to the alleged bribery of Mexican officials by a Wal-Mart subsidiary and Wal-Mart’s flawed investigation of that misconduct.  Affirming a Chancery Court ruling that ordered Wal-Mart to turn over privileged documents, the Delaware Supreme Court expressly adopted an exception to the attorney-client privilege for a corporate shareholder who shows “good cause” for obtaining the corporation’s privileged materials.  See also “When Are Reports of Internal Investigations Protected by Attorney-Client Privilege?,” The FCPA Report, Vol. 3, No. 9 (Apr. 30, 2014).

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  • From Vol. 3 No.16 (Aug. 6, 2014)

    D.C. Circuit Confirms Applicability of Attorney-Client Privilege to Internal Investigations

    Barko v. Halliburton, a March 2014 decision by the U.S. District Court for the District of Columbia, sent shock waves through the ranks of corporate counsel: The District Court ruled that an internal investigation was not privileged because it would have been conducted regardless of whether the company was also seeking legal advice.  In an important reaffirmation of the strength and breadth of the attorney-client privilege, the U.S. Court of Appeals for the D.C. Circuit recently vacated the District Court’s decision, ruling that the privilege was available so long as seeking legal advice was a “significant” purpose – even if not the sole purpose – of the internal investigation.  This decision coincides with a Delaware Supreme Court ruling, discussed above in this issue of The FCPA Report.  That court expressly adopted an exception to the attorney-client privilege for a corporate shareholder who shows “good cause” for obtaining the corporation’s privileged materials (in that case, Wal-Mart).  See also The FCPA Report’s series on conducting internal investigations: “Ten Factors to Consider at the Outset (Part One of Two),” The FCPA Report, Vol. 2, No. 25 (Dec. 18, 2013); and “Developing and Implementing the Investigation Plan (Part Two of Two),” The FCPA Report, Vol. 3, No. 1 (Jan. 8, 2014). 

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  • From Vol. 3 No.12 (Jun. 11, 2014)

    Second Circuit Overrules Rakoff’s Controversial Rejection of SEC Settlement: Implications for FCPA Resolutions

    U.S. District Court Judge Jed Rakoff has been overruled by the Second Circuit, which held that he abused his discretion in refusing to approve a settlement between the SEC and Citigroup unless the SEC provided more evidence about the truth of the allegations lodged against the company.  One of Judge Rakoff’s primary criticisms of the settlement was the SEC’s choice to allow Citigroup to neither admit nor deny the allegations in the complaint.  This article analyzes the decision and its effect on FCPA settlements with the SEC.  See also “After a Protracted Battle About Reporting Requirements, Judge Leon Approves a $10 Million FCPA Settlement Between IBM and the SEC,” The FCPA Report, Vol. 2, No. 16 (Aug. 7, 2013).

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  • From Vol. 3 No.11 (May 28, 2014)

    What the Eleventh Circuit’s “Instrumentality” Decision Means for FCPA Practitioners

    In the first appellate court decision on the issue, the U.S. Court of Appeals for the Eleventh Circuit has ruled that an “instrumentality of the government” is “an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own,” providing a non-exhaustive list of factors to consider when determining functionality and control.  The landmark decision that largely confirms the government’s interpretation of the term “foreign official” (an interpretation criticized by some as being overbroad), follows the imposition of some of the longest FCPA sentences to date.  The defendants, Joel Esquenazi and Carlos Rodriguez, had argued that the DOJ had not proved that the entity at issue, Telecommunications D’Haiti, met the FCPA’s definition of an “instrumentality” of the Haitian government such that its employees were foreign officials.  This article examines the impact of the case, the Court’s reasoning, the specific factors to consider when determining whether an entity is an instrumentality, and the practical applications of the Court’s newly-announced two-pronged test to the defendants.  For a discussion of the oral argument of the appeal, see “A Hot Bench Hears Oral Arguments in Historic Challenge to the Definition of ‘Foreign Official’,” The FCPA Report, Vol. 2, No. 21 (Oct. 23, 2013).

