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« Super-charge your analytics program with the guidance | Main | China Corruption Blotter (December 13, 2012) »
Thursday
Dec132012

Great guidance from the bench: 'The FCPA casts a wide net'

In his 61-page ruling this week allowing the SEC's suit against two former Noble executives to go forward, federal district judge Keith P. Ellison provided some excellent 'guidance' about the FCPA.

Judge Ellison was already familiar with the FCPA. He presided over the criminal sentencing of KBR's Jack Stanley and Wojciech Chodan, and middleman Jeffrey Tesler. (He famously asked Tesler, 'Where is your family, sir?')

Who is Judge Ellison? Harvard undergrad degree in 1972, off to Oxford on a Rhodes scholarship at Magdalen College, followed by Yale Law School.

Next was a clerkship with the great Skelly Wright at the D.C. Circuit Court of Appeals, topped with a clerkship for United States Supreme Court Justice Harry Blackmun.

He then practiced law in Texas until his nomination to the bench by President Bill Clinton in 1999.

A commenter at the Robing Room typically said about him: 'Brilliant, accomplished, compassionate, and humble. A rare combination in a human being, let alone a federal judge. Scrupulously fair and patient.'

So Judge Ellison is a legal heavyweight and his views on the FCPA are important (federal district court decisions don't bind other courts but can influence them).

In his ruling in the Ruehlen and Jackson case this week, Judge Ellison talked plenty about the breadth of the FCPA's coverage. Although the case before him was a civil suit brought by the SEC, his reasoning could apply as well to criminal prosecutions by the DOJ. In fact he cited as precedent U.S. v. Kay, a criminal FCPA case that went to the Fifth Circuit Court of Appeals a couple of times.

Judge Ellison doesn't need our help. But coincidentally, last week we talked about the Kay case, and about how the Fifth Circuit used it to warn defendants not to be hairsplitters when it comes to the FCPA.

Judge Ellison echoed that. Quoting from the Kay I opinion he warned that the FCPA 'casts a wide net over foreign bribery.'

It's a message the rest of us should listen to.

*     *     *

Here are relevant excerpts from Judge Ellison's December 11, 2012 Memorandum and Order in Securities and Exchange Commission v. Mark A. Jackson and James J. Ruelen:

Nothing in the legislative history of the FCPA suggests that Congress intended to limit the application of 15 U.S.C. § 78dd-1 to those cases where the government could show that a defendant knew, either by name or job description, precisely which foreign officials would be receiving the illicit payments he had authorized. The Fifth Circuit has recognized that, subject to the narrow exception for facilitation payments, Congress intended, with the FCPA, to “cast an otherwise wide net over foreign bribery.” Kay I, 359 F.3d at 749.

Indeed, in explaining the requirement that a defendant act knowingly, Congress specified that the statute is intended to cover “both prohibited actions that are taken with ‘actual knowledge’ of intended results as well as other actions that, while falling short of what the law terms ‘positive knowledge,’ nevertheless evidence a conscious disregard or deliberate ignorance of known circumstances that should reasonably alert one to the high probability of violations of the Act.” H.R. Conf. Rep. 100-576 (1988).

In light of this legislative history, it would be perverse to read into the statute a requirement that a defendant know precisely which government official, or which level of government official, would be targeted by his agent; a defendant could simply avoid liability by ensuring that his agent never told him which official was being targeted and what precise action the official took in exchange for the bribe. . . .

The Court seriously doubts that Congress intended to hold an individual liable under 15 U.S.C. § 78dd-1(a)(3)(A) only if he took great care to know exactly whom his agent would be bribing and what precise steps that official would be taking. Congress intended to address the problem of domestic entities bribing foreign officials to accomplish certain proscribed ends, see Kay I, 359 F.3d at 747, not domestic entities carefully monitoring the execution of that bribery. And, if the FCPA does not require a defendant to know precisely which government official was being bribed, [the prosecution] bears no burden to allege such facts. . .

“[T]he touchstone is whether the statute, either standing alone or as construed, made it reasonably clear at the relevant time that the defendant’s conduct was criminal.” Id. at 267.

However, “no more than a reasonable degree of certainty can be demanded [in a criminal statute]. Nor is it unfair to require that one who deliberately goes perilously close to an area of proscribed conduct shall take the risk that he may cross the line.” Kay II, 513 F.3d at 442 (citing Boyce Motor Lines, Inc. v. United States, 342 U.S.337, 340 (1952)) (brackets in original).

Here, a person of common intelligence should have no difficulty understanding that routine government actions do not include the granting of permits based on fraudulent documents.

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