Search

Editors

Richard L. Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Harry Cassin Managing 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

Sunday
Aug022009

Hollywood FCPA Trial Set To Open

The year's third Foreign Corrupt Practices Act trial is scheduled to start on Tuesday when the husband-and-wife movie producers arrested in 2007 face a federal jury in Los Angeles. Prosecutors allege that Gerald and Patricia Green paid more than $1.8 million in bribes to a former governor of the Tourism Authority of Thailand in return for $14 million in contracts to stage the Bangkok Film Festival.

Last month, Frederic Bourke was convicted of conspiracy to violate the FCPA. And a jury is now deliberating the fate of former congressman William Jefferson (here), who's accused of violating the FCPA and accepting bribes while in office.

Gerald Green, 76, and his wife Patricia, 53 -- whose screen credits include Rescue Dawn -- have pleaded not guilty to all 22 counts of a second superseding indictment. In addition to the FCPA charges, they face counts for money laundering and illegally transporting money-laundering proceeds. Gerald Green is also charged with obstruction and Patricia Green with filing false tax returns. The government is also seeking forfeiture of some of their property, and the court has issued a restraining order that prevents them from disposing of certain assets before the end of the trial.

The Greens face up to five years in prison for each FCPA charge, up to 10 years for each tax count, and up to 20 years for the money-laundering and obstruction charges.

According to the prosecution's trial memo, the Thai official at the center of the case is Juthamas Siriwan. She headed the Tourism Authority of Thailand from 2001 to 2006 and was in charge of the film festival the Greens produced. She resigned as deputy chair of Thailand's Puea Pandin (People's Power) Party soon after the Greens' arrest in December 2007. She denies doing anything wrong.

The prosecution says one of its witnesses will be Susan Shore. She was the Greens' long-time accountant and is now a cooperating witness testifying with immunity. The government also has surveillance tapes it intends to use at the trial.

Prosecutors plan to introduce into evidence a Thai anti-bribery statute that applies to public officials (here). That law -- even if it's rarely enforced -- probably blocks the Greens from raising the local-law affirmative defense. The FCPA allows otherwise prohibited payments if the "payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the foreign official’s" country. 15 U.S.C. §§ 78dd-1(c)(1), 78dd-2(c)(1) and 78dd-3(c)(1). The defense is rarely available because most countries, like Thailand, have anti-corruption laws.

View our prior posts about U.S. v. Gerald Green and Patricia Green here.
.

Saturday
Aug012009

Canadian Indicted For Iraq Bribes

The Justice Department said Friday that a Canadian citizen has been indicted for his alleged role in an eight-year conspiracy to defraud the United Nations Oil for Food Program (OFFP) and to bribe Iraqi government officials in connection with the sale of a chemical additive used in refining leaded fuel.

Ousama Naaman, 60, of Abu Dhabi, United Arab Emirates, was indicted on Aug. 7, 2008, in U.S. District Court for the District of Columbia. The indictment was unsealed last week. It charges Naaman with one count of conspiracy to commit wire fraud and to violate the Foreign Corrupt Practices Act and two counts of violating the FCPA.

Naaman was arrested on July 30, 2009 in Frankfurt, Germany. The Justice Department is trying to extradite him to the United States to stand trial. He faces a maximum prison sentence of 15 years.

From 2001 to 2003, acting on behalf of a publicly traded U.S. chemical company and its subsidiary, Naaman allegedly offered and paid ten percent kickbacks to the then Iraqi government in exchange for five contracts under the OFFP. In exchange for handling the kickbacks, Naaman allegedly received two percent of the contract value, in addition to the two percent commission he was paid for securing the contracts. The U.S. company allegedly inflated its prices in contracts approved by the OFFP to cover the cost of the kickbacks.

In 2006, Naaman also allegedly paid $150,000 in bribes on behalf of the U.S. company to Iraqi Ministry of Oil officials to ensure that a competing product manufactured by a different company failed a field test, keeping the competing product out of the Iraqi market. He is alleged then to have provided the U.S. company with false invoices, on the basis of which the U.S. company reimbursed him for the bribes to the Iraqi officials.

The Justice Department hasn't identified the U.S. company Naaman was acting for or the competing company.