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  • From Vol. 3 No.9 (Apr. 30, 2014)

    FCPA Implications of Recent Decisions on Judicial Monitoring of DPAs, Statutes of Limitations and Jurisdiction

    FCPA cases are often settled without litigation, and judicial interpretation of the law is relatively scarce.  A few recent cases, however, may impact how the FCPA is enforced.  A recent panel at the New York City Bar discussed five such cases and examined possible FCPA implications of these cases for prosecutors and defense counsel. The panel was moderated by John Buretta, a partner at Cravath, Swaine & Moore and included Peter Clark, a partner at Cadwalader, Wickersham & Taft; Colby Smith, a partner at Debevoise & Plimpton; and Lee Dunst, a partner at Gibson, Dunn & Crutcher.  See also “Four Ways the SEC Enforcement Landscape Is Changing and Why They Matter,” The FCPA Report, Vol. 2, No. 24 (Dec. 4, 2013).

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  • From Vol. 3 No.9 (Apr. 30, 2014)

    When Are Reports of Internal Investigations Protected by Attorney-Client Privilege?

    In-house legal departments and outside counsel often work under the assumption that internal investigations conducted by, or under the supervision of, counsel are protected by privilege.  However, a recent decision by the U.S. District Court for the District of Columbia has raised questions as to whether such privilege extends to investigations that are not conducted primarily for the purpose of seeking legal advice or directly in anticipation of litigation.  This article delves into the recent Barko v. Halliburton decision and what it means for companies that may seek to invoke the attorney-client privilege or work-product doctrine to preserve the confidentiality of internal investigations.  See also “Preserving the Attorney-Client Privilege in Cross-Border Internal Investigations,” The FCPA Report, Vol. 2, No. 13 (Jun. 26, 2013).

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  • From Vol. 3 No.4 (Feb. 19, 2014)

    Former Siemens Executives Receive Record-Breaking Individual FCPA Fines in Default Judgment

    More than five years after the resolution of its FCPA case, Siemens AG still holds the title for the highest fine paid in an FCPA matter.  The company continues to set FCPA records – on February 4, 2014, two of its former executives were ordered to pay the largest individual civil penalties in the history of FCPA enforcement.  Adding to the historic nature of the event, Stephan Signer and Ulrich Bock were sentenced after failing to enter an appearance in the case pending against them since 2011 and choosing not to file any responsive pleadings.  See “Lessons Learned on Crafting FCPA Compliance Programs from the Largest FCPA Case in History,” The FCPA Report, Vol. 1, No. 3 (July 11, 2012).  

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  • From Vol. 2 No.22 (Nov. 6, 2013)

    New York Judge Rules that Foreign FCPA Whistleblowers Are Not Protected Under Dodd-Frank’s Anti-Retaliation Provision

    Does Dodd-Frank’s Anti-Retaliation Provision protect a foreign employee who reports FCPA violations based on conduct that occurred extraterritorially?  A court in the Southern District of New York recently became the second district court in the country to say that it does not.  Judge William H. Pauley III granted Siemens A.G.’s motion to dismiss Meng-Lin Liu’s case against it on October 21, 2013, holding that whistleblower protection does not apply to activity outside the United States, but declining to opine on whether Dodd-Frank’s definition of “whistleblower” extends to those who report to the SEC after the alleged retaliation has occurred.  Liu, a Taiwanese resident who worked for Siemens’ Chinese subsidiary, alleges that he was retaliated against after he internally reported a potential FCPA violation regarding an alleged kickback scheme in China and Korea.  He reported it to the SEC after he was terminated.  Siemens has a checkered FCPA history, having paid a record-breaking fine in 2008.  See “Lessons Learned on Crafting Compliance Programs from the Largest FCPA Case in History,” The FCPA Report, Vol. 1, No. 3 (Jul. 11, 2012).  For more on Dodd-Frank’s whistleblower provisions, see “Seven Steps Companies Can Take to Incentivize Internal Reporting of FCPA Violations,” The FCPA Report, Vol. 1, No. 3 (Jul. 11, 2012). 

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  • From Vol. 2 No.18 (Sep. 11, 2013)

    Who Is a Foreign Official?

