Guest Post: The Obiang Trial Suggests Innovative Approaches To Fighting International Corruption

GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris office of Debevoise & Plimpton, who contributes the following guest post:

Over the past two months, the French Tribunal de Grande Instance in Paris (the principal trial court) heard evidence in the case against Teodoro Nguema Obiang Mangue (known as Teodorin), on charges of corruption and money laundering, among other allegations. Teodorin is the son of Teodoro Obiang Nguema Mbasogo, the long-time – and notoriously corrupt – President of Equatorial Guinea, a resource-rich country that also has some of the most widespread poverty in the world. Yet Teodorin, who is currently Vice President , owns vast real estate in Paris, a private jet, a yacht, and a fleet of vintage and modern automobiles, among his other known assets. This case has been discussed extensively on this blog (see here, here, here, here, here, here, here, and here), but it’s useful to recap how the case came to trial in the first place:

The case against Teodorin was primarily the result of diligent efforts by NGOs, including the French anticorruption group Sherpa and the French chapter of Transparency International (TI). In 2007, Sherpa and others filed a complaint with the Public Prosecutor in Paris alleging that the ruling families of Equatorial Guinea, Angola, Burkina Faso and the Republic of the Congo held assets in France that were not the fruits of their official salaries. After a brief investigation, the Public Prosecutor dismissed the claims. Several of the NGOs, joined in some instances by citizens of the countries in question, then used a French procedure known as constitution de partie civile to cause a criminal investigation by an investigating magistrate (juge d’instruction). This effort was opposed by the Public Prosecutor. A Court of Appeals initially upheld the prosecutor’s position and dismissed TI’s intervention, but in an important 2010 ruling, the French Cour de Cassation (Supreme Court) ruled that TI was a proper partie civile authorized to instigate the criminal investigation. Ultimately Teodorin was bound over for trial, now with the support of the Public Prosecutor (as well as the continued active participation of TI and other NGOs). A decision is expected in October.

The procedures that brought Obiang to trial are interesting because they highlight four important differences between French and US criminal procedures, and more generally illustrate several legal deficiencies, in countries like the United States, that often hinder the worldwide fight against transnational corruption: Continue reading

Guest Post: Paris Court Rules That a US FCPA Guilty Plea Precludes Subsequent Prosecution in France

GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris office of Debevoise & Plimpton, who contributes the following guest post:

Overseas bribery and similar crimes can often be investigated by prosecutors in more than one country. But does (or should) the resolution of a criminal investigation in one country—say, through a negotiated resolution—bar subsequent prosecutions in other countries for the same underlying conduct? In earlier posts, I have explored some recent rulings that address aspects of this debate over so-called “international double jeopardy” (see here, here and here). A recent decision of the Paris Court of Appeals added an interesting new element to this debate. Faced with a classic situation of parallel prosecutions, the Paris Court held that an individual who had pleaded guilty in the United States for violations of the U.S. Foreign Corrupt Practices Act (FCPA) could not be prosecuted under French anti-bribery law—not because of the standard international double jeopardy principle, but rather because, according to the Paris Court, the US proceedings deprived the defendant of the right to defend himself protected by the European Convention on Human Rights (ECHR).

The facts of the case are simple: an individual entered into a written plea agreement with the U.S. Department of Justice (DOJ), in which the defendant agreed to plead guilty in a US court to FCPA charges, on which he was subsequently sentenced. He was separately bound over for trial in France under French anti-bribery laws, apparently for the same underlying conduct.  In affirming the dismissal of the French prosecution, the Paris Appellate Court’s reasoning proceeded in two steps: Continue reading

Guest Post: A Pending Federal Case Could–and Should–Limit the FCPA’s Extraterritorial Reach

GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris office of Debevoise & Plimpton, who contributes the following guest post:

Can the U.S. government prosecute an individual for Foreign Corrupt Practices Act (FCPA) violations if that individual is not a U.S. citizen or resident, and committed no unlawful act in U.S. territory? An important case posing that question is now before a U.S. appeals court. The decision may have important implications on the territorial reach of the FCPA.