As the DOJ says, an indictment is merely an accusation and the defendant is presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.

Download the DOJ's July 31, 2009 release here.

Download the unsealed indictment in US v Ousama M. Naaman here (with thanks to Glen Kelley).
.

Friday
Jul312009

SEC Settles With Nature's Sunshine, Two Officers

The Securities and Exchange Commission filed a settled enforcement against Nature's Sunshine Products Inc. (NSP), its Chief Executive Officer Douglas Faggioli. 54, and its former Chief Financial Officer Craig D. Huff, 53. According to the SEC, the charges relate to cash payments made in 2000 and 2001 by the Brazilian subsidiary of NSP, a manufacturer of nutritional and personal care products, to import unregistered products into Brazil and the subsequent falsification of its books and records to conceal the payments.

NSP will pay a civil penalty of $600,000; Faggioli and Huff will each pay $25,000.

The SEC's civil complaint alleges that, faced with changes to Brazilian regulations which resulted in classifying many of NSP's products as medicines, NSP's Brazilian subsidiary made a series of cash payments to customs officials to import product into that country and then purchased false documentation to conceal the nature of the payments. The conduct violated the Foreign Corrupt Practices Act, and the antifraud, issuer reporting, books and records and internal controls provisions of the federal securities laws. The complaint also alleges that Faggioli and Huff, in their capacities as control persons, violated the books and records and internal controls provisions of the securities laws in connection with the Brazilian cash payments. NSP also failed to disclose the payments to Brazilian customs agents in its filings with the SEC.

The civil injunctive action filed in the United States District Court for the District of Utah alleges that NSP violated Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) and 30A of the Exchange Act, and Rules 10b-5, 12b-20, 13a-1 and 13a-13, and that Faggioli and Huff violated Sections 13(b)(2)(A) and 13(b)(2)(B) as control persons pursuant to Section 20(a) of the Exchange Act.

In its own statement, NSP said "no current NSP officers, directors, or employees are alleged to have participated in or had knowledge of any of the improper conduct alleged in the complaint, which occurred approximately eight years ago. . . . Nature’s Sunshine now believes that all government investigations relating to potential FCPA violations by the Company or related persons have been fully resolved. The Company anticipates no action by the Department of Justice (“DOJ”) in a previously disclosed investigation relating to these events."

NSP said it self reported the results of its internal investigation to the SEC and the DOJ and "fully cooperated in the government investigations."

The DOJ has not indicated if it will pursue criminal prosecution of anyone involved in the case.

Nature's Sunshine Products Inc. trades on the Over-The-Counter Bulletin Board (OTCBB) under the symbol NATR.OB.

View the SEC's Litigation Release No. 21162 (July 31, 2009) in SEC v. Nature's Sunshine Products, Inc., Douglas Faggioli and Craig D. Huff, Case No. 09CV672 (D. Utah) here.

Download a copy of the SEC's civil complaint here.
.

Friday
Jul312009

Guilty Plea By Control Components

Valve-maker Control Components Inc. (CCI) of Rancho Santa Margarita, California pleaded guilty Friday to violating the anti-bribery provisions of the Foreign Corrupt Practices Act (15 U.S.C. §78dd-2) and the Travel Act (18 U.S. C. §1952). It admitted bribing foreign officials in a decade-long scheme to secure contracts in about 36 countries. CCI's plea agreement requires it to pay a criminal fine of $18.2 million, implement an anti-bribery compliance program, retain a compliance monitor for three years, serve a three-year term of organizational probation, and cooperate with the DOJ's ongoing investigation.

CCI designs and manufactures service control valves for use in the nuclear, oil and gas, and power generation industries. Its website is here. It's owned by British-based IMI plc, which trades on the London Stock Exchange under the symbol IMI.L.

The corrupt payments were made to foreign officials at state-owned entities including Jiangsu Nuclear Power Corp. (China), Guohua Electric Power (China), China Petroleum Materials and Equipment Corp., PetroChina, Dongfang Electric Corporation (China), China National Offshore Oil Corporation, Korea Hydro and Nuclear Power, Petronas (Malaysia) and National Petroleum Construction Company (United Arab Emirates).