    The FCPA’s broad definition, and the government’s broad interpretation, of the term “foreign official” have caused many companies operating internationally serious consternation.  The definition of “foreign official” for FCPA purposes – which arguably includes any employee of an institution that has some degree of state ownership or control, based on a list of considerations – does not match up with the more narrow way the term is used in common parlance.  This disconnect and the lack of perceived clarity on the issue under U.S. law and that of other countries causes companies to struggle with identifying potential risk areas and implementing effective compliance programs.  During a recent program, leading FCPA practitioners provided valuable insight into how the government defines the critical terms and how companies should structure their policies in response to the government’s interpretations.  The panelists included James G. Tillen, a Member of Miller & Chevalier Chartered; Matteson Ellis, a Special Counsel at that firm; and Mark Gough, Deputy Head for Compliance Investigations at Siemens.   See also “The Expanding Definition of ‘Foreign Official’ and its FCPA Implications,” The FCPA Report, Vol. 2, No. 11 (May 29, 2013).

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  • From Vol. 2 No.17 (Aug. 21, 2013)

    SEC Investigation of JPMorgan Hiring Practices Demonstrates FCPA Nepotism Risks

    Should banks with global presences be concerned that their hiring practices may cause FCPA headaches?  The recent revelation that JPMorgan Chase & Co., the nation’s largest bank, is being investigated by the SEC for possible FCPA violations stemming from its hiring of the children of two high-placed Chinese officials, may cause other banks to scrutinize who they are hiring and how they are documenting their hiring decisions, especially if the new hires are related to foreign officials.  This article discusses the JPMorgan investigation and how companies can mitigate FCPA risks in their hiring practices.  See also “Friendly Relations? When Nepotism May Violate the FCPA,” The FCPA Report, Vol. 1, No. 10 (Oct. 17, 2012).

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  • From Vol. 2 No.16 (Aug. 7, 2013)

    After a Protracted Battle About Reporting Requirements, Judge Leon Approves a $10 Million FCPA Settlement Between IBM and the SEC

    One of the most judicially contested civil settlements in FCPA history reached a conclusion on July 25, 2013, when U.S. District Judge Richard J. Leon of the U.S. District Court for the District of Columbia signed off on a $10 million agreement between IBM and the SEC.  The agreement resolves civil FCPA charges arising from IBM’s alleged bribery schemes in China and Korea.  The settlement agreement has been pending for more than two years, with Judge Leon accusing the SEC of “rolling over” during negotiation of the reporting requirements in the agreement, and warning IBM that if corruption problems arise in the future, it “won’t be a happy day.”  See also “Judge’s Refusal to Approve Civil FCPA Settlement Raises Concerns for Future FCPA Settlements with the SEC,” The FCPA Report, Vol. 2, No. 1 (Jan. 9, 2013); “District Court Judge Modifies Demands in Push for Stricter Judicial Review of Civil FCPA Settlements,” The FCPA Report, Vol. 2, No. 3 (Feb. 6, 2013).

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  • From Vol. 2 No.15 (Jul. 24, 2013)

    Ninth Circuit Upholds Judge-Issued Restitution Order in Film Executives’ FCPA Appeal

    Life is not always glamorous in Hollywood.  Just ask Los Angeles film executives Patricia and Gerald Green.  They already have served six months in prison and three years supervised release in connection with their 2009 FCPA conviction, and recently lost their appeal to the Ninth Circuit of a district court decision ordering them to pay $250,000 in restitution.  The Greens argued in the appeal that the lack of a jury finding of “an identifiable victim or victims” who suffered a pecuniary loss (as required by the Mandatory Victims Restitution Act) made the restitution order issued by a judge improper under Supreme Court precedent.  A three-judge panel of the Ninth Circuit disagreed with the Greens.  This article explains the background of the case and summarizes the Ninth Circuit's decision and legal analysis.

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  • From Vol. 2 No.11 (May 29, 2013)

    The Expanding Definition of “Foreign Official” and its FCPA Compliance Implications

    The shrinking global village has made international deals and dealings a daily occurrence.  Yet, a much-debated ambiguity in American law can put at risk any person or company who bestows a benefit on a foreign individual without stopping, first, to consider the definition of “foreign official” under the FCPA.  In a guest article, Ronald E. Wood and Jennifer L. Roche, partner and associate, respectively, at Proskauer Rose LLP, explore why the contours of the FCPA’s anti-bribery provision remain fuzzy 36 years after it was enacted, giving the government a hammer it has wielded with increased frequency over the past decade.  The article also offers guidance on how to avoid having the twin threats of investigation or prosecution make an unwelcome house call.  See also “U.S. Government Counters Foreign Official Challenge in the Eleventh Circuit,” The FCPA Report, Vol. 1, No. 7 (Sep. 5, 2012).

