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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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