The facts and relevant statutory provisions are straightforward, although the analysis is not. The defendant, Lawrence Hoskins, is a British national who at all relevant times was an officer of a British subsidiary of French manufacturing giant Alstom. Alstom and several of its subsidiaries were investigated by the US Department of Justice for alleged illicit payments in Indonesia, and ultimately reached a global corporate settlement that included several corporate guilty pleas and Deferred Prosecution Agreements, pursuant to which the corporate entities paid US fines of over US$750 million. The DOJ also pursued several individuals, including Mr. Hoskins, who was ultimately arrested when he arrived in the United States on vacation. His attorneys moved to dismiss the indictment on the ground that the US prosecutor lacked power to prosecute him. After energetic procedural activity by both sides, the District Court granted his motion in significant part. Unusually, the prosecutor appealed, and oral argument was heard on March 2, 2017.

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France’s New Anticorruption Law — What Does It Change?

GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris office of Debevoise & Plimpton, who contributes the following guest post:

The ineffectiveness of French efforts to combat overseas bribery is well-known if not entirely understood. Put most simply, in the 17 years since France adopted comprehensive anti-bribery legislation, essentially similar to the U.S. Foreign Corrupt Practices Act (FCPA), France has not convicted a single corporation of classic overseas bribery under that legislation. This shortfall has been regularly documented in periodic reports by the OECD, and by NGOs such as Transparency International and others. Its causes are complex. They may include a simple deficit in willpower, but as others as well as I have pointed out, French criminal procedures, and in particular the difficulty of demonstrating corporate responsibility under French criminal law, impede effective prosecution.

Stung by the fact that four very large French companies entered into a variety of guilty pleas or deferred prosecution agreements (DPAs) with US authorities, pursuant to which these companies paid well over $2 billion in fines and other payments to the US treasury, in December 2016 the French legislature finally adopted a long-pending law, known as the Loi Sapin II, which progressively goes into effect during 2017. The law is unmistakably a reaction to US success in prosecuting French companies under the FCPA: it only applies to corporations, and only to allegations of overseas corruption or other crimes very similar to those prosecutable under the FCPA.

Several of new law’s provisions are unexceptional: it creates a new Anticorruption Agency, called the AFA, to replace an existing agency, known as the SCPC, which was widely viewed as ineffective; the law requires medium- and large-sized companies to adopt compliance programs pursuant to criteria to be developed by the AFA. (While the AFA can impose administrative sanctions for absent or deficient compliance programs, it will have no criminal investigative authority). The new law also slightly extends the territorial reach of French anti-bribery laws to make them applicable to companies that “carry out all or part of their economic activity on French territory,” and enhances whistleblower protection available under existing laws. But the Loi Sapin II’s most ambitious innovation by far is a series of amendments to the French Code of Criminal Procedure to permit negotiated outcomes generally similar to DPAs as practiced for many years in the United States, and since 2014 in the United Kingdom, that result in the payment of fines and other penalties but not in a criminal judgment. Under the new provisions, a French corporation may enter into an agreement, known as a “Judicial Convention in the Public Interest” (JCPI), under which the firm admits facts sufficient to show the commission of a relevant crime, and agrees to a fine that may be as high as 30% of the company’s annual turnover for the prior three years. The company may also agree to the imposition of a corporate monitor, to be supervised by the AFA. Continue reading

Guest Post: The Case for Greater US Deference to Foreign Anticorruption Prosecutions–A Response to Maruca

GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris office of Debevoise & Plimpton, who contributes the following guest post:

Last fall, I published two posts in which I raised concerns about overlapping jurisdiction in foreign bribery cases, and about the appropriate role of US enforcement authorities in such cases. My first post noted that the US is not bound by the outcome of criminal processes in other countries, but can—and sometimes does—bring FCPA cases against foreign companies that have already resolved investigations for the same conduct brought initiated by their home countries. (As I also observed, the absence of any such constraint on US authorities creates an asymmetry with respect to countries that endorse an international ne bis in idem/double jeopardy bar, which can block such countries from pursuing a corporation or person that has already been pursued in the US.) My second post urged that the US Department of Justice (DOJ) should be more transparent in articulating when it will defer to non-US prosecutions in the corruption area.

A few weeks back, Michael Maruca posted an interesting critical commentary on my posts. The main thrust of Mr. Maruca’s very thoughtful comment was that the DOJ should not unnecessarily defer to non-US counterparts, partly because he worries about downgrading the effectiveness of US FCPA enforcement efforts, and partly because he envisions competition among national authorities as encouraging a “race to the top” in achieving optimal enforcement of foreign bribery laws. He proposes that the DOJ, rather than being more deferential to foreign resolutions of conduct that might violate the FCPA, the DOJ should go further in sharing the monetary outcomes of multinational investigations, and he provides commonsense principles for how it might do so.

