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Government Enforcement Exposed - "The GEE"
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15 Dec 2014 DOJ Offers Opinion on Successor Liability Under FCPA

The Department of Justice recently issued Opinion Release 14-02, its second release of the year regarding the Foreign Corrupt Practices Act, and it offers valuable insight for any U.S. company looking to merge with or acquire a foreign entity. The opinion request came from a U.S. consumer products company that intends to acquire a foreign manufacturer with no direct sales or distribution contracts in the U.S. In the course of its pre-acquisition due diligence of the foreign company, the U.S. entity identified a number of likely improper payments to government officials, as well as substantial accounting and recordkeeping problems. In light of these identified concerns, the U.S. company set forth a plan to take remedial pre-acquisition measures and post-acquisition integration steps. The opinion request, however,…

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02 Dec 2014 Prosecutorial Over-criminalization: Fishing for Guilty Pleas

On November 5, 2014, the Supreme Court heard oral argument in a case involving a fisherman, Mr. Yates, who was convicted of violating the so-called “anti-shredding” provision of the Sarbanes-Oxley Act, which was passed in 2002 in the wake of the Enron scandal. The case arose from a 2007 search of the Miss Katie, Mr. Yates’ fishing vessel. A Florida state officer boarded the ship at sea and noticed fish that appeared less than 20 inches long, which was under the minimum legal size of grouper. The officer placed the smaller fish into a crate, issued Yates a citation, and ordered Yates to take the crate to port for seizure.   Instead, Yates ordered his crew to throw some of the smaller fish overboard. Officials…

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21 Nov 2014 ASSISTANT ATTORNEY GENERAL URGES COMPANIES TO COOPERATE AND CONDUCT THOROUGH INTERNAL INVESTIGATIONS OF FCPA VIOLATIONS

In remarks prepared for the American Conference Institute’s 31st International Conference on the Foreign Corrupt Practices Act on Nov. 19, 2014, Assistant Attorney General Leslie R. Caldwell emphasized the DOJ’s recent successful prosecutions under the FCPA and urged companies to cooperate and conduct thorough internal investigations of FCPA violations.   Caldwell emphasized the DOJ’s aggressive prosecution of individuals and companies, citing more than 50 convictions of individuals since 2009 (25 of those since 2013) and resolution of cases against more than 50 companies with penalties in forfeiture of approximately $3 billion.   While the DOJ is more aggressively developing and prosecuting cases, Caldwell still called on companies to self-disclose and cooperate.  Caldwell emphasized that she meant a full and timely cooperation, saying, “We do not…

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07 Nov 2014 Bio-Rad Settlement Reinforces FCPA Trends

On Tuesday, the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) announced that both had reached agreements with medical diagnostics and life sciences manufacturing company Bio-Rad Laboratories to resolve allegations that Bio-Rad violated the Foreign Corrupt Practices Act (FCPA) in connection with its engagement of third party intermediaries in Russia, Thailand and Vietnam. The respective releases reveal information about the settlement that places it squarely in line with some emerging trends in the FCPA enforcement arena.   The SEC alleged that Bio-Rad “lacked sufficient internal controls to prevent or detect” $7.5 million in bribes that were paid to Vietnamese and Thai foreign officials during a five-year period and recorded as legitimate expenses, including commissions. The SEC also alleged that Bio-Rad engaged foreign agents…

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31 Oct 2014 A Cozy Relationship: The DOJ and JFTC, and the Potential Risks of Taking Advantage of JFTC’s Leniency Program

Over the past year, the United States Department of Justice (DOJ) and the Japanese Fair Trade Commission (JFTC) have made concerted efforts to coordinate and join forces in the enforcement of U.S. and Japanese antitrust policies. This growing relationship makes sense, from the agencies’ perspective, given that they are both responsible for upholding their respective antitrust laws and prosecuting violators. The relationship really makes sense when one considers that the DOJ Antitrust Division’s prosecution of Japanese auto parts manufacturers has resulted in over $2.4 billion in criminal fines from their ongoing investigation of price fixing and bid rigging in the auto parts industry. On the surface, the JFTC’s teeth don’t seem as sharp as the DOJ’s, especially in light of the JFTC’s much heralded Leniency…