From 2003 through 2007, CCI made about 236 corrupt payments to foreign officials in more than 30 countries amounting to $4.9 million. The bribes resulted in sales that produced net profits of about $46.5 million.

Two former executives of CCI pleaded guilty earlier this year to conspiring to bribe officers and employees of foreign state-owned companies on behalf of the valve company. Mario Covino, CCI’s former director of worldwide factory sales, pleaded guilty on Jan. 8, 2009 to one count of conspiracy to violate the FCPA and admitted to causing the payment of $1 million in bribes to officers and employees of several foreign state-owned companies. Richard Morlok, CCI’s former finance director, pleaded guilty on Feb. 3, 2009 to one count of conspiracy to violate the FCPA and admitted to causing the payment of $628,000 in bribes to officers and employees of several foreign state-owned companies. Covino and Morlok are scheduled to be sentenced on Jan. 25, 2010.

On April 8, 2009, six former CCI executives were charged in a 16-count indictment with violating the FCPA and the Travel Act (here). They're Stuart Carson, CCI’s former chief executive officer, Hong (Rose) Carson, CCI’s former director of sales for China and Taiwan, Paul Cosgrove, CCI’s former director of worldwide sales, David Edmonds, CCI’s former vice president of worldwide customer service, Flavio Ricotti, CCI’s former vice-president and head of sales for Europe, Africa and the Middle East, and Han Yong Kim, the former president of CCI’s Korean office. Hong (Rose) Carson was also charged with one count of destruction of records in connection with a matter within the jurisdiction of a department or agency of the United States. Their trial is currently scheduled for Dec. 8, 2009.

As the DOJ says, an indictment is merely an accusation and the defendants are presumed innocent until and unless found guilty at trial beyond a reasonable doubt.

Download the DOJ's July 31, 2009 release here.

Download a copy of CCI's July 22, 2009 plea agreement here.

Download the July 22, 2009 criminal information against CCI here.

Download Mario Covino's plea agreement here.

Download Richard Morlok's plea agreement here.

Download the indictment of the six former executives of CCI here.
.

Thursday
Jul302009

Driller Resolves FCPA Charges

Oil and gas driller Helmerich & Payne Inc. (H&P) will pay a $1 million criminal penalty to the Justice Department to settle Foreign Corrupt Practices Act violations related to improper payments to government officials in Argentina and Venezuela. It will also disgorge to the Securities and Exchange Commission $320,604 plus prejudgment interest of $55,077.22.

H&P, a Delaware corporation headquartered in Tulsa, Oklahoma, paid bribes to customs officials of about $185,673 from 2003 through 2008. The payments by subsidiaries in Argentina and Venezuela were made directly or through third-party customs brokers to clear imports of drilling equipment. H&P avoided costs of about $320,604 by the improper payments.

The Justice Department gave H&P and its subsidiaries a two-year deferred or non-prosecution agreement. In addition to imposing the criminal penalty, it requires the company to implement internal controls and cooperate with prosecutors. The DOJ recognized "H&P’s voluntary disclosure and thorough self-investigation of the underlying conduct, the cooperation provided by the company to the Department, and the extensive remedial efforts undertaken by the company."

The SEC said none of the bribes were accurately reflected in H&P’s books and records, and its system of internal accounting controls was not adequate to prevent and detect the illegal payments. As a result, H&P violated Exchange Act Section 13(b)(2)(A) and Section 13(b)(2)(B).

The SEC's cease and desist order said that in early 2008, as part of an effort to improve compliance, H&P "designed and implemented a stand-alone set of FCPA policies and procedures." It also began worldwide FCPA training for key employees.

At one such training session in May 2008, an employee voluntarily disclosed that potentially improper payments had been made by H&P Argentina, through a customs broker, to Argentine customs officials. This information was relayed to H&P’s corporate headquarters in Oklahoma, and came to the attention of H&P’s general counsel in July 2008. In response, H&P hired outside FCPA counsel and independent forensic accountants to conduct an internal investigation of its subsidiaries’ customs payment practices in a number of Latin American countries.
Eventually the internal investigation uncovered fifty improper payments to customs officials in Argentina and Venezuela. The payments were disguised in invoices as “additional assessments,” “extra costs,” and “extraordinary expenses,” “urgent processing,” “urgent dispatch,” or “customs processing.” H&P self-reported its compliance problems in October 2008.

