VICTOR HOU CLEARY GOTTLIEB STEEN & HAMILTON LLP

Transcription

1 VICTOR HOU CLEARY GOTTLIEB STEEN & HAMILTON LLP

2 May 7, 2015 Corruption Investigations: A U.S. Perspective on Cooperation by Individuals and Corporations Victor L. Hou Partner Cleary Gottlieb Steen & Hamilton Valor Economico

3 Corruption spintarella pod stolom spicken bribery zou hou mien propina kuro kiri

4 Corruption Corruption erodes trust in government and private institutions alike; it undermines the confidence in the fairness of free and open markets; and it breeds contempt for the rule of law.

5 Lava Jato

6 Lava Jato

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12 Colaboração Premiada

13 I m gonna make him an offer he can t refuse. Godfather

14 How U.S. Prosecutors Use Accomplice or Cooperator Testimony

15 The Stages of Cooperation Identify Key Witnesses Approach Witness Proffer with AUSA Sentencing Cooperation Credit 5k 1.1 Guilty Plea Cooperation Agreement 15

16 Cooperation by Corporations

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25 Key Difference between Brazilian and U.S. Cooperation Brazil Inquisitorial System U.S. (SDNY model) Adversarial System Preventive Detention Material Witness Order Accusation / Charges Required for Collaboration Substantial Assistance Charges Not Required Selective Guilty Pleas Comprehensive Guilty Pleas Specified Reduction in Sentence Indeterminate Sentence

26 Cooperation by Business Organizations DOJ rarely brings criminal charges against entities except as part of an agreed-upon resolution Impact of the Arthur Andersen prosecution: Collateral consequences of an indictment: charges can be a corporate death penalty Arthur Andersen was convicted after trial, destroyed the company, conviction then reversed by the Supreme Court In deciding whether to bring charges, DOJ applies analyzes certain key factors: Nature and seriousness of offense, and pervasiveness within the company Company s history of prior misconduct Company s disclosure of wrongdoing and cooperation, and the remedial actions it took upon discovering the misconduct Effectiveness of the corporate compliance program The collateral consequences of a prosecution 26

27 Criminal Resolutions with Business Organizations Non-Prosecution Agreements (NPA) /Deferred Prosecution Agreement (DPA) Entity agrees to cooperate with investigation and pay an (often substantial) fine Entity agrees to a statement of facts outlining the wrongdoing Often includes requirements for compliance improvements and/or monitor Government may file charges if the company fails to comply with the terms of the agreement Primary differences between a NPA and DPA: NPA: No formal charges filed or court involvement (agreement b/w the parties) DPA: Charges filed in federal court, but prosecution is deferred during pendency of agreement» Agreement must be approved by federal judge Sunset period: agreement ends (and for DPA, charges dismissed) so long as the corporation complies with the requirements of the agreement Guilty Plea Company or subsidiary pleads guilty through a corporate representative; similar range of penalties, but stigma of conviction 27

28 Criminal Resolutions with Business Organizations (cont d) Vast majority of resolutions over last decade have been either DPAs or NPAs Significant collateral consequences to resolutions Monetary component of the resolution may only be the proverbial tip of the iceberg Statement of Facts/Admissions can constrain a company s ability to defend itself in civil litigation arising from the same set of events Presence of monitor can impact company s business Pending investigation can be a distraction, but managing the fallout from a resolution can be as well Resolution may result in debarment from bidding on public contracts Non-U.S. consequences: The resolution may attract the interest of foreign regulators 28

29 SEC Investigations and Resolutions Civil Enforcement Actions SEC can bring civil enforcement actions against individuals and companies for violations of the securities laws These actions can be conducted parallel to federal criminal proceedings SEC Resolutions Settlement Form of settlement: (1) Administrative proceeding; or (2) Complaint followed by consent judgment Neither admit nor deny If no settlement case may proceed to discovery and then trial SEC Enforcement Cooperation Initiative Established incentives for companies and individuals to assist the SEC during ongoing investigations and during the pendency of actions As part of Enforcement Cooperation Initiative, SEC will enter into agreements with corporations, including DPAs and NPAs 29

30 Challenges in Corruption Investigations Difficulty for anti-corruption authorities to obtain evidence Key witnesses and documents located in other jurisdictions May be able to obtain documents through Mutual Legal Assistance Treaty requests, but not always Witnesses in other jurisdiction may have protections or may refuse to cooperate Evidence must be admissible in court Investigations can be lengthy due to complexity and evidentiary issues In U.S., statute of limitations is five years May get tolling agreement from entity Or, DOJ can toll statute of limitations if there is a pending request for documents with another country 30

31 Increasing Law Enforcement Cooperation The world is flat -- In a connected world, corruption investigations are increasingly connected globally as well Misconduct often touches upon multiple jurisdictions More powerful tools for anti-corruption regulators outside the U.S. leads to greater interest in anti-corruption investigations Italty s New Anti-corruption Law no. 191/2012 Brazil s Clean Companies Act Increased experience among authorities with working together International anti-corruption meetings and conferences Prior cases as models Coordination and cooperation are not seamless International turf battles and the race to court Some countries are less likely to be cooperative 31

32 Global Trends In Corruption Investigations Extraterritorial enforcement of laws and expansive view of jurisdiction Use of aggressive investigative techniques Cooperation credit model Encourages entities to cooperate with investigation Companies conduct an internal investigation and report the results in order to get credit Significance of a strong compliance program Use of coordinated resolutions among different 32 regulators