The FCPA Report

The definitive source of actionable intelligence covering the Foreign Corrupt Practices Act

Recent Issue Headlines

Vol. 3, No. 11 (May 28, 2014) Print IssuePrint This Issue

  • 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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  • Should an Individual Defendant Go to Trial on FCPA Charges?  Five Important Considerations

    Creative.  Aggressive.  Those are the two words a senior official at the SEC recently used to describe the government’s increasing pursuit of FCPA cases against individuals.  As The FCPA Report has indicated, a growing number of individuals are being pursued under the FCPA.  Historically, individuals – facing the potential loss of their liberty – have been more willing than companies to fight FCPA charges at trial.  With the increase in FCPA cases against individuals, it is likely that so too will the number of individuals who (like Joseph Sigelman in the PetroTiger case, who is insisting he will fight the charges against him) must consider whether the government is able to meet its burden of proof. In light of these trends, in a guest article, Michael Himmel and Steven Llanes, partner and associate, respectively, at Lowenstein Sandler, discuss five factors that an individual who is facing an FCPA action should consider when determining whether to go to trial or not.     

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  • The World Bank’s Wide Reach and Its Growing Anti-Corruption Program

    “What is the World Bank and why do I care what it thinks?”  Tim Coleman, a partner at Freshfields Bruckhaus Deringer, told The FCPA Report that many clients have that question – often prompted by an unexpected notice from the World Bank.  Companies that have contracted with foreign governments on a World Bank-financed project, along with companies that have signed deferred prosecution agreements with the DOJ containing a World Bank cooperation clause, may have put themselves in the World Bank’s jurisdiction.  “Any company or individual who touches my money is subject to the jurisdiction of my office,” Stephen Zimmermann, Director of Operations of the Integrity Vice Presidency of the World Bank, said at a speech at the American Conference Institute’s FCPA conference in New York.  And, he said, “just about every developing country project has World Bank money.”  The World Bank, which made $35 billion in loans last year to tens of thousands of contractors, is increasingly using its economic and political leverage to enforce its rules against fraud, collusion, obstruction, corruption and coercion. Penalties include not only debarment from the World Bank and the other major global development banks, but because the World Bank cooperates with governments around the world, investigations and potential penalties under national anti-corruption regimes.  Recently, a panel of World Bank experts at the Practising Law Institute’s FCPA and International Anti-Corruption Developments program, including Zimmermann, addressed critical issues about the Bank and its investigations.  One of the panelists, Tim Coleman, a partner at Freshfields, along with associate Jonathan Ware, further spoke with The FCPA Report about the challenges companies may face when the Bank investigates them and whether it makes sense for companies to settle.  See also “Doing Business with the World Bank: Understanding and Avoiding Debarment,” The FCPA Report, Vol. 2, No. 10 (May 15, 2013).

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  • Corruption Considerations for Private Fund Managers: An Interview with Molo Lamken Partner Justin Shur

    Private fund managers are looking with increasing receptivity at emerging markets, and, in some cases, frontier markets where corruption risk is significant.  This has not gone unnoticed by the FCPA units in the SEC and DOJ, which have been focusing on bribery in the financial services industry.  See “Why the Direct Access Partners Case Matters for Financial Sector Anti-Corruption Compliance,” The FCPA Report, Vol. 2, No. 21 (Oct. 23, 2013).  The FCPA Report recently interviewed Justin V. Shur, a former federal prosecutor and now a partner at Molo Lamken LLP, about the enforcement climate, the risks the industry faces and strategies for compliance.  The interview covered, among other things: the relationship between investment control and FCPA risk; contract provisions to limit the FCPA risk raised by third parties; issues presented by deal finders and sovereign wealth funds; hiring risks and best practices; facilitation payments; and successor liability.  Shur will expand on these ideas at a complimentary event (invitation here) at 5 p.m. on June 3 at the CORE: Club in Manhattan.  The event is sponsored by Molo Lamken, The FCPA Report and our affiliated publication, The Hedge Fund Law Report.  In addition to Shur, the event will feature his partner Andrew DeVooght, panelists from Indus Capital, Seward & Kissel, Global Environment Fund and the SEC.  Please RSVP to rsvp@fcpareport.com.  A cocktail reception will follow.

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  • Practical Guidance for Obtaining Evidence from Abroad: An Interview with T. Markus Funk of Perkins Coie

    A perennial challenge in FCPA cases is obtaining evidence that resides outside the U.S., both during the investigation and during administrative and court proceedings. T. Markus Funk, a partner at Perkins Coie and former federal prosecutor, DOJ Legal Advisor in Kosovo and Oxford law lecturer, discussed with The FCPA Report the details of, and differences between, the two formal mechanisms for obtaining evidence from abroad, mutual legal assistance treaties and letters rogatory.  He also gave expert insight on informal channels for obtaining evidence overseas, and strategies for handling the challenges that attorneys may encounter when seeking such evidence.  Funk recently authored Mutual Legal Assistance Treaties and Letters Rogatory: A Guide for Judges (Federal Judicial Center, 2014).  For more analysis from Funk, see “Assessing the Year in FCPA Enforcement and Looking Ahead,” The FCPA Report, Vol. 3, No. 2 (Jan. 22, 2014) and “The New Landscape of Corporate Social Responsibility Regulation and Its Overlap with FCPA Compliance,” The FCPA Report, Vol. 1, No. 11 (Nov. 7, 2012).  Funk also represented Joel Esquenazi in the challenge to the definition of “instrumentality,” decided on May 16.  See “What the Eleventh Circuit's 'Instrumentality' Decision Means for FCPA Practitioners,” above, in this issue of The FCPA Report.

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  • Three Questions to Ask After Detecting a Possible FCPA Violation

    A report of bribery has come in: a whistleblower has made a complaint or an employee has discovered a violation of an internal control, such as fraud on an expense report.  Among the questions that must be answered are: Who should conduct which parts of the investigation? When should the investigation end?  How should the issue be remediated?  FCPA experts from Paul Hastings, Akin Gump and KPMG weigh in.  See also “How to Conduct an Anti-Corruption Investigation: Ten Factors to Consider at the Outset (Part One of Two),” The FCPA Report, Vol. 2, No. 25 (Dec. 18, 2013); “Developing and Implementing the Investigation Plan (Part Two of Two),” Vol. 3, No. 1 (Jan. 8, 2014).

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  • Anti-Corruption Compliance Lawyer Howard Weissman Joins Baker & McKenzie from Lockheed Martin

    Former Lockheed Martin Vice President & Associate General Counsel-International Howard Weissman has joined Baker & McKenzie’s compliance practice as Counsel.  Weissman worked for Lockheed for more than 25 years, designing and strengthening the defense company’s anti-corruption compliance programs.

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  • Former Federal Prosecutor and Veteran Litigator Joins Blank Rome as a Partner

    Blank Rome recently announced that Carlos Ortiz has joined the firm as a partner in the White Collar Defense and Investigations group.  Ortiz served for five years at the DOJ Tax Division and ten years at the U.S. Attorney’s Office for the District of New Jersey.  He joins from Edwards Wildman and will be based in the firm’s New York and Princeton, N.J. offices.  For insight from Ortiz, see “Six Things Every Business Lawyer Needs to Know About the FCPA,” The FCPA Report, Vol. 3, No. 4 (Feb. 19, 2014).

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