We Confess Our Love

There's no subtle way to say this: We love Shearman & Sterling's FCPA Digest.

The January 2012 edition is nearly seven hundred pages. In it are every DOJ and SEC enforcement action --  catalogued, explained, and analyzed. There are also parallel cases (private suits), ongoing investigations, and all the DOJ opinion procedure releases.

Shearman & Sterling partner Philip Urofsky is the editor-in-chief. He took over a few years ago from founding editor Danforth Newcomb. Nearly twenty others are listed as editors and contributors. No wonder. The FCPA Digest is a monumental work and an amazing gift to the compliance world.

That's right. It's a gift -- available to anyone without charge.

The DOJ and SEC don't publish FCPA case compilations. In fact, those agencies rely on the FCPA Digest and often include it with official compliance-related submissions to the U.N., OECD, and other international groups.

The current edition starts with a thirty-page 'trends and patterns' section that can also be downloaded separately. It's an outstanding analysis of the state of FCPA enforcement. Included are discussions about 2011's settlements, trials, reform efforts, the financial rewards (or not) of self-disclosure, and even the U.K. Bribery Act.

A few other observations (among many) from trends and patterns about enforcement in 2011:

• Judges in multiple districts largely adopted the government’s expansive interpretation of what constitutes an “instrumentality” of a foreign government, including state-owned entities indirectly controlled by a foreign government

• Despite claims that the government extracted exorbitant fines in FCPA matters, the average penalty continued to be less than $25 million

• The DOJ and the SEC almost completely withdrew from their prior practice of routinely requiring an independent monitor in all cases and demonstrated a willingness to accept various forms of self-monitoring

We use the FCPA Digest every day in our work here. And our admiration for the publication keeps growing.

The January 2012 editions of the FCPA Digest and Recent Trends and Patterns in FCPA Enforcement can be downloaded from Shearman & Sterling's dedicated FCPA website here.

Disclosure: Shearman & Sterling is a premium-listed United States law firm in the FCPA Database law firm directory.

Bigger And Better: Hughes Hubbard's 2011 Spring Alert

Hughes Hubbard's annual FCPA reviews are new kids on the block. But we don't know a better source for FCPA and compliance-related information.

Last year's version, we said, was both a quick desk reference and -- at 241 pages -- an authoritative collection of FCPA resources. This year's edition -- at 349 pages, and still free of charge -- sets a new standard for FCPA-related discussion. It's a combination of exposition, opinion piece, and encyclopedia -- all of it top notch in content and presentation.

Hughes Hubbard's Kevin T. Abikoff is Innospec’s compliance monitor under its global settlement with U.S. and U.K. authorities. He leads the anti-corruption and internal investigations team at Hughes Hubbard, a long-time sponsor and supporter of the FCPA Blog.

The 2011 Alert starts with a summary and analysis of enforcement trends and lessons to be learned from settlements. Then comes a review of focus issues, a description of FCPA settlements and criminal matters from 2010 and early 2011, and a discussion of selected recent FCPA and related developments. That's Part I.

Part II opens with with the statutory requirements and penalties under the FCPA, followed by a description of FCPA settlements and criminal matters from 2005 through 2009, and closing with a knock-out summary of each DOJ Review and Opinion Procedure Release issued from 1980 to now.

The 2011 Spring Alert can be found here, on the top right of the page.

It's a resource that'll be an important addition to any FCPA library.

BAE To Feds: Stop Moving The Goalposts

When BAE pleaded guilty in February to a one-count criminal information, it agreed to appoint a compliance monitor by the end of May. But that didn't happen. BAE blamed the Justice Department for rejecting six qualified candidates; the DOJ blamed BAE for picking the wrong people. To which BAE responded: we followed your rules until you changed them.

BAE complained that the DOJ rejected as unqualified a couple of batches of candidates, "all of whom [from the first group] had served as members of the English judiciary, without even agreeing to conduct interviews or seeking additional information about them. The Department has also, thus far, declined to accept any one of the second group of candidates, who are highly accomplished and respected lawyers in the U.K., including a former Senior Partner of a leading British law firm."

It sounds to us like a trans-Atlantic culture clash -- two great nations once again separated by their common language.

