Following the Department of Justice's February 21, 2012, decision to dismiss remaining charges against defendants in the so-called "African sting" case, some commentators quickly hailed the collapse of the prosecutions as marking the end of the department's aggressive Foreign Corrupt Practices Act (FCPA) prosecution of individuals. That prediction is not likely to come true, however, as the targeting of individuals under the FCPA has been a stated priority of the DOJ and is, in part, a result of U.S. Congressional criticism of the department for not charging enough individuals.
In fact, when the Department of Justice (DOJ) brought charges against 22 individuals in the "African sting" case, it was hailed by DOJ officials as the pinnacle of FCPA enforcement actions. The case represented the largest FCPA sting operation in history and came on the heals of a number of investigations that ended with increasingly large sums being paid in settlement.
Not long after the indictments in the African sting case, however, FCPA prosecutors' momentum began to turn in two unrelated cases. In the first FCPA prosecution to go to a jury verdict, the court rejected the guilty verdict on post-trial motions relating to Lindsey Manufacturing Co. and other defendants. The court ruling focused on prosecutorial misconduct and the weakness of the evidence. U.S. v. Aguillar, Case no. 2:10-cr-01031 (C.D.Cal.). In the second case, the court dismissed all FCPA charges against a former ABB Ltd. official, John O'Shea. U.S. v. O'Shea, H-09-cr-429 (S.D.Tx.). After that court dismissal, the DOJ dismissed all remaining charges.
As the African sting indictments proceeded to the first trial, the court dismissed FCPA charges relating to certain defendants and all money laundering charges. After the decision in O'Shea, the second African sting trial proceeded. The court dismissed the FCPA conspiracy charge against all defendants in the second trial after the government rested its case, and the trial ended in the acquittal of two defendants and a hung jury on the substantive FCPA charges against the remaining three defendants. Comments by jurors after the trial indicated that the jury was substantially in favor of acquittal and only a few jurors credited the government's evidence.
The DOJ announced, on February 21, 2012, that it was voluntarily dismissing with prejudice all remaining charges in the African sting case. U.S. v. Goncalves, No. 09-cr- 335 (D.D.C.). In ending what was perhaps the most significant FCPA prosecution against individuals, the DOJ stated that its decision, after "careful consideration," was based on the hung juries and acquittals in the first two trials, the adverse impact of evidentiary and other legal rulings, and the substantial resources (governmental, judicial, jury and defense) that would be needed to proceed with the prosecution. Our Washington, D.C. partner, Charlie Leeper, represented one of the defendants in the second African sting trial and argued the successful motion that resulted in the dismissal of the FCPA conspiracy charge against all the defendants in that trial.
On the same date that the DOJ abandoned the African sting case, the U.S. Chamber of Commerce, representing a coalition of 30-plus groups, petitioned the DOJ and SEC to clarify certain FCPA enforcement issues in guidance that the DOJ is expected to release some time this year. In the groups' letter to the DOJ and SEC, they ask for clarification of the FCPA's definitions of "foreign official" and "instrumentality" of foreign governments. The letter also requests clarification of the weight given by the agency to companies' compliance programs, the policies behind enforcement actions against parent companies for a subsidiary's actions, and the policy regarding companies that merge with or acquire others that are accused of FCPA violations.
While the abandonment of the African sting cases represents a major FCPA development, it is highly unlikely that FCPA enforcement by the DOJ and SEC will decrease. The U.S. Chamber of Commerce's letter to the DOJ and SEC is clear evidence of the high level of concern in the business community regarding the ongoing risk of FCPA prosecutions.
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