BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG HOUSTON LONDON LOS ANGELES NEW YORK PALO ALTO SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C. Recent Developments in Foreign Corrupt Practices Act Enforcement Sixth International Pharmaceutical Compliance Congress and Best Practices Forum Budapest, Hungary May 15, 2012 Joseph B. Tompkins, Jr. Partner, Washington D.C.
Predicted FCPA Trends for 2011/2012 Continued Aggressive Enforcement by U.S. DOJ and SEC Continued Prosecution of Individuals, Not Just Companies Increased Use of Deferred Prosecution Agreements by DOJ Increased International Cooperation by Law Enforcement Agencies 2
Continued Aggressive Enforcement FCPA- Related Cases new criminal or civil cases (settled or contested) instituted by year (pending investigations based upon public disclosures of investigations) (as of April 2012) 3
Continued Aggressive Enforcement Corporate FCPA-Related Fines (Civil & Criminal) (as of April 2012) 4
The Top Ten No. Company Year Amount (millions) 1 Siemens (Germany) 2008 $800 2 KBR/Halliburton (U.S.) 2009 $579 3 BAE, plc (UK) 2010 $400 4 ENI SpA/Snamprogetti Netherlands B.V. (Italy/Holland) 2010 $365 5 Technip S.A. (France) 2010 $338 6 JGC Corporation (Japan) 2011 $218 7 Daimler AG (Germany) 2010 $185 8 Alcatel-Lucent (France) 2010 $137 9 Panalpina (Switzerland) 2010 $81 10 Johnson & Johnson (U.S.) 2011 $70 5
Deferred Prosecution and Non-Prosecution Agreements February 2011: Tyson Foods, Inc. Two-year DPA; $4 million criminal fine April 2011: JGC Corporation Two-year DPA; $218.8 million criminal fine; independent compliance consultant April 2011: Comverse Technology, Inc. NPA; $1.2 million criminal fine; $1.6 million disgorgement 6
Deferred Prosecution and Non-Prosecution Agreements April 2011: Johnson & Johnson Three-year DPA; $21.4 million criminal fine; $48.6 million disgorgement May 2011: Teneris SA First-ever DPA with SEC; $5.4 million disgorgement DPA with DOJ; $3.5 million criminal fine July 2011: Armor Holdings, Inc. NPA; $10.29 million criminal fine; $5.69 million civil fine, disgorgement 7
Deferred Prosecution and Non-Prosecution Agreements December 2011: Aon Corporation NPA; $1.76 million criminal fine; $14.5 million disgorgement Settled with U.K. Financial Services Authority; 5.25 million for failing to establish and maintain effective controls to prevent foreign bribery December 2011: Deutsche Telekom AG and Magyar Telecom Plc (Hungary) 8 Magyar DPA with DOJ; $59.6 million fine SEC Settlement; $31.2 million disgorgement Deutsche Telekom NPA; $4.36 million penalty for books and records violations
Current FCPA Issues of Interest Who is a foreign official under the FCPA? When a company makes a disclosure to the U.S. Department of Justice and cooperates with the DOJ during an investigation by the company s outside counsel, do the company, the outside law firm and its lawyers become agents of the U.S. Government? What effect will the Shot Show debacle, in which the DOJ ended up dropping charges against 22 individual FCPA defendants, and other failed prosecutions have on future FCPA prosecutions of individuals? 9
Who is a Foreign Official? Foreign officials at all levels very broadly defined: 10 any officer or employee of a government or any department, agency, or instrumentality of a government; any person acting in an official capacity on behalf of a government; any officer or employee of a company or business owned in whole or part by a government; any officer or employee of a public international organisation such as the World Bank or the United Nations; any officer or employee of a political party or any person acting in an official capacity on behalf of a political party; and/or any candidate for political office.
