Britain's Proceeds of Crime Act isn't as well known as the new Bribery Act. But it's potent. Think of it as an anti-money laundering and forfeiture statute -- on steroids.
Entries in United Kingdom (126)
On the new CPI, America landed just ahead of Uruguay, France, and Estonia -- a neighborhood not well known for iron-fisted compliance. What's that mean for FCPA enforcement?
British banks accepted deposits from corrupt Nigerian politicians even after regulators issued specific warnings, according to a report released Monday by NGO Global Witness.
By Nancy Z. Boswell and Robert N. Walton, Transparency International-USA
Transparency International’s sixth annual report on enforcement of the OECD Anti-Bribery Convention, released last week, paints a mixed picture. On the positive side, it shows active enforcement in seven of the 36 countries evaluated, including the U.S, Germany, Italy and Norway. The U.K. even made the cut, despite the disappointing news last month that it is postponing the implementation of its sweeping new Bribery Act until April 2011.
Far less encouraging is the report’s finding that there is only moderate enforcement in nine countries and little to none in the remaining 20. This latter undistinguished group represents 15% of world trade and includes G8 members Canada, Japan and France.
The numbers speak for themselves, but the underlying question is why, after a dozen years, so many governments that committed to criminalize the use of bribes to get business have failed to live up to that promise. One can only conclude many of them have decided that it is not in their economic interest to do so. Motivations may vary, but these governments may see greater value in promoting the international commercial success of their country’s enterprises. If that means ignoring the Anti-Bribery Convention, so be it.
This disheartening conclusion is ominous for the countries where bribes continue to be paid, and for fair competition for those who observe the rule of law. There can be little doubt that inconsistent enforcement will allow bribery to continue unabated and may well undermine support of those countries that have followed their commitments with action. Likewise, it will hinder efforts to ensure that important emerging exporters –- notably China, India and Russia –- agree to and impose foreign bribery constraints on their companies.
Given the serious and damaging consequences of bribery in countries that can least afford it, the OECD, the governments that are complying with the convention, and those of us in the anti-corruption movement need to put more pressure on lagging countries to step up to their commitments and actively enforce the convention. Time is running out.
Nancy Boswell is the President and CEO of Transparency International- USA (TI-USA) and a former member of the Board of Directors of Transparency International (TI). She can be contacted here.
Rob Walton is TI-USA's Senior Policy Director for Private Sector Initiatives. He can be reached here.
For the second time in recent months, U.K. judges have warned the Serious Fraud Office not to make plea deals in overseas bribery cases, throwing into doubt the agency's whistleblower program and its partnership with the U.S. Justice Department in resolving global corruption cases.
This week a U.K. appeals court affirmed the suspended sentence agreed between the SFO and a former sales executive who helped bribe Greek doctors and then turned whistleblower. But at the same time, the court said the SFO's U.S.-style approach was unconstitutional.
Robert John Dougall, 45, formerly marketing director of DePuy, pleaded guilty in April to making £4.5 million in corrupt payments to Greek medical professionals within the state-controlled healthcare system. DePuy, acquired by Johnson & Johnson in 1999, makes and sells orthopedic devices.
The SFO said Dougall was the first "co-operating defendant" in a major SFO corruption investigation. It had recommended leniency in exchange for his guilty plea and help in the case, as typically happens in U.S. white-collar prosecutions. The SFO asked for a suspended sentence; the trial court instead sent Dougall to prison for a year.
The appeals court reversed the sentence but hammered the SFO. It said "agreements between the prosecution and the defense about the sentences to be imposed in fraud and corruption cases were constitutionally forbidden" and solely under the purview of judges, according to reports.
In March, Britain's second-ranking criminal judge said the $12.7 million fine the SFO agreed with a U.K. division of Innospec Inc. went beyond the SFO's authority. Delaware-based Innospec had reached what it believed was a $40 million global settlement with U.S. prosecutors and the SFO.
At Innospec's hearing, Lord Justice Thomas, the deputy head of criminal justice in the U.K. courts, said: “I have concluded that the director of the SFO had no power to enter into the arrangements made and no such arrangements should be made again.” Although he confirmed the U.K. part of the fine agreed by the SFO, he called the amount "wholly inadequate." See our post here.
The SFO first charged Dougall in November 2009 after a "referral" from the U.S. Justice Department. Two months earlier, DePuy and four other orthopedic device makers -- Biomet, Zimmer, Smith & Nephew and Stryker -- had agreed to pay $310 million to settle charges they paid kickbacks to induce U.S. doctors to buy their products. Since the U.S. settlement, the four companies, along with Medtronic Inc. and Wright Medical Group, have disclosed DOJ and SEC Foreign Corrupt Practices Act investigations. See our post here.
