A Prince Of Persia

Iran has all the ingredients to be an FCPA minefield. It's big -- 66 million people in an area about the size of Alaska -- and it's the world's 6th largest oil producer. On top of that, it has a corruption problem, ranking near the bottom of the latest Corruption Perception Index -- 168th, tied with Burundi, Equatorial Guinea, Haiti, and Turkmenistan.

But although the country routinely makes world headlines, it's hardly mentioned on the FCPA Blog. Why not?

Iran has been off limits to U.S. companies from around the time the FCPA became law in 1977. The U.S. first imposed sanctions on Iran in 1979. After the takeover of the American embassy in Teheran, President Carter banned  imports of Iranian oil and blocked all transfers of property in the U.S. owned by the Central Bank and Government of Iran. In 1980, he embargoed all U.S. exports to and imports from Iran, and stopped U.S. citizens from traveling or conducting financial transactions there.

Some of those sanctions were loosened after the U.S. hostages were released. But in 1987, President Reagan imposed a new embargo on Iranian-origin goods and services. And in 1995, after Iran was labelled a sponsor of international terrorism, President Clinton again banned U.S. involvement with Iran's oil and gas development. He later confirmed that "virtually all trade and investment activities with Iran by U.S. persons, wherever located, are prohibited," according to the Treasury Department. With some small adjustments, that's how things stand today.

Criminal penalties for violating the U.S. sanctions are stiff -- fines up to $1,000,000 and prison for up to 20 years, four times harsher than the FCPA's penalties.

Even without America's business, Iran was the focus of an important FCPA case. In 2006 the Norwegian company Statoil was hit with DOJ and SEC enforcement actions for bribery and books and records violations. Statoil in 2002 had paid $5.2 million in bribes to a modern-day prince of Persia -- the son of a former president of Iran, and promised to pay $20 million more for access to the giant Pars oil field. The company eventually self-disclosed the payments and paid $3 million to Norwegian prosecutors and $21 million in penalties and disgorgement to the DOJ and SEC (with credit for the $3 million it paid back home).

That was the first FCPA criminal enforcement action against a foreign company -- Statoil is an "issuer," trading on the NYSE under the symbol STO. Its three-year deferred prosecution agreement with the DOJ expired in November 2009.

We could be hearing more FCPA news involving Iran. Last week the Wall Street Journal said the SEC's enforcement and corporation finance divisions have sent letters to several pharmaceutical and energy companies that work in Iran, as well as in Cuba, Sudan, and Syria -- which all appear on the State Department's list of countries that sponsor terrorism. (Some medicines and medical devices are licensed for export from the U.S. to Iran.) The letters reportedly asked the companies, which haven't been named, what they are doing in the four countries to ensure compliance with the FCPA.

The Fugitive Files, Part III

When Suleiman A. Nassar was indicted in 1994 for violating the Foreign Corrupt Practices Act, he was a regional vice president of Lockheed International living near Geneva, Switzerland. His territory for Lockheed included Egypt, and in the late 1980s he landed a nice sale there -- three C-130 military cargo planes worth $79 million. But he won the business, the Justice Department said, by bribing a member of the Egyptian parliament with a million dollars. The DOJ indicted him, along with a co-worker and Lockheed itself.

Before issuing the indictment, the Justice Department spoke with Nassar, a Syrian-born, naturalized U.S. citizen. He assured prosecutors he would appear voluntarily in Atlanta, where the case would be filed. They in turn agreed not to have him arrested in Europe, which would have triggered a long extradition process. It was a gentlemanly arrangement but Nassar had other intentions. He never showed up in Atlanta and instead did his best to vanish.

He fled to his birthplace, Syria, a country with no extradition treaty or law-enforcement agreements with the U.S. Prosecutors said later they were "disappointed and frustrated" by Nassar's escape. But they didn't give up.

They tracked him to Damascus after Swiss police noticed that his wife was receiving mail from an address there. But how to get him back? As the prosecutors said, the relationship between America and Syria was, at best, "notoriously tenuous."

One thing the Justice Department could do was make his life difficult. When he sold two condos in Washington, D.C., prosecutors used the Federal Debt Collection Procedures Act ( 28 U.S.C. § 3001, et seq.) to block the international transfer of the sale proceeds. Then they used the ancient All Writs Act (28 U.S.C. § 1651)* to freeze Nassar’s worldwide assets -- including pension payments that eventually amounted to about $750,000. Prosecutors even threatened to freeze an inheritance his wife was about to receive, on the grounds that she might use the money to help her husband evade arrest.

The Syrians, meanwhile, did their part too. They arrested Nassar in late September 1994 under an Interpol warrant circulated by the U.S. They held him in jail until he made bail two months later. Once released, he stayed in Damascus -- the local police had impounded his passport -- and nothing further happened. The Americans couldn't extradite him, the Syrians wouldn't keep him locked up, and everyone assumed the case was stuck. But they were wrong.

In January 1995, Lockheed pleaded guilty to violating the Foreign Corrupt Practices Act. That generated global headlines, leading the Syrian government to take a new interest in their now-notorious FCPA fugitive. In March 1995, DOJ prosecutors were meeting with the Syrian justice minister. He chose that moment to deliver some dramatic news: Nassar had just been arrested "on charges of violating the Foreign Corrupt Practices Act, and that under the doctrine of extraterritoriality, the Syrian Government intended to try him in Damascus." As U.S. prosecutors said later, it wasn't exactly the trial they had in mind.

But by then Nassar was exhausted and scared. The global freeze on his family's assets, two arrests, a looming Syrian criminal trial, the prospect of years in a local prison -- he'd had enough. According to the DOJ's account, in July 1995 their man was "released from Adra Prison in Syria and escorted to the Damascus Airport where he boarded a plane for Frankfurt, Germany. There he was met by Special Agent Chris Amato of the Defense Criminal Investigation Service, taken to Atlanta, and placed under arrest."

Nassar agreed to plead guilty to violating the FCPA. By prior arrangement, he was sentenced to 18 months in prison and fined $125,000, to be paid from his frozen funds before they were released. His co-worker Allen Love pleaded guilty to lying to investigators and was fined $20,000. Lockheed's guilty plea to conspiracy to violate the FCPA's antibribery provisions resulted in penalties of $24.8 million.

A final note: Suleiman A. Nassar -- who almost became the first person to be tried outside the United States for violating the Foreign Corrupt Practices Act -- was the first person ever imprisoned in the U.S. for an FCPA offense.

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This post is adapted in part from an article called "The International Fugitive," by Martin J. Weinstein and Daniel A. Caldwell of the U.S. Attorneys' Office for the Northern District of Georgia. The article appeared in the USA Bulletin for December 1996, Volume 44, Number 6, which can be downloaded here.

Parts I and II of the Fugitive Files can be found here and here.

We're grateful to Cody Worthington, whose outstanding research was the basis for our series on FCPA fugitives.
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*The All Writs Act (28 U.S.C. § 1651) provides: (a) The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law. (b) An alternative writ or rule nisi may be issued by a justice or judge of a court which has jurisdiction.
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