Helmerich & Payne Inc. trades on the New York Stock Exchange under the symbol HP.

Download the Justice Department's July 30, 2009 release here.

Download the SEC's Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order under Release No. 60400 and Accounting and Auditing Enforcement Release No. 3026 (both dated July 30, 2009) in Administrative Proceeding File No. 3-13565 In the Matter of Helmerich & Payne, Inc. here.
.

Wednesday
Jul292009

Over There

Our subject is usually corruption overseas. But it's impossible to ignore the news these days from New Jersey. Arrested earlier this month -- 44 people, including three mayors and two state legislators. So what's the cause of all that alleged home-grown graft?

There are lessons from the Third World. The International Finance Corporation has said, "Cumbersome entry procedures are associated with more corruption, particularly in developing countries. Each procedure is a point of contact—an opportunity to extract a bribe. Analysis shows that burdensome entry regulations do not increase the quality of products, make work safer or reduce pollution. Instead, they constrain private investment; push more people into the informal economy; increase consumer prices; and fuel corruption."

The same goes for New Jersey. The Wall Street Journal's William McGurn said this week:

Sandy McClure, co-author of the book The Soprano State: New Jersey’s Culture of Corruption, agrees that big government is a big reason behind the state’s corruption problem. “You have all these little authorities that everyone has to go to for permission,” she says. “Too much government means too many opportunities for officials looking to cash in. And there’s no way that the press can keep track of it all.”

Ms. McClure is right: The more extensive government’s reach, the more opportunities the governing class has to steal from and shake down the productive class. . .

When government gets too big and complicated for businesses to get their permits and approvals and funding honestly, the dishonest prosper. And the honest get fed up and flee.

William McGurn's full column is here.

* * *
Apropos of who-knows-what, we enjoyed this thought from Eric Hoffer's Truth Imagined:

"Sheep never get used to life. They view anything that comes in sight as something outlandish and unprecedented. Though they are undeniably silly, there is something remarkably human about them. Their fear of loneliness is pathetic. One cannot help thinking that, like sheep, human beings herd together in tribes and nations and follow a leader because of their fear of life and their feeling of being eternal strangers in this world."

* * *

And this wisdom from Don Zimmer, former manager of the Boston Red Sox, after a 6-and-6 road trip: It could have gone either way.
.

Tuesday
Jul282009

Avery Dennison Settles China-Related Violations

Label-maker Avery Dennison Corporation, whose compliance problems in China were described in an LA Times story last January, has resolved civil and administrative charges brought by the Securities and Exchange Commission.

The SEC filed settled enforcement actions in the United States District Court for the Central District of California charging Avery with violating the FCPA's books and records and internal controls provisions. In the administrative action, the SEC ordered Avery to disgorge $273,213 and $45,257 in prejudgment interest. In the federal civil action, Avery agreed to a final judgment requiring it to pay a civil penalty of $200,000.

From 2002 through 2005, the Reflectives Division of Avery (China) Co. Ltd. paid or authorized the payment of kickbacks, sightseeing trips, and gifts to Chinese government officials amounting to about $30,000. In one transaction, Avery China secured a sale to a state-owned end user by agreeing to pay a Chinese official a kickback of nearly $25,000 through a distributor. Avery China earned $273,213 in profit from the transaction, which it inaccurately booked as a sale to the distributor rather than to the end user.

The SEC said, "In addition, after Avery acquired a company in June 2007, employees of the acquired company continued their pre-acquisition practice of making illegal petty cash payments to customs or other officials in several foreign countries, resulting in illegal payments of approximately $51,000. Avery failed to accurately record these payments and gifts in the company’s books and records, and failed to implement or maintain a system of internal accounting controls sufficient to detect and prevent such illegal payments or promises of illegal payments."

The SEC charged Avery, a Delaware corporation headquartered in Pasadena, California, with violating Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934. The Justice Department didn't announce any charges.