A U.K.-funded anti-corruption court in Afghanistan this week sentenced the manager of a British company that guards the British embassy in Kabul to two years in prison for bribery.
Bill Shaw, a 28-year British army veteran who retired as a major and was awarded the MBE, will be sent next week to one of the country's most notorious jails, Pul-e-Charkhi, according to reports from the Guardian and others.
Shaw was also fined $25,000. Convicted with him was an an Afghan, Maiwand Limar, who was also sentenced to two years in prison.
Shaw said he made what he believed were legitimate payments of $25,000 to gain release of two bombproof vehicles confiscated by Afghan security forces last year. He said he used an intermediary and tried for weeks to obtain an official receipt.
He was sentenced by three judges sitting on an anti-corruption tribunal that's funded largely by the U.K. Shaw's case was one of the first to come before the special court.
Shaw said he cooperated with Afghan investigators, giving interviews and returning to the country in early January after a vacation in the U.K. He was arrested on March 3rd.
Shaw's lawyer, Kimberley Motley, criticized the trial. "For some reason," she said, "[the tribunal] decided not to follow Afghan law or the U.N. conventions to which Afghanistan is a party. Furthermore, the presumption of innocence did not exist for him."
The U.S. and other Western countries have criticized Afghan President Hamid Karzai for corruption. But he has blamed foreigners for importing most of the graft. Now his government is apparently targeting expatriates. In addition to Shaw's prosecution, three Italian medical workers in Helmand were arrested and held briefly last month for plotting to murder the local governor. This month in Kabul, police raided at least five bars and restaurants popular with foreigners, alleging illegal sales of alcohol.
The news last week from the U.K. that the Bribery Bill had become the Bribery Act seemed important. But we didn't understand why it still wasn't law.
So we asked London lawyer Kelly Hagedorn about it. Here's what she said:
Dear FCPA Blog,
The U.K.’s Bribery Act received Royal Assent on April 8 and passed onto the statute book.
Britain's been trying to pass a new law to deal with overseas bribery and corruption for a long time -- the predecessor Corruption Bill went back and forth between the Houses of Commons and Lords several times before final rejection in 2003. The Bribery Act nearly ended up with the same fate.
The General Election, however, was called on April 6, requiring Parliament to be dissolved on April 12. That left less than a week for “wash up” -- a process whereby the Government seeks to rush through unfinished legislative business before dissolution. It worked.
But the law isn't yet in force. The statutory instruments needed to implement the Act still have to be released. The “general offences” part should come into force in June 2010. The corporate offence of failing to prevent bribery (section 7) should come into force in October 2010, after the Government issues guidance on “adequate procedures” by July 2010.
The Bribery Act has a broader scope than the FCPA and a wide reach, particularly for the offence of failing to prevent corruption within an organisation. This applies to organisations incorporated anywhere, if they undertake a business or part of a business in the U.K. The defence to this charge is that the organisation had “adequate procedures” in place to attempt to prevent bribery.
Companies should start preparing now, if they haven't already, for implementation of the Bribery Act.
More about the Bribery Act can be found here.
The U.K.'s Serious Fraud Office on Friday charged one of BAE's former middlemen, Count Alfons Mensdorff-Pouilly, with bribery in connection with arms sales to countries in Eastern and Central Europe. He was formally accused of "conspiracy to corrupt, contrary to section 1 of the Criminal Law Act 1977."
The SFO alleged that Mensdorff-Pouilly, 56, conspired with others from 2002 though 2008 to bribe government officials and representatives from the Czech Republic, Hungary, and Austria. The bribes were intended to secure contracts from those governments for the sale of SAAB/Gripen fighter jets marketed by BAe Systems plc.
David Leigh and Rob Evans, the investigative journalists from the Guardian who first reported BAE's alleged corrupt selling practices nearly five years ago, said Friday that Mensdorff-Pouilly's prosecution still needs approval from Britain's attorney general, Lady Scotland. Mensdorff-Pouilly lives in Luising, Austria and is an Austrian citizen. The attorney general hasn't yet agreed to let the case proceed, the SFO's lawyers said, and they asked the court for a month-long adjournment while she decides.
These are the first criminal charges arising from the investigation of BAE's practices.