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06 Oct 2014 Supreme Court Passes on Esquenazi, Makes Instrumentality Test Settled Law

  The Supreme Court today declined to issue a writ of certiorari for the appellants in the case of United States v. Esquenazi.  As readers will recall from our previous post, the Esquenazi decision was noteworthy for adopting the Department of Justice’s relatively expansive definition of who qualifies as a “foreign official” under Foreign Corrupt Practices Act.  Now it appears that this definition is settled law.   While FCPA practitioners had hoped that the Supreme Court might step in to decide this issue, it appears that there was no room on the docket under the circumstances. The decision not to grant review of the Esquenazi decision is likely the result of a lack of any disagreement among the circuit courts on the issue. This is,…

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30 Sep 2014 IS A NON-UNITED STATES CITIZEN WHO REFUSES TO LEAVE HIS HOME COUNTRY TO FACE FCPA CHARGES A FUGITIVE FROM JUSTICE?

South Korean citizen Han Young Kim has petitioned the United States Supreme Court for certiorari to resolve a circuit split regarding whether a non-United States citizen who refuses to come to the United States to face Foreign Corrupt Practices Act charges is a fugitive from justice.   Kim argues that because he lives in South Korea and did not flee the United States to South Korea, he should not be considered a fugitive.  The government’s position that Kim is a fugitive because he refuses to submit to extradition has kept Kim from having an opportunity to seek judicial review of his indictment or from attempting to reach a settlement, since the government will not negotiate with fugitives.   The Ninth Circuit Court of Appeals denied…

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23 Sep 2014 DODD-FRANK WHISTLEBLOWER ACTIVITY GETTING EVEN HOTTER

  Just two weeks ago, we discussed the increased activity in civil litigation and SEC enforcement actions related to Dodd-Frank whistleblowers. When we suggested that readers check back soon for further developments, we did not imagine that the SEC would provide us with fodder for another update quite so quickly. However, on September 22, the SEC turned up the heat even more by announcing its largest ever whistleblower award – a whopping $30 million award. This award more than doubles the previous largest award of $14 million, announced last October.   While the SEC’s awards are confidential, given that awards range from 10 percent to 30 percent of the sanction imposed in an SEC enforcement action when that sanction exceeds $1 million, the underlying action…

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19 Sep 2014 NASAA: State Securities Regulators’ Views on Top Emerging Enforcement Issues

  At the North American Securities Administrators Association (NASAA) Annual Conference earlier this week in Indianapolis, the NASAA Enforcement Section gave a preview of the results of its annual survey of securities administrators. In that survey, state securities regulators identified binary options, marijuana-related investments, stream of income investments and the cybersecurity of digital currency as the primary emerging enforcement concerns.   Binary options. Described by one regulator as “the flavor of the week in terms of investor fraud,” these options, with a fixed expiry time, are all-or-nothing investments. If the option expires in-the-money, the investor gets a fixed amount of cash; if it expires out-of-the-money, the investor gets nothing. Because they are easy to understand and do not require any leverage, state regulators believe relatively unsophisticated…

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17 Sep 2014 News from Down Under: The Case against Leighton Holdings Further Highlights Problems with the Facilitation Payments Exception

  Traditionally, Australia has not vigorously enforced its anti-corruption laws.  In fact, an OECD report released in October 2012 found that, as of that date, enforcement of Australia’s Bribery of Foreign Officials Act was “extremely low,” considering the number of Australian companies exposed to bribery risk. It notes that as of 2012, only 1 of 28 referred allegations resulted in a prosecution. That may be changing with Monday’s report in the Australian Financial Review that Leighton Holdings, an international contracting company based in Australia and active in mining and oil and gas, has internal emails and other documents that show that it have paid substantial bribes in Iraq to secure oil and gas contracts. According to that article, among other things, certain leaked emails which…

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