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Entries in 1998 Amendments (10)

Thursday
Aug092012

The Hunt For Public International Organizations

What are public international organizations? Philip Fitzgerald dives deep for an answer.

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Friday
Feb032012

Beyond Balance IV: New Players, Same Playing Field 

Serendipity is a wonderful thing. What better segue from my last posting than yesterday’s announcement that Russia has signed the OECD Anti-Bribery Convention. This is a remarkable and important event. I hope we fully understand why.

Click to read more ...

Wednesday
Jan252012

Beyond Balance: Reframing the FCPA Reform Debate

Thanks again to the FCPA Blog for sharing its space with me at this, a crucial point in FCPA history. Readers of this blog well know that since enacting the statute in 1977, we have amended it only twice -- in 1988 and 1998. We may now be gearing up to do so again.

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Friday
Jul222011

Bodmer Appointed To Board Of Swiss Bank

Bloomberg's David Glovin reported this month that Viktor Kozeny's Swiss lawyer who pleaded guilty in the U.S. to conspiracy to launder money was "reappointed to the board of a Swiss bank that the government said he used in the criminal scheme."

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Wednesday
Jun152011

If The FCPA Is Sick, Judicial Review Is The Medicine

The House hearing about the FCPA on Tuesday was a testy affair, with some serious debate and some less serious political theater.

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Tuesday
Feb232010

Bourke Witness Faces Sentencing

Hans Bodmer, a key witness against Frederic Bourke, faces sentencing today in federal court in Manhattan for conspiracy to launder money. Photo by edenpicturesHans Bodmer, the Swiss lawyer who once represented Viktor Kozeny and provided key testimony against Frederic Bourke, may learn his sentence today. He's scheduled to appear in U.S. federal district court in Manhattan before Judge Shira A. Scheindlin, who oversaw Bourke's trial last summer.

Bodmer was indicted by a New York federal grand jury in August 2003 on single counts of conspiracy to violate the Foreign Corrupt Practices Act and to launder money. A copy of the indictment can be downloaded here. The court dismissed the FCPA charge, ruling that before being amended in 1998, the FCPA didn't apply to non-U.S.-resident foreign nationals who served as agents of domestic concerns. Bodmer then pleaded guilty in October 2004 to conspiracy to launder money.

He was released on bail of $1.5 million, including $1.45 million in cash first held at the Royal Bank of Scotland in London and later transferred with Judge Scheindlin's consent to Thurgauer Kantonalbank in Switzerland.

Bodmer faces ten years in prison on the money-laundering conspiracy charge. Because of his guilty plea and cooperation with the DOJ in the prosecution of Frederick Bourke, his sentence will be much lighter.

Bloomberg's David Glovin gave this account of Bodmer's June 2009 appearance for the prosecution at Bourke's trial:

Bodmer, who is testifying for prosecutors in exchange for leniency and admits knowing of the bribery scheme, testified yesterday that he told Bourke about the payments. . . .

[S]peaking methodically through a thick German accent, [he] told jurors he was surprised when Bourke asked him about the “arrangement” [to pay Azeri officials bribes] because it was a “sensitive matter.” After getting permission from Kozeny, Bodmer said he outlined the scheme. Justice Department lawyer Robertson Park asked Bodmer how Bourke responded.

“No specific response,” Bodmer testified.

Bourke was convicted in July 2009 of conspiracy to violate the FCPA and lying to FBI agents. Judge Scheindlin sentenced him to a year and a day in prison. He's free on bail while he appeals his conviction.

Bodmer's one-time client, Czech-born Victor Kozeny, is the best-known FCPA fugitive. Last month he won a decision in a Bahamas appellate court that continues to block his extradition to the U.S. He's lived in the Bahamas for about ten years. A federal grand jury in Manhattan indicted Kozeny in May 2005 for a plot to bribe Azeri leaders to gain control of the state oil company. His co-defendant Bourke was accused of investing in the scheme despite knowing Kozeny planned to use bribes.

[Editor's note: Bodmer's sentencing was postponed today until August 23, 2010.]

Thursday
Aug202009

Tinseltown, Bourke Again, And Margaritaville

More on the Greens. In February 2008 we said: "We're not privy to the Greens' defense, of course, but they appear to have a tough legal battle ahead of them." As their trial was about to begin this week, it was postponed. According to the AP, the Justice Department blamed the one-week delay on "the availability of a prosecution witness." Trial delays aren't unusual. But could the Greens be trying to work out a plea?