Mr. Maruca’s intervention usefully advances the discussion on a very important issue. I agree with much of what he says. Nonetheless, I continue to view the lack of sufficient US deference to foreign resolutions of foreign bribery cases as a problem, and I have the following concerns about the points Mr. Maruca’s makes: Continue reading

Equitable Sharing, Not Deference: How US FCPA Enforcers Should Accommodate Foreign Interests

Frederick Davis recently published two guest posts (see here and here) emphasizing some of the risks that arise when the US government pursues FCPA prosecutions against foreign corporations. He notes that European anticorruption administrators are regularly irritated by aggressive US action in this field and by the apparent discrepancy in the treatment of US and non-US corporations. He also notes that foreign corporations are reasonably worried about being charged twice for the same transgression: While European countries have addressed this concern through an international version of the double jeopardy bar (also known as ne bis in idem), that bar does not protect a corporation against a subsequent US prosecution. Moreover, as Mr. Davis notes, US enforcement agencies (as compared to their counterparts in Europe) have wider authority to charge, are more willing to assert power abroad, wield more procedural tools, and are less subject to judicial supervision in their charging and settlement decisions. To address these problems, Mr. Davis recommends, among other measures, that the US DOJ issue guidelines for when to defer to foreign judgments.

However, US deference to foreign judgments may not be the best solution. It could be true, as Mr. Davis worries, that US prosecutors are “becoming the ultimate arbiters” of foreign bribery cases (at least those involving multinational corporations). But if the US standard is indeed more stringent, then US hegemony could lead to more aggressive anticorruption prosecution across the board, a boon for anticorruption advocates. Since in certain situations competition among administrative and enforcement agencies can create a de facto “race to the top” in terms of standards, it might not be such a good idea for the US to adopt a more deferential posture toward foreign judgments in transnational bribery cases.

That’s not to ignore the significant problems that Mr. Davis describes. Given that the fines and other monetary penalties for corrupt business behavior can be enormous, US FCPA counterparts in other nations would be rightly dismayed if they lost out on the potential recoveries. If a Danish corporation listed on a US exchange bribes an official in Gambia, all three countries should be able to penalize the wrongdoers and share—though not necessarily equally—in the fines and other penalties recovered. If the penalties are appropriately distributed, we need not sacrifice the aggressive anticorruption regime of US hegemony. My response to Mr. Davis is that we need guidelines for distribution of recoveries, not necessarily guidelines for deferral to foreign judgments operating under differing, and less aggressive, standards.

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Guest Post: The US Needs To Show More Respect for Foreign Prosecutions

GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris office of Debevoise & Plimpton, who contributes the following guest post:

The principle that the state may not criminally prosecute the same defendant twice for the same conduct—known in most of the world as ne bis in idem (“not twice for the same thing”), and known in the United States as the prohibition on “double jeopardy”—is well-settled and uncontroversial, at least in Western democracies. Much more controversial is whether that principle protects a defendant prosecuted by one country from prosecution by a different country for the same (or closely related) conduct. This question is of particular importance in the context of transnational bribery, where the same conduct might violate the criminal laws of multiple governments. As I discussed in my last post, in Europe, a mix of domestic legislation, international treaties, and court decisions have established an international version of the ne bis in idem principle, providing companies with a reasonable assurance that if they are prosecuted in one European country, they are shielded from further prosecution in another. In contrast, in the United States the prohibition on double jeopardy has been consistently interpreted to prohibit only multiple prosecutions by the same sovereign. US laws thus offer no protection against re-prosecution in the United States after a prosecution abroad.

The power of US prosecutors to go after companies that have already been prosecuted in other countries is enhanced by other powers that European prosecutors can only dream about. As noted in an earlier post, a US prosecutor can pursue a corporation when anyone within that corporation can be shown to have committed a crime, giving the prosecutor considerable leverage. US prosecutors also have finely tuned procedural mechanisms, such as deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs), that are only tentatively being explored in other countries, such as the United Kingdom and France. The DOJ regularly asserts aggressive notions of its territorial powers, claiming, for example, that the use of dollars as the currency of an illegal transaction may subject the participants to US prosecution. US prosecutors have essentially unreviewable discretion their investigative decisions, because unlike many countries in Europe, criminal investigations (and, crucially, the decision to charge) are not supervised or reviewed by judges, as the DC Circuit has recently held.

Taken together, these circumstances risk causing two problems: Continue reading