A spokesperson for Avery told the FCPA Blog, "What's important to us is the fact, noted in the SEC's administrative order, that we discovered the questionable actions. We investigated them and took disciplinary action, and reported them to the Securities Exchange Commission and Department of Justice (DOJ). As the SEC's administrative order notes, in some cases we prevented them. We believe ethical conduct is critical to our reputation and our success, and we back that up with a rigorous training and reporting process to help employees make the right decisions. Our training includes training on the FCPA."

Don Lee's January story in the LA Times was unique for its first-hand accounts of the China violations. Here's one vignette:

During 2003 and 2004, it became common for Avery managers to retain Chinese "consultants" to secure contracts in exchange for a share of the proceeds. One was a midlevel Public Security Ministry official who said he could connect Avery with a state-owned truck manufacturer in northeastern China that needed red-and-white reflective stickers for the backs of trucks. Avery's expense accounts also showed lavish spending on entertaining clients, according to people who recorded the reports. By summer 2004, things were changing. On a Friday morning in September, [salesman Ding Yong] said he was called to the 11th-floor conference room of Avery's offices in southwest Shanghai. Sales were running at triple the pace of two years earlier, and Ding thought his superiors might want to renew his contract. Instead, Avery sent him packing.
Avery Dennison Corporation trades on the New York Stock Exchange under the symbol AVY.

The SEC's Litigation Release No. 21156 and Accounting and Auditing Enforcement Release No. 3020 (b0th dated July 28, 2009) in Securities and Exchange Commission v. Avery Dennison Corporation (United States District Court for the Central District of California, Civil Action No. CV09-5493 DSF (CWx)) can be viewed here.

Download the SEC's July 28, 2009 cease and desist order in Accounting and Auditing Enforcement Release No. 3021 and Administrative Proceeding File No. 3-13564 here.
.

Monday
Jul272009

Jefferson's Case Heads To The Jury

His defense took just two hours to present. Now, according to the Times Picayune, the jury will hear closing arguments Wednesday and begin deliberating William Jefferson's fate. Here's how the paper began its report of the final day of testimony:

In a moment of courtroom drama Thursday, the prosecutors in the corruption trial of William Jefferson withdrew their objections and let the former New Orleans congressman's attorneys play nearly 90 minutes of secretly taped recordings that the defense team said was crucial to his case.

"Play them all Mr. Trout, play them all," Judge T.S. Ellis III said to lead defense attorney Robert Trout after the government legal team relented under pressure from Ellis, who had promised jurors they would be done by 1 p.m. and promised his mother he would pick her up in advance of a long weekend, and "I'm not going to be late."

After more than five weeks of prosecution witnesses, the defense presented its entire case in about two hours.

Jefferson, 62, is the first member of congress to have been indicted under the Foreign Corrupt Practices Act. He's accused of violating the FCPA by arranging bribes to the vice president of Nigeria, Atiku Abubakar, in exchange for contracts for his family's companies, and with soliciting and accepting bribes, wire fraud, money laundering and obstruction of justice. He faces up to 20 years in prison. He lost an election last year for a 10th term in the House of Representatives from a district that includes New Orleans.

Jefferson's case is best known for the cash found in his freezer. The FBI had given its cooperating witness, Lori Mody, $100,000 in marked bills to pass to him after he allegedly told her about his plan to bribe the Nigerian vice president. The money was supposed to be a down payment. The FBI later found $90,000 of that cash in Jefferson's freezer.

Read all our posts about William Jefferson here.
.

Sunday
Jul262009

Getting Loud For Justice

It's been awhile since we beat the drum about respondeat superior (here). But that's OK. A a couple of very smart guys have been doing it for us. They're Stanley A. Twardy Jr., a former U.S. Attorney for Connecticut, and Daniel E. Wenner, a former Assistant U.S. Attorney in the Eastern District of New York, both now with Day Pitney. Their view? Respondeat superior as currently used should be drop-kicked out of the American criminal justice system.

Nothing magnifies the impact of the Foreign Corrupt Practices Act on corporations more than respondeat superior. Latin for "let the master answer," it's the legal doctrine holding companies vicariously liable for crimes committed by employees acting within the scope of their employment. Once an employee -- even a low-level worker acting against the company's orders -- admits to an offense or is found guilty, the company is automatically guilty too. Case closed.