U.S. v. Carson, et al. (C.D. Cal.) (2012) The issue of whether the government-owned entities involved in China, Korea, Malaysia and the UAE are instrumentalities of a foreign government is a factual issue to be determined by the jury at trial. Among other things, the jury should consider: The foreign state s characterization of the entity and its employees; The foreign state s control over the entity; The purpose of the entity s creation; The entity s obligations and privileges under the foreign state s law; The circumstances surrounding the entity s creation; and The extent of the foreign state s ownership of the entity, including the level of financial support by the state, such as subsidies and special tax treatment Trial scheduled for June 2012 11
Issues Arising From Cooperating With The Government Is a cooperating company an agent of the U.S. Government? If so, are its communications with the U.S. Government discoverable in criminal or civil litigation? If so, what are the Fifth Amendment implications for individual employees who are later indicted? What are the potential waiver of privilege implications for attorneys notes and interview memoranda? 12
FCPA Prosecutions of Individuals U.S. v. Lindsay Manufacturing (C.D. Cal.) (Dec. 2011) Convictions of several defendants vacated and charges dismissed because of prosecutorial misconduct Misconduct included: Allowing a key FBI agent to testify untruthfully Inserting material falsehoods into affidavits submitted to the Court Improperly reviewing an e-mail communication between a defendant and her lawyer Engaging in questionable behavior during closing argument and making misrepresentations to the Court 13
FCPA Prosecutions of Individuals Africa Sting/ Shot Show Case (D.D.C. 2011) Large, multi-year FBI undercover operation involving 5,287 phone calls, 240 meetings between the suspects and government undercover agents, and 14 search warrants in the U.S. and the U.K. Result: Case split into four different trials A mistrial was declared in first case; motions for acquittals granted against several defendants in second case, and then not guilty verdicts and mistrial against other defendants After scathing comments by the Judge, DOJ announced that it would not pursue prosecution of any other defendants 14
FCPA Prosecutions of Individuals U.S. v. O Shea (S.D. Tex 2011) Indictment and prosecution of John Joseph O Shea, a business united manager at ABB, Inc., charged with conspiring to pay bribes to officials of a Mexican stateowned utility company Result: January 2012: After government presented its case, the Judge granted the defendant s motion for acquittal The Judge stated: The government s principal witness knows nothing. His answers were abstract and vague, generally relating to gossip. Case dismissed 15
FCPA Risk Assessment www. transparency.org/ 16
FCPA Risk Assessment 17
FCPA Risk Assessment 18
JOSEPH B. TOMPKINS, JR. Partner Washington, D.C. 202.736.8213 202.736.8711 Fax jtompkins@sidley.com PRACTICES Complex Commercial Litigation International Trade White Collar AREAS OF FOCUS Business Torts Compliance Counseling - White Collar Contract Litigation Customs Economic Sanctions Export Controls FCPA/Anti-bribery Financial Institutions Counseling Financial Institutions Litigation Grand Jury Investigations Internal Investigations International Financial Institutions in the U.S. Private Securities Litigation Real Estate Litigation Trials ADMISSIONS & CERTIFICATIONS U.S. Supreme Court, 1977 U.S. Court of Appeals, 3rd Circuit, 1983 U.S. Court of Appeals, 4th Circuit, 1993 U.S. Court of Appeals, 5th Circuit, 1977 U.S. Court of Appeals, 6th Circuit, 1985 U.S. Court of Appeals, 7th Circuit, 1991 U.S. Court of Appeals, 9th Circuit, 1985 U.S. Court of Appeals, 11th Circuit, 1982 U.S. Court of Appeals, D.C. Circuit, 1976 U.S. Court of Appeals, Federal Circuit, 1985 U.S. District Court, District of Columbia U.S. District Court, E.D. of Virginia District of Columbia, 1976 Virginia, 1975 EDUCATION Harvard Law School (J.D., 1975) Harvard University - John F. Kennedy School of Government (M.P.P., 1975) Washington and Lee University (B.A., 1971, summa cum laude) JOSEPH B. TOMPKINS, JR. s experience includes service with the Criminal Division of the United States Department of Justice from 1979-1982, where he served as Deputy Chief of the Fraud Section from 1980-1982. Mr. Tompkins serves as a Global Coordinator of the Firm s Complex Commercial Litigation practice, and he is one of the leaders of the firm s Foreign Corrupt Practices Act (FCPA) practice. His practice includes a variety of civil and white collar criminal litigation matters. In recent years, Mr. Tompkins has represented corporate and individual clients in connection with complex internal investigations, commercial litigation in federal and state courts, Department of Justice and Securities and Exchange Commission investigations, Inspector General investigations and federal grand jury investigations concerning alleged fraud, corruption and export control violations. Mr. Tompkins has also represented corporate and individual clients in international law enforcement matters, including FCPA investigations, economic sanctions, export control investigations and related matters. He has also drafted and negotiated international agreements between the United States and foreign entities. Mr. Tompkins is currently leading the Firm s representation of Bank of America in the Multi-District Litigation proceeding involving Parmalat, the Italian dairy company that engaged in a massive international fraud. He has also represented a number of other major financial institutions that have been the victims of fraud and corrupt activity, including the World Bank and other domestic and international banks. Mr. Tompkins regularly represents clients such as the U.S. Chamber of Commerce, the government of the United Kingdom and the government of the Cayman Islands in a broad range of regulatory and litigation matters. He was selected to be listed in the International Who s Who of Commercial Litigators 2010, and he is also listed in Who s Who in the World and Who s Who in America. 19
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