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  • From Vol. 2 No.6 (Mar. 20, 2013)

    How Broad Is the FCPA’s Reach Over the Acts of Foreign Nationals?

    Within the last few months, U.S. courts, the Department of Justice and the Securities and Exchange Commission clarified the reach of the FCPA over foreign nationals, and courts determined that physical presence is required to begin the statute of limitations for bribery claims.  In a guest article, Palmina M. Fava and Mor Wetzler, partner and associate, respectively, at Paul Hastings LLP, distill important takeaways from those authorities and provide insight on those issues, harmonizing the holdings of SEC v. Straub and SEC v. Sharef and the FCPA Resource Guide.

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  • From Vol. 2 No.4 (Feb. 20, 2013)

    One U.S. District Court in New York Affirms Broad Jurisdictional and Temporal Reach of the FCPA While Another Dismisses FCPA Case for Lack of Contacts

    Two federal judges sitting in the Southern District of New York recently reached different conclusions regarding how far the FCPA reaches.  Together, the two decisions provide legal analysis relevant to corporate decision-making on: the role of e-mail and computer servers in conferring jurisdiction over FCPA defendants; the interaction between preparation of SEC filings and jurisdictional questions; the level of authority over a bribe or cover up required to trigger jurisdiction; statute of limitations questions; and other topics.  This article analyzes both decisions.

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  • From Vol. 2 No.3 (Feb. 6, 2013)

    District Court Judge Modifies Demands in Push for Stricter Judicial Review of Civil FCPA Settlements

    A federal judge continues to exercise significant control over FCPA settlement agreements in his courtroom, with the potential to change the way the SEC and corporate defendants settle FCPA cases.

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  • From Vol. 2 No.1 (Jan. 9, 2013)

    Judge’s Refusal to Approve Civil FCPA Settlement Raises Concerns for Future FCPA Settlements with the SEC

    A federal judge’s frustration with the SEC’s enforcement policies could have important consequences for companies subject to the civil provisions of the FCPA.  U.S. District Judge Richard J. Leon of the U.S District Court for the District of Washington, D.C. announced in open court in late December that he will not “rubber stamp” a settlement agreement resolving civil FCPA charges brought by the SEC against IBM in 2011, and accused the SEC of “rolling over.”  Judge Leon insisted that IBM agree to more rigorous reporting than the settlement requires.  Judge Leon’s active involvement in the settlement and his imposition of additional reporting demands on IBM could affect how other companies negotiate FCPA (and other) settlements with the SEC.  Sources told The FCPA Report that Judge Leon’s demands could lead to, among other things, more widespread judicial scrutiny of settlements, and ultimately more enforcement actions settled administratively.

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  • From Vol. 1 No.11 (Nov. 7, 2012)

    Litigation, Settlement and Risk Management Lessons Learned from Recent FCPA Trials

    FCPA trials present specific obstacles, and as the recent “SHOT Show” case demonstrates, can be difficult for the government to win.  On October 18, 2012, as part of the Fifth Annual ABA FCPA Institute in Washington, D.C., a panel of litigators and current and former prosecutors discussed recent FCPA trials and lessons learned from them.  The lively panel disagreed over issues such as the uniqueness of FCPA trials, and whether juries really care about bribery.  U.S. Attorney Neil MacBride also provided insight into trial work in the Eastern District of Virginia, home of the “Rocket Docket,” where some FCPA cases have been brought recently.