In a National Law Journal article about the decision in U.S. v. Ionia Mgmt. S.A., 555 F.3d 303 (2d Cir. 2009), Twardy and Wenner pound away, starting with the title: "One Rogue Worker Can Take an Entire Company Down." Obviously, they say, a company can act only through its employees. "The question asked of the 2nd Circuit in Ionia was whether the company should be criminally responsible when its employees commit criminal acts without corporate direction or authorization." The court said yes. They say fuhgeddaboudit.

Listen to this:
The [Ionia] courts' views of the respondeat superior doctrine in the context of corporate criminal liability stands in stark contrast with the same liability in other contexts. For example, in discrimination suits under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e, et seq., the U.S. Supreme Court has limited respondeat superior liability to actions taken by supervisors. See, e.g., Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 762 (1998).
And this:
More recently, the U.S. Supreme Court reiterated its precedent that "government officials may not be held liable for the unconstitutional conduct of their subordinates under a theory of respondeat superior." Ashcroft v. Iqbal, No. 07-1015, 77 U.S.L.W. 4387, slip op. at 11-12 (U.S. May 18, 2009) (an action brought pursuant to Bivens v. Six Unknown Fed. Narcotics Agents, 403 U.S. 388 (1971)). In fact, as the dissent in Iqbal noted, the majority's opinion even "does away with supervisory liability under Bivens." Id. slip op. at 1 (Souter, J., dissenting).
Therefore:
With such an exacting limit to respondeat superior liability in the Title VII and Bivens contexts, perhaps the same standard should apply to a corporation for the criminal acts of its employees.
That's nice research and first-class argument.

What to do? Let organizations defend themselves, the authors say. Give them a chance to show that the crimes were committed by "a truly rogue employee, who was acting in violation of a robust compliance program." Juries are smart. They can decide "whether the employee was, in fact, truly acting in a rogue manner . . ." and whether companies have effective compliance programs (the U.S. Attorneys' Manual and the Federal Sentencing Guidelines describe what an "effective compliance program" looks like).

Our view: What's controversial here? To give organizations the best possible reason to have an effective compliance program, give them a defense based on their efforts to comply. Isn't that what everyone, including the Justice Department, should want?

"One Rogue Worker Can Take an Entire Company Down" by Twardy and Wenner in the July 16, 2009 National Law Journal can be viewed here.
.

Thursday
Jul232009

Here Comes The SFO, Part One

The last time we had a serious discussion about the U.K.'s Serious Fraud Office was to report its thrashing in June 2008 by a former American prosecutor. Jessica de Grazia, who'd been an assistant district attorney in Manhattan for 13 years, was hired by the U.K.'s then-attorney general to find out why the SFO couldn't get it right. As the U.K. Times said, her arrival at the SFO sparked panic.

But times change and even the SFO gets a second chance. Earlier this month it brought what may be the first of several cases against British firms for overseas corruption.

Mabey & Johnson pleaded guilty this month to violating the U.N.'s old Iraq sanctions and to an additional ten charges of overseas graft. The BBC reported that the company, which specializes in making temporary bridges, admitted at the Westminster Magistrates Court that it tried to influence officials in Jamaica and Ghana to award it public contracts. It also admitted paying more than £123,000 to the pre-war Iraqi regime in violation of the U.N. sanctions. The company hasn't been sentenced yet.

Reuters said Mabey & Johnson's admissions let to the resignation of Jamaica's junior minister of transport and works after he was linked to the U.K. company's corrupt business practices.

The emergence of an energized Serious Fraud Office, if that's what we're seeing, could mean the start of a lot more anti-corruption enforcement from London. According to the Telegraph, the SFO has spent £22 million investigating breaches by British firms of the oil-for-food program and more prosecutions could follow.

Former SFO director Robert Wardle left his post in April 2008, two months before de Grazia released her report. The U.K. Times' story about de Grazia was called "She came, she saw, she scythed through the SFO." The paper quoted an ex-staffer at the SFO as saying, “She caused chaos. She called meetings of case controllers and asked them to identify the crap assistant directors. Then she went to the investigators and asked them who was a crap case controller.”