It boils down to this: The DOJ naturally wants a monitor deeply familiar with U.S. law -- including the Foreign Corrupt Practices Act, the Arms Export Control Act, and the International Traffic in Arms Regulation (ITAR), all of which, according to its plea deal, BAE had trouble complying with. BAE, though, says those specific laws weren't mentioned in the plea deal's description of the monitor, so why is the DOJ talking about them now?

This one's easy. The DOJ agreed that BAE could appoint a U.K. citizen, which was culturally sensitive, but said the monitor had to be "acceptable" to both parties. Finding a U.K. citizen who really understands those three U.S. criminal laws was never going to be simple. But that word "acceptable" covers a lot of ground. It's used by American lawyers who don't want to list every specific requirement but leave some discretion to final decision-makers. Could a U.K. lawyer or former judge, even one with lots of white hair, who doesn't know the FCPA, Arms Export Control Act and ITAR, ever be an "acceptable" BAE monitor? No way.

In any case, the special relationship is safe. The DOJ agreed to give BAE 90 more days. The feds will interview a couple of the candidates in early June and get back to BAE right away, in plenty of time for the company to meet its new August 31 deadline. That, at least, is what the two English-speaking legal teams think has been agreed.

Download a copy of BAE's May 27, 2010 motion to extend the deadline to appoint a compliance monitor here.

Feds Call Time Out

There hasn't been a new FCPA enforcement action from the DOJ since Daimler's on April 1 and only Dimon's from the SEC. That's strange. The first three months of this year were the busiest in FCPA history. But since then, hardly a peep.

With around 150 cases pending and pressure building to resolve long-standing actions involving Panalpina, Technip, ENI, ABB, Alcatel-Lucent, Pride International, Inc., Alcoa, the medical device makers, and pharmas, you have to ask: Where are the enforcement actions for April and May?

In a typical year, we'd expect a couple of actions a month; this year, we'd expect more. So what's happening?

Here are a few guesses:

• Changing horses. Mark Mendelsohn, head of the DOJ's FCPA unit, left government service in mid-April. His departure would be a natural time for those still there or newly arrived to take inventory -- to use the white board to plot their present location and itinerary for the coming year.

• Resources are stretched. With all the pending prosecutions, including the 22-defendant shot-show case, the DOJ's FCPA group has to be stretched. Maybe they're taking a couple of months to catch their breath, bring in reinforcements, and lift their eyes above the trenches to make sure they aren't about to make any big mistakes.

• A new strategy. Could the DOJ be assessing its overall enforcement approach? Looking, perhaps, at how decisions are made to prosecute corporations (which are defenseless because of respondeat superior)? Or whether financial penalties that punish innocent stakeholders make sense? Or if enforcement should zero in on individuals, or find new ways to spotlight foreign officials who demand bribes . . . ?

There's precedent for the current FCPA moratorium. In February and March 2008, the DOJ also came to a dead stop. The reason was never announced but it could have been the controversy over the unregulated appointment of compliance monitors. Former Attorney General John Ashcroft's $52 million gig with Zimmer in a domestic kickback case threw Washington into a spin. The storm blew over and the DOJ was back in the FCPA business after about two months.

Was Daimler's Deal Twice Delayed?

Friday we posted Bloomberg's report that German company Daimler AG (manufacturer of Mercedes-Benz cars and trucks) will pay about $200 million to resolve a Foreign Corrupt Practices Act investigation that began in 2004.

Why did the settlement take so long?

We've heard this explanation, which hasn't been confirmed by the company or the Justice Department:

Daimler first reached agreement with the government at end of the Bush administration. Counsel advised Daimler to wait until the Obama administration came in, in order to get a better deal. Daimler waited but wasn't able to improve on the terms and may have ended up with a harsher settlement.

The deal was originally brought to Judge Richard Leon at the federal district court in Washington, D.C. in August 2009. He took his time reviewing the terms (to Daimler's disappointment) and ultimately wouldn't give approval because it was not severe enough on the company. The government and Daimler revised the terms to meet Judge Leon's concerns.

The deal calls for the appointment of a compliance monitor for three years. Former FBI director Louis Freeh's name has been mentioned.

As we said, no one from the government or Daimler has confirmed this information.