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  • From Vol. 1 No.9 (Oct. 3, 2012)

    Five Themes for General Counsel to Monitor with Respect to Dodd-Frank Whistleblowers and the FCPA

    It’s late at night and General Counsel is giving the deck for the next morning’s Audit Committee presentation one final read through.  The subject of the presentation is a succinct yet thorough post-mortem report distilling the key findings from a wide-ranging internal investigation into irregularities relating to a major contract award in one of the company’s most challenging foreign markets.  There is sufficient evidence of questionable conduct to merit real concern under the FCPA and General Counsel, with Outside Counsel by her side, must make a recommendation to the Audit Committee as to whether the company should make a voluntary disclosure to U.S. authorities.  Flipping through the slides, General Counsel remarks to herself how familiar the facts have become, particularly the unattractive ones.  She is also well versed in the factors weighing on the pro and con side of disclosure.  But one wildcard prevents General Counsel from putting the presentation down and getting some much-needed rest: is there a whistleblower who has already informed the government?  If so, the company’s calculus is dramatically different.  But General Counsel just doesn’t know and that is one answer that Outside Counsel does not have for her.  Whistleblowers have long been a hot topic for corporate counsel.  They have become an even hotter topic since Congress passed Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), which amended the Securities Exchange Act of 1934 to add new Section 21F, “Securities Whistleblower Incentives and Protection.”  In a guest article, F. Joseph Warin, chair of Gibson, Dunn & Crutcher LLP’s Washington, D.C. Litigation Department and co-chair of the Firm’s White Collar Defense and Investigations Practice Group, along with John W.F. Chesley, a litigation associate at Gibson Dunn, provide a brief primer on the regulatory framework governing whistleblower awards under Dodd-Frank; explore early developments in Dodd-Frank whistleblower litigation, with a particular focus on two important cases predicated upon alleged violations of the FCPA; and list some of the key issues that they see as emerging or that they expect to emerge in the near future.

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  • From Vol. 1 No.7 (Sep. 5, 2012)

    U.S. Government Counters Foreign Official Challenge in the Eleventh Circuit

    In the first case to bring the issue of the definition of an “instrumentality of a foreign government” in front of an appellate court, the DOJ has replied to Joel Esquenazi and Carlos Rodriguez’s (Defendants’) opening brief.  The Defendants have argued that Teleco, a firm that provides telephone service to Haiti and that was owned by the Haitian national bank at the time of the alleged bribery, was not an instrumentality of the Haitian government because Teleco did not perform a government function.  Defendants were convicted of bribing employees of Teleco to retain business for their Florida-based communications company.  In its brief filed August 21, 2012, the DOJ says that the Defendants’ argument “contravenes bedrock principles of statutory construction and is unsupported by legislative history.”

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  • From Vol. 1 No.5 (Aug. 8, 2012)

    Halliburton Settles Shareholder Derivative Suits Alleging Breaches of Fiduciary Duty Stemming from Inadequate Internal Controls and Violations of the FCPA

    In May 2009, the Policemen and Firemen Retirement System of the City of Detroit and the Central Laborers’ Pension Fund commenced separate shareholder derivative actions in the name of Halliburton Company (Halliburton).  The plaintiffs accused Halliburton and its former subsidiary, Kellogg, Brown & Root, Inc. (later Kellogg, Brown and Root, LLC) of operating as a “criminal enterprise” and running a “reign of terror” in connection with various violations of the FCPA and other laws.  Those violations included, notably, the payment of $182 million of bribes to win Nigerian oil contracts.  The parties have agreed to settle the suits and all related claims.  This article provides the background facts and a summary of the material terms of the settlement, with emphasis on those that relate to FCPA and anti-corruption compliance issues.  It also discusses Halliburton’s recently-filed Form 10-Q, which discloses internal FCPA investigations of payments made to third party agents in Angola and Iraq.

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  • From Vol. 1 No.1 (Jun. 6, 2012)

    Defendants in Haiti Teleco Case Urge the Eleventh Circuit to Limit “Instrumentalities” to Entities that Perform Government Functions

    The elusive definition of a foreign official under the Foreign Corrupt Practices Act may finally get some clarity.  Two defendants have brought the issue squarely in front of the 11th Circuit.  Their appeals, filed May 9, 2012, mark the first time in the history of the FCPA that an appellate court has been asked to define what constitutes an instrumentality of a foreign government.  This article summarizes the background of the case and legal arguments made in the defendants’ briefs, with an emphasis on the arguments surrounding the definition of instrumentality.

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