As we've said, Perry Mason's clients never ended up behind bars. But real-life FCPA defendants aren't so lucky. Most accused individuals have plea-bargained to reduce or avoid jail time -- FCPA convictions carry a prison term of up to five years. And consider this: Since 1991, not a single FCPA trial has ended with an acquittal.

The Greens -- husband-and-wife Hollywood movie-producers Gerald and Patricia -- are also charged with conspiracy, money laundering, obstruction, and filing false tax returns. He's 76, she's 54, and if convicted on some or all counts they could spend the rest of their lives in prison.

Jury selection in U.S. v. Green is scheduled to start on August 25.

* * *
About those FCPA jury instructions. Responding to this week's post, The Feds Should Take A Meeting, a reader said:

I'm not sure the Professor's criticism of the Bourke instructions on jurisdiction are well-founded. Although the statutory charging language in the conspiracy count does allege that the conspiracy continued to in or about 1999, only two of the overt acts took place after the 1998 amendments were signed into law. One was a trip to Azerbaijan in January 1999 by Farrell and the other a trip in February 1999 by Bourke. Both of these trips are described as being for the purpose of meeting with Azeri officials concerning the privatization investment, but the government did not set out any particular acts in furtherance of the bribery scheme. Moreover, in the original indictment, none of the substantive FCPA counts involved transactions after November 10, 1998. Thus, it is likely that the government chose to play it safe and had the court instruct on the pre-amendment jurisdictional element.
But the pre-1998 jurisdictional instruction wouldn't be needed in U.S. v. Green, where the alleged offending behavior took place from 2002 to 2007.

The government's proposed jury instructions in United States v. Green (United States District Court for the Central District of California, Case #: 08-59(B) - GW) can be downloaded here. The proposed "interstate commerce" instruction is number 28.

The jury instructions from
United States v. Bourke, S1 05 Cr. 418 (SAS) (S. D. N. Y.) can be downloaded here.

* * *
Turks and Caicos-shire. Last Friday, Britain suspended the territory's political institutions and imposed direct rule. A U.K. report (available here) alleged systematic corruption among Turks and Caicos' leading politicians and their friends. A U.K.-appointed governor is now in charge.

In an AP report, former premier Galmo Williams said, "Our country is being invaded and re-colonized by the United Kingdom, dismantling a duly elected government and legislature and replacing it with a one-man dictatorship."

Turks and Caicos is a British Overseas Territory about 500 miles southeast of Florida. Its 25,000 residents have U.K. passports. Its beaches attract around 300,000 tourists a year.

British Foreign Office Minister Chris Bryant said the suspension could last up to two years while governor Gordon Wetherell "puts the Islands' affairs back in good order," according to the AP. Elections for a new government will be held by July 2011, Bryant said.

Meanwhile, will the U.K.'s audit into the government's accounts reveal any FCPA compliance problems for investors in T & C during its former home-rule regime?
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Monday
Aug172009

The Feds Should Take A Meeting

Husband-and-wife movie producers Gerald and Patricia Green are now on trial in LA for violating the Foreign Corrupt Practices Act. Prosecutors allege they paid more than $1.8 million in bribes to Juthamas Siriwan, a former governor of the Tourism Authority of Thailand, in return for $14 million in contracts to stage the Bangkok Film Festival. They're also charged with conspiracy, money laundering, obstruction, and filing false tax returns. He's 76, she's 54, and they're now facing 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.

Theirs is the third FCPA-related trial this year. In July, Frederick Bourke of the Dooney & Bourke handbag company was convicted by a jury in Manhattan of conspiracy to violate the FCPA. A month later, William Jefferson, the former nine-term congressman from Louisiana, was found guilty on a similar charge (among 10 others) in Alexandria, Virginia.

We don't know how many currently-serving U.S. Attorneys or Assistant U.S. Attorneys had seen an FCPA trial before this year. But the number could be zero or close to it. So going into the recent trials, prosecutors didn't have a lot of courtroom-tested resources to draw from. That might explain why the government's proposed jury instructions on the FCPA counts in the Greens' case are copied verbatim from Judge Shira Scheindlin's instructions in Frederic Bourke's trial. There's one problem though. Those instructions contained some errors.

