In a recent post we analyzed the comments of Charles Duross, Deputy Chief, Fraud Section, Criminal Division, DOJ, at the ABA White Collar Crime annual conference.  Today, we will summarize the comments of Duross’ fellow panelists — Robert Tarun, Mark Mendelsohn and Raphael Monty — all three of whom are in private practice.

Tarun stated:

  • The SEC enforcement increased 85% in 2010 versus 2009.
  • The SEC sought disgorgement of ill gotten gains in every 2010 enforcement action.
  • Revenue derived from FCPA violations will continue to be sought regardless of how immaterial the revenue generated by the illegal conduct.  Specifically, Tarun cited the recent SEC enforcement action of Tysons Foods, where a Mexican plant produced just 1% of Tysons’ revenues but was the situs of some of the illegal conduct.
  • No defendant had challenged the SEC’s authority for imposing disgorgement when an FCPA accounting violation was charged and not an antibribery violation.
  • There is a lack of transparency at the DOJ regarding what is necessary to receive a declination or deferred or non-prosecution agreement and called for a much clearer roadmap, ala something akin to the DOJ’s antitrust leniency policy, to provide the transparency needed.  In response, Duross opined companies and individuals prosecuted for FCPA violations do not have the same ability, generally speaking, to provide valuable information to law enforcement and prosecutors as they do in the antitrust context where competitors hold meetings and exchange communications to further their crimes.  Duross also commented the Fraud Section does not need a leniency program for the simple fact that such a program would provide little benefit to law enforcement.

Mark Mendelsohn, Duross’ immediate predecessor at DOJ, commented additional guidance regarding ultimate settlements would be beneficial.  Specifically, he said that guidance on:

  • The peanlty discount;
  • Whether a decision to decline to prosecute would be made;
  • Whether a deferred or non-prosecution agreement would be offered;
  • What charges might be brought; or
  • How far the jurisdictional envelop would be pushed by the Government

would be welcomed by those in the private sector and their corporate clients.

Raphael Monty, a British lawyer, emerged from a “deferred speaking agreement” to a roar from the attendees.

  • He argued the FCPA was a “crime control failure”  and cited the increased numbers of lawyers assigned to prosecute the FCPA and the increased number of prosecutions in recent years.
  • He further stated that after 34 years there was still a lack of clarity regarding when an enforcement action will or will not be brought.  In that respect, he stressed that his British clients need more certainty regarding what will be prosecuted and what will not before they can consider self-reporting.
  • Further, he stated that if the DOJ wants to prosecute the FCPA “on the cheap” (i.e., when a company self-discloses and then exhaustively investigates the potential wrongdoing), the DOJ needs to partner with the company.  On the other hand, if the DOJ wants to revert to a traditional law enforcement posture and investigate cases, use detectives and informants, and conduct stings — which are not cheap — then the DOJ will rightfully be able to execute “absolute prosecutorial authority.”  However, in the current context where the Government often depends on companies to self-report and investigate, then it should not execute such absolute authority.
  • Finally, in respect to the Bribery Act, he stated it will come into force, at the latest, in October 2011, three months after final SFO guidance has been issued.

That’s a wrap in the FCPA panel.