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Richard L. Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Elizabeth K. Spahn Editor Emeritus

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor


FCPA Blog Daily News

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Thursday
Oct312013

Special report: Has the FBI disbanded its FCPA Unit?

The FCPA Blog posed this question to the DOJ and FBI's public affairs' offices Wednesday: Has the FCPA Unit at the FBI been disbanded? In response, Christopher Allen in the FBI's Public Affairs Office said: "The FBI's investigations are managed through the International Corruption Unit, and that unit is absolutely not being disbanded."

The FBI's International Corruption Unit handles an array of fraud investigations, including FCPA cases. Within the ICU, the FBI had set up its specialized FCPA Unit.

At the FCPA & Anti-Corruption Compliance Conference in Washington, D.C. in 2010, Andrew Sekela, who was then a Supervisory Special Agent, talked about the planned growth of the FBI's FCPA unit, which he said then consisted of three SSAs and 12 members.

The FCPA Guidance published last year by the DOJ and SEC said at page 5: "The FBI also has a dedicated FCPA squad of FBI special agents (located in the Washington Field Office) that is responsible for investigating many, and providing support for all, of the FBI’s FCPA investigations."

It was formerly common practice for press releases about FCPA enforcement actions to mention the FBI's dedicated FCPA team or squad of agents in the Washington office. A few examples are here, here, and here. More recently, however, the practice of mentioning the FBI's FCPA Unit appears to have stopped.

The Diebold enforcement action press release from the SEC and the DOJ's press release, plus the complaint document itself, make no mention of the FBI's FCPA Unit. Only the FCPA coordinator in the DOJ's Fraud division is referred to in the DOJ's press release. 

In the release for last week's Stryker enforcement action brought by the SEC alone, the agency merely thanks its own FCPA Unit for its assistance. 

The FBI's 12-member FCPA Unit was much trumpeted when it was formed in 2010. But the unit received a black eye with the mistrials and ultimate dismissals of 22 defendants after the undercover "Africa sting" operation. Defense lawyers alleged that FBI agents mishandled the government's cooperating witness, Richard Bistrong, and contaminated the entire case. U.S. District Judge Richard Leon -- who had warned the DOJ about his doubts concerning its conspiracy charges a year earlier -- dismissed most of the government's case, leaving the DOJ no real option except to end the entire prosecution.

In January 2012, another judge ordered the acquittal of John O'Shea, a former ABB manager charged with bribing officials at Mexico's state-owned electric utility and covering up the payments. U.S. District Judge Lynn N. Hughes granted O'Shea's motion for acquittal on the substantive charges at the close of the prosecution’s case and dismissed the jury. The judge said the government’s chief witness, Fernando Basurto Jr., could not tie O’Shea to the alleged bribery and cover up. 

In December 2011, a federal judge in Los Angeles dismissed indictments against Keith Lindsey and Steve K. Lee, and their company Lindsey Manufacturing. Despite a jury verdict convicting the defendants on all counts, Judge Howard Matz threw out the verdicts. Among other things, he said government prosecutors allowed a key FBI agent to testify untruthfully to the grand jury and inserted material falsehoods into affidavits to support applications for search and seizure warrants. 

We'll keep looking into this, and we still hope to hear more from the DOJ or FBI.

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Julie DiMauro is the executive editor of FCPA Blog. She can be reached here.