The most glaring mistake concerns the "interstate commerce" element of an FCPA offense. That instruction, as they'd say in Hollywood, is just so 1997. As Prof Mike Koehler explained on his blog,
The [Bourke] instructions say (on pg. 24) that a "domestic concern" (as Bourke is under FCPA-speak) "must have intended to make use of the mails or a means or instrumentality of interstate commerce" in order to violate the FCPA. This is the so-called "territorial" jurisdictional provision found at 78dd-2. However, the 1998 amendments to the FCPA expanded the jurisdictional reach of the FCPA, as applied to "domestic concerns," by adding an alternative "nationality" jurisdictional provision found at 78dd-2(i) which removes the interstate commerce / U.S. territorial nexus requirements. Thus, a "domestic concern" can be charged and found liable for a substantive FCPA violation even if the prohibited activity took place entirely outside of the U.S. The jury instruction that the "domestic concern" "must have intended to make use of the mails or a means or instrumentality of interstate commerce" is thus just plain wrong.
Another problem in the Bourke instructions and repeated by the government's requested instructions in U.S. v. Green concerns the definition of "foreign official." The instructions depart from the text of the FCPA by inserting a reference to "an instrumentality" where it shouldn't be. True, the word "instrumentality" pops up all over the FCPA, but not in the place in the statute's definition of a "foreign official" where the instructions put it. The government has gone one instrumentality too far.

How serious are the errors? Not very. In Bourke's trial, the anachronistic "interstate commerce" element probably hurt the government's case but not Bourke's defense. Prosecutors had to present evidence that wasn't really needed to prove his FCPA-related violation -- i.e., Bourke's use of an instrumentality (that word again) of interstate commerce while offering or making a corrupt payment to a foreign official. And the reference to "instrumentality" in the description of a foreign official is a bit confusing but not a big deal -- probably harmless error. Still, the government might want to have a quick huddle and check its notes.

The jury instructions from United States v. Bourke, S1 05 Cr. 418 (SAS) (S. D. N. Y.) can be downloaded here.

The government's proposed jury instructions in United States v. Green (United States District Court for the Central District of California, Case #: 08-59(B) - GW) can be downloaded here.

Read all our posts about U.S. v. Green here.

* * *
More from Hollywood: A couple of years ago, LA Times reporter Glenn F. Bunting wrote a great story (here) about the budget for the movie "Sahara." The information he extracted from documents filed in a court case included this:
"Courtesy payments," "gratuities" and "local bribes" totaling $237,386 were passed out on locations in Morocco to expedite filming. A $40,688 payment to stop a river improvement project and $23,250 for "Political/Mayoral support" . . .
Since that story appeared, lawyers and pundits have wondered when the FCPA hammer would fall on Hollywood's overseas "community relations" practices. Could the Greens' case be the first of many?

* * *
New Addresses: The wrageblog has a fascinating post (here) about prison assignments in white-collar criminal cases. Here's what it says about two convicted FCPA defendants who started serving their time this year:
Douglas Murphy of American Rice, sentenced to 63 months after his FCPA conviction, is serving his sentence at the Federal Correctional Institution in El Reno, a medium security facility. However, David Kay, who was tried with Murphy, is serving his 37 month sentence at Texarkana, a low security facility.
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Tuesday
Apr282009

Catching Corrupt Lawyers, Part II

A lawyer with his briefcase can steal more than a hundred men with guns. -- Mario Puzo

With that street-smart aphorism in mind, we went looking for Foreign Corrupt Practices Act-related cases where lawyers were alleged to be on the wrong side of the law.

Turns out there aren't many. Here's the rundown:

Jeffrey Tesler -- indicted by a Houston grand jury in February. Prosecutors say he was a middleman who handled or arranged corrupt payments from KBR to Nigerian officials. The London lawyer was arrested by British police in March at the request of American authorities, who are trying to extradite him to stand trial in the U.S.

Two American law firms were mentioned in November 2008 during an anti--corruption sweep in China. Avon had disclosed possible FCPA violations involving payments to Chinese regulators. Authorities there were reported to be reviewing foreign investment cases in which the two U.S. firms with offices in Hong Kong and Beijing played a role. The firms (and their lawyers) haven't been named.

J. Bryan Williams, a lawyer in Virginia, was an executive at Mobil Oil. He was also a friend of James H. Giffen, an American businessman arrested in New York in 2003 for paying $78 million in bribes to an adviser of Kazakhstan's president and former oil and gas minister. Williams took a $2 million kickback from Giffen for helping negotiate a deal involving Kazakhstan's Tengiz oil field. Williams pleaded guilty in September 2003 to tax charges and was sentenced to 46 months in prison. Giffen is awaiting trial.

