On December 19, the Justice Department published FCPA Opinion Procedure Release No. 13-01, ruling that a law firm partner could pay some medical expenses of foreign official's daughter.
Entries in Richard H. Liebo (2)
We enjoy a good argument just as much as the next lawyer. Stare decisis, analogy, plain meaning, ambiguity -- bring 'em on. Which is why it took us awhile -- the better part of two decades, but who's counting -- to firmly grasp this simple idea: When it comes to the Foreign Corrupt Practices Act, forget the fancy lawyer stuff.
If the few reported FCPA criminal trials have taught anything, it's that legalistic quibbling and the FCPA don't mix. David H. Mead learned that in 1998. Mead, it has to be said, had a great-looking defense. Evidence at trial showed he'd paid a bribe in Panama on the advice of counsel. His company's lawyer, whom he trusted, told him a payment via a Dutch subsidiary to a Panamanian official wouldn't violate the FCPA. So, he argued, if he was acting on the advice of trusted counsel, how could he have had any corrupt intent to violate the FCPA? It must have shocked Mead and his lawyers when the jury convicted him anyway.
David Kay and Douglas Murphy, in their 2002 criminal trial on FCPA charges, argued that bribes to reduce their company's taxes in Haiti couldn't violate the FCPA. Those bribes, they said, weren't about "obtaining or retaining business" and so aren't covered by the antibribery provisions. The trial court bought the argument and dismissed the case. But the appellate court shot them down, and hard. "A man of common intelligence," it ruled, "would have understood that . . . in bribing foreign officials, [Kay and Murphy were] treading close to a reasonably-defined line of illegality. . . . Defendants took this risk, and splitting hairs . . . does not allow them to argue successfully that the FCPA’s standards were vague."
It's not every day that a United States appellate court describes defendants as hairsplitters, an epithet which shouldn't encourage anyone to put the FCPA under a microscope and begin dissecting it with tiny scalpels. By doing just that, Kay and Murphy landed prison terms of 37 months and 63 months respectively. Meade, meanwhile, was sentenced to four months in federal prison for his counsel-induced FCPA violation.
Years before Meade, Kay and Murphy took their chances in court and lost, another defendant had come up short in an FCPA criminal case. Although a jury acquitted Richard H. Liebo on seventeen FCPA-related counts, it convicted him of one count of violating the antibribery provisions, 15 U.S.C. §§ 78dd-1(a)(1), (3); 78dd-2(a)(1), (3); 78dd-2(b)(1)(B) and 78ff(c)(2) (1988), and making a false statement to a government agency, 18 U.S.C. § 1001 (1988). U.S. v. Richard H. Liebo (Cr. No. 4-89-76) (D. Minn., Mar. 1989); 923 F.2d, 1308 (8th Cir. Minn., Jan. 15, 1991).
In 1985, Liebo bought airplane tickets (Niger - Paris - Stockholm - London - Niger; cost - $2,028) for a honeymooning government official from Niger. Liebo was then the vice-president in charge of the Aerospace division of NAPCO International, Inc., located in Hopkins, Minnesota. NAPCO's primary business consisted of selling military equipment and supplies. In Niger, it wanted to service two Lockheed C-130 cargo planes for the Ministry of Defense. The honeymooning Niger official receiving the air tickets was a cousin of another official who could (and did) influence the award of the contract to NAPCO.
Liebo appealed his conviction, arguing that his gift-giving couldn't support the jury's findings. Lawyers at the time thought Liebo's arguments were strong. True, the FCPA prohibits "gifts" that are given "corruptly" for the purpose of "obtaining or retaining business." But, Liebo argued, his gift was just . . . a gift. And the recipient himself said he understood the tickets were from Liebo personally and not from NAPCO. How then, Liebo argued, could the jury find that he acted "corruptly" within the meaning of the FCPA? Such a result would kill gift-giving practices in the commercial world forever, and that couldn't be what the FCPA intended.
The United States Court of Appeals for the Eighth Circuit not only rejected Liebo's arguments, it did so with a decisiveness and brevity that took the defense bar's breath away. With minimal discussion about the evidence itself, the court said, "There is sufficient evidence that the airplane tickets were given to obtain or retain business. . . .We are satisfied that sufficient evidence existed from which a reasonable jury could find that the airline tickets were given 'corruptly.'" That was that.
Liebo, however, did win a new trial on another issue. There was newly discovered evidence, he said -- a memo from his corporate superior showing that Liebo's payment for the honeymoon travel was approved by NAPCO. The appellate court ruled that the jury, with the benefit of that evidence, might have found that Liebo didn't act “corruptly” in giving the tickets, if he'd acted at his supervisor’s direction. That looked promising for Liebo, but it didn't change anything. He was sentenced to 18 months in prison, suspended with three years’ probation, with 60 days of home confinement and 600 hours of community service.
The lesson from all these cases? The elements of an antibribery offense may look to a 1L as though they're riddled with loopholes. And it's tempting to argue that "gift" and "corruptly" and "obtaining or retaining business" are ambiguous and vulnerable to legal attack. But while lawyers should always think like lawyers, they should also remember that most juries and appellate courts haven't been sympathetic. Jurors and judges, it appears, just don't like it when people pay bribes to foreign officials. That's why, in FCPA trials, lots of smart lawyers have been sent to the showers before anyone even worked up a good sweat.
U.S. v. Liebo, 923 F.2d, 1308 (8th Cir. Minn., Jan. 15, 1991), can be viewed at the Public Library of Law (by free registration) here.