The SFO dropped an investigation in December 2006 into allegations the company bribed members of the Saudi Arabian government in exchange for the sale of Typhoon jet fighters. The SFO said it had to abandon the case after Saudi Arabia threatened to end anti-terrorism cooperation with the British government.
The U.S. Justice Department is reportedly still investigating BAE's payments of about $2 billion to Saudi Prince Bandar bin Sultan. He was formerly ambassador to the United States and some of the payments allegedly passed through U.S. bank accounts he controlled.
The SFO on Friday said its current investigation of BAE has involved collaboration with the Vienna (Austria) Prosecution Office (Staatsanwaltschaft Wien) and police (Bundeskriminalamt) and was coordinated with help from Eurojust. The SFO said it also had help from Czech, Hungarian and Swiss authorities.
View a copy of the Serious Fraud Office's January 29, 2010 release here.
The London lawyer accused by the U.S. of being a middleman in KBR's bribery of Nigerian officials appeared in court last week to fight extradition. Jeffrey Tesler, 61, a U.K. citizen, was indicted in February by a federal grand jury in Houston. He was charged with one count of conspiring to violate the Foreign Corrupt Practices Act and ten substantive FCPA offenses. If convicted on all counts, he faces up to 55 years in prison. U.K. police, acting at the request of U.S. authorities, arrested Tesler in March.
According to a Press Association report, Tesler argued in the City of Westminster Magistrates' Court that his case is already under investigation by the U.K.'s Serious Fraud Office and shouldn't be duplicated by American prosecutors.
Tesler's lawyer, Bill Clegg QC, also said Tesler's case isn't linked to the U.S. "No person who was alleged to have received a bribe was promised a bribe in the U.S.A. No money to pay any bribes originated from any U.S. bank account. Mr Tesler, who it is alleged arranged the bribes, had never visited the U.S. in relation to the alleged conspiracy." The alleged bribes, Clegg said, were handled by a Gibraltar company and paid through Swiss bank accounts.
The U.S. indictment charged Tesler with using his Gibraltar company, Tri-Star Investments, to funnel about $132 million in bribes to Nigerian officials. The payments were intended to secure contracts worth more than $6 billion to build liquefied natural gas facilities on Nigeria's Bonny Island. The DOJ said Tesler was acting for a joint venture known as TSKJ, equally owned by KBR, Technip, SA of France, Snamprogetti Netherlands B.V. (a subsidiary of Saipem SpA of Italy) and JGC of Japan.
The Crown's lawyer, David Perry QC, said U.S.-based companies were involved and money had been channelled through U.S. bank accounts. According to a report in the Guardian, Perry said the allegations against Tesler could be criminal offenses "in Britain as well as the U.S., so extradition could take place under normal legal rules."
In the indictment, the U.S. made this claim of jurisdiction:
At all times relevant to this Indictment, Tesler was an "agent" of an "issuer" within the meaning of the FCPA, Title 15, United States Code, Section 78dd- 1, an "agent" of a "domestic concern" within the meaning of the FCPA, Title 15, United States Code, Section 78dd-2, and an "agent" of a "person" within the meaning of the FCPA, Title 15, United States Code, Section 78dd-3.
The London court continued Tesler's extradiction hearing.
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Down But Not Out. Former congressman William Jefferson, sentenced last month to 13 years in prison for corruption and conspiring to violate the Foreign Corrupt Practices Act, managed to file his notice of appeal on time. It was touch-and-go after Jefferson, 62, filed for bankruptcy in August, saying he owes his criminal defense lawyers more than $5.7 million. But two of the lawyers are sticking with him.
The Times Picayune reported that attorneys Robert Trout and Amy Jackson received approval last week from the trial judge, T.S. Ellis III, for the court to pay Jefferson's legal fees for the appeal. The lawyers won't get their full rates but a lower amount equivalent to court-appointed public defenders. Ellis also approved their request for the court to pay for a transcript of the six-week trial, probably about $26,000.
Jefferson is free on bail pending his appeal. It's expected to take at least a year. Judge Ellis said he released Jefferson because his defense raised an argument that's untested in the appellate courts. Jefferson says he was acting as a private citizen, while a corruption statute he was convicted under applies only to public acts by elected officials. The judge also said he regretted not making the jury's verdict form more specific. (See our post here.)
Jefferson was convicted on 11 charges -- conspiracy, soliciting and taking bribes, depriving citizens of honest services, money laundering and racketeering. He was acquitted of five charges, including Count 11 of the indictment -- the only substantive FCPA charge he faced.