Hans Bodmer, a Swiss lawyer, represented Viktor Kozeny, the Czech-born fugitive charged with Frederic Bourke with bribing government officials in Azerbaijan. Bodmer was indicted by a New York federal grand jury in August 2003 on single counts of conspiracy to violate the FCPA and to launder money. The court dismissed the FCPA charge, ruling that before being amended in 1998, the FCPA didn't apply to non-U.S.-resident foreign nationals who served as agents of domestic concerns. Bodmer then pleaded guilty to conspiracy to launder money. He's never been sentenced.

Attorney Philippe S.E. Schreiber represented Saybolt Inc. It's president, David Mead, said during his 1998 trial that he paid a $50,000 bribe to government officials in Panama only after Schreiber said it wouldn't violate the FCPA. That advice was wrong. Saybolt and Mead were charged with violating the FCPA. Mead was convicted and sentenced to four months in prison, home detention and probation, and a $20,000 fine; Saybolt's FCPA offenses resulted in five-years probation and a $1,500,000 fine. And Schreiber? Saybolt's shareholders sued him for legal malpractice (the case was settled in 2005); and the government never indicted him.

Alfredo Duran, a Miami lawyer, was charged in 1989 with arranging a bribe to officials in the Dominican Republic. The government said a $20,000 to $30,000 payment was intended to secure release of an airplane confiscated in a drug case. Duran's co-defendant jumped bail and returned to the Dominican Republic. At Duran's federal trial in Florida on FCPA charges, the court excluded evidence concerning the fugitive co-defendant, resulting in Duran's acquittal.

In 1994, attorney Harold Katz was indicted for bribing an Israeli Air Force officer to induce the purchase and maintenance of GE aircraft engines worth $300 million. The bribes, paid into Swiss bank accounts, totaled $7.8 million. A co-defendant was charged under the FCPA, while Katz faced mail and wire fraud and money laundering charges. He was never apprehended and remains a fugitive.

* * *
That's it, then. Pretty thin record, isn't it? So the verdict on Mr. Puzo's wisdom about that briefcase? Well, either he's wrong when it comes to the FCPA and lawyers aren't the culprits after all. Or he's right and they don't get caught.
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Wednesday
Oct012008

In Search Of The Level Playing Field

The Foreign Corrupt Practices Act was last amended ten years ago. The "International Anti-Bribery and Fair Competition Act of 1998" was intended to make the FCPA consistent with the OECD Convention -- formally titled the Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

The OECD Convention itself resulted from a 10-year initiative by the United States. In 1988, Congress told the White House to help U.S. companies compete by encouraging trading partners to pass laws similar to the FCPA. The OECD members -- consisting then of 33 countries with the most significant economies -- signed the Convention in Paris in December 1997. It went to the U.S. Senate six months later.

The 1998 Amendments implemented the OECD Convention and made five conforming changes to the FCPA:

First, payments made to secure "any improper advantage" -- language used in the OECD Convention -- were added to the FCPA's prohibitions.

Second, the FCPA's coverage was extended to include all foreign persons who commit an act in furtherance of a foreign bribe while in the United States.

Third, the FCPA's definition of foreign officials was expanded to include employees and representatives of public international organizations.

Fourth, jurisdiction was extended over the acts of U.S. businesses and nationals involved in illegal payments that take place wholly outside the United States.

And fifth, the distinction was eliminated between U.S. nationals and non-U.S. nationals, making all employees or agents of U.S. businesses subject to both civil and criminal penalties under the FCPA.

When President Clinton signed the 1998 Amendments (S. 2375) into law, his message about the search for the elusive level playing field was clear:
. . . Since the enactment in 1977 of the Foreign Corrupt Practices Act, U.S. businesses have faced criminal penalties if they engaged in business-related bribery of foreign public officials. Foreign competitors, however, did not have similar restrictions and could engage in this corrupt activity without fear of penalty. . . . As a result, U.S. companies have had to compete on an uneven playing field, resulting in losses of international contracts estimated at $30 billion per year.

The OECD Convention - - which represents the culmination of many years of sustained diplomatic effort - - is designed to change all that. Under the Convention, our major competitors will be obligated to criminalize the bribery of foreign public officials in international business transactions. . . . The United States intends to work diligently, through the monitoring-process to be established under the OECD, to ensure that the Convention is widely ratified and fully implemented. We will continue our leadership in the international fight against corruption. . . .

Ten years later, how well are the 1998 Amendments working? Non-U.S. companies and individuals are being prosecuted under the FCPA. And despite some disappointments, there are encouraging signs from Europe and Asia, where countries are prosecuting their companies and citizens for overseas public bribery. The level playing field is still a work in progress, but at least there's progress to measure.

View the DOJ's 1998 Amendments site here.

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