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'Carbon copy prosecutions' change the rules of the game

A recent University of Chicago Legal Forum article looks deep into an important new enforcement trend -- duplicative enforcement actions in multiple countries.

The article -- 'Carbon Copy” Prosecutions: A Growing Anticorruption Phenomenon in a Shrinking World' -- was written by T. Markus Funk and Andrew S. Boutros.

Funk is a former Assistant U.S. Attorney in Chicago. He's now a partner at Perkins Coie and represents Joel Esquenazi in his appeal.

Boutros is an Assistant U.S. Attorney in Chicago and lecturer at the University of Chicago Law School. In the article, he's writing in his personal capacity.

By their definition, carbon copy cases are 'successive, duplicative prosecutions by multiple sovereigns for conduct transgressing the laws of several nations, but arising out of the same common nucleus of operative facts.'

These cases, the authors argue, mark an important -- and probably permanent -- development. And they've already changed how international anticorruption investigations are resolved.
Until lately, corporate FCPA offenders worried mainly whether they would face liability from both the DOJ and SEC. But now their exposure to liability may extend 'beyond a single sovereign,' as Funk and Boutros put it.

Today’s international enforcement picture is complex. One reason the authors cite is that the DOJ and SEC require admission, acceptance, or acknowledgement of corrupt conduct in NPAs, DPAs, plea agreements, and settlements. And the DOJ's standard language strictly bars defendant companies from later taking public positions contradicting the agreed factual basis. So the defendants' hands are tied when facing prosecutions in other countries.

Examples of carbon copy FCPA cases aren't hard to find: Shell ($48.1 million to DOJ and SEC; $10 million to Nigerian government), Snamprogetti/ENI ($365 million to DOJ and SEC; $32.5 million to Nigerian government, BAE Systems ($400 million to DOJ; 46.5 million to UK’s SFO), Innospec ($27.5 million to DOJ, SEC, OFAC; $12.7 million to UK’s SFO, Alcatel-Lucent ($137.4 million to DOJ and SEC; $10 million to Costa Rican government, JGC Corporation ($218.8 million to DOJ million to DOJ; $28.5 million to Nigerian government), Siemens ($800 million to DOJ and SEC; $569 million to Munich Prosecutor; $46.5 million to Nigerian government; $336 million to Greek government; $100 million to World Bank Group).

What's it mean?

The days of one-dimensional government investigations are probably over. Despite a debate over fairness and the need for duplicative prosecutions, serial enforcement actions are now the norm. And with our globalized future, Boutros and Funk see carbon copy prosecutions becoming even more common, and more costly for companies trying to settle them.

"Carbon Copy Prosecutions: A Growing Anticorruption Phenomenon in a Shrinking World" can be downloaded in pdf here.

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