The SFO had often been in hot water because of blown prosecutions. The worst trouble, though, came after its 2006 decision to drop the high-profile investigation of BAE Systems for bribery. It said it had no choice because Saudi Arabia threatened not to buy Typhoon aircraft or continue sharing anti-terrorism intelligence. The High Court in London called the episode an outrage, an abject surrender to threats, and a capitulation. On the government's appeal to the House of Lords, five law lords decided the SFO's action was legal but "extremely distasteful."

In de Grazia's 157-page report, she compared prosecution rates for the Serious Fraud Office with those of her former employer, the New York District Attorney's Office. In 2007, she said, the SFO had about three times more lawyers than the Frauds Bureau at the Manhattan District Attorney's Office. The New York DA's 19 lawyers -- with virtually no outside help -- managed to conclude the prosecution of 124 white collar defendants from 2003 to 2007. During the same period, the SFO's 56 staff lawyers concluded 166 prosecutions, and spent more than £4 million on external counsel. That means the per-lawyer prosecution rate in the New York DA's office was at least double and maybe triple that of the SFO.

Britain's Sunday Times reported that after release of de Grazia's report, dozens of lawyers, accountants and investigators were offered large severance packages to leave the agency.

Download a copy of Jessica de Grazia's June 2008 report here.

Coming up: The SFO meets the DOJ.
.

Wednesday
Jul222009

Caribbean Corruption Report Leaked

WikiLeaks -- the site that publishes documents that are "classified, censored or otherwise opaque to the public record" -- has posted the suppressed final report of the Turks and Caicos Islands Commission of Inquiry. Based on the commission's findings, the British government said in June it would suspend the territory's political institutions and impose direct rule. Because of lawsuits filed in London, however, the takeover has been delayed and the commission's report was put under wraps. A redacted version appeared on the commission's website but removed a few hours later. WikiLeaks then posted an unredacted copy.

In its cover note, WikiLeaks said:

This suppressed report, dated July 18, 2009, lays at the center of UK plans to take control of the Turks & Caicos Islands—a Caribbean tourist and tax haven.

Following corruption allegations made against the Islands' political elite, the British Foreign and Commonwealth Office (FCO) commissioned Sir Robin Auld last year to run the Turks & Caicos Islands Commission of Inquiry.

After the release of an interim report in March, 2009, the Commission and the Island's Governor were sued to prevent the release of parts of its final report.

On July 18, 2009, the Commission briefly released on its website what it called its Redacted Final Report (http://www.tci-inquiry.org/). According to the Commission's July 18, 2009 press release, the —

Governor's redaction results from the direction of the Hon Chief Justice Gordon Ward in the current litigation between Mario Hoffmann and Cem Kinay against the Governor and me (and an assurance given by the Hon Attorney General in proceedings brought by Jak Civre).

Hours later, the entire 266 page redacted report was removed from the Commission's web site.

WikiLeaks has obtained the full report—and unredacted the missing text.

Download a copy of the July 18, 2009 Final Report of the Turks and Caicos Islands Commission of Inquiry 2008 - 2009 here.

Read our prior posts on the Turks and Caicos Islands here.
.

Monday
Jul202009

Seal This . . .

Nearly everything in the court's electronic record of James Giffen's criminal prosecution is beyond reach. Almost 200 pleadings and orders are in the docket but only a dozen can be viewed or downloaded, and the indictment isn't one of them. It's sealed tight, buttoned down, locked up. Or so it seemed just last week.

Then Cody Worthington from the District of Columbia said: "Well, apparently it’s not sealed in the case Grynberg vs. BP et al. . . it’s Exhibit 4 in that case . . .1:08-cv-00301-JDB. I just looked it up in Pacer and it’s available for anyone with an account and $2.40." Cody said he'd been keeping a copy of the Giffen indictment on his hard drive for awhile -- "collecting electronic dust." So he sent us a copy.


Sixty-five counts, seventy-five pages, hundreds of names, dates, and amounts. Thanks, Cody.

Download a copy of Exhibit 4 from the complaint in Grynberg et al v. BP P.L.C. et al (U.S. District Court District of Columbia (Washington, DC) Civil case #: 1:08-cv-00301-JDB) here.

A final note: Grynberg's suit was dismissed as to all defendants after they won orders to compel arbitration. Our original post about his civil complaint against BP, Statoil and British Gas and some of their current and former executives is here.
.