Guest Post: The Result in US v. Hoskins is Required by the OECD Anti-Bribery Convention

GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris and New York offices of Debevoise & Plimpton and a Lecturer at Columbia Law School, who contributes the following guest post:

Much has been written about the long-awaited decision in US v. Hoskins, on this blog (see here and here) and elsewhere. In Hoskins, a US federal appeals court held that the U.S. cannot charge a foreign national acting abroad (and who therefore couldn’t be charged directly with violating the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA)) by alleging vicarious liability under either the aiding and abetting statute, 18 U.S.C § 2, or the conspiracy statute, 18 U.S.C. § 371. Judge Pooler’s opinion for the court relied on two justifications: First, under the principle established by a Supreme Court cased called Gebardi v. United States and its progeny, Congress clearly indicated an affirmative legislative policy to exclude from complicity or conspiracy liability parties like Mr. Hoskins (foreign nationals acting abroad). Second, the FCPA lacks the requisite affirmative indication of congressional intent, demanded in cases like Morrison v. National Australia Bank, that Congress intended the FCPA to apply extraterritorially to the kind of conduct in question. (Analytically, these two tests are very similar, as they both ask, “What did Congress intend?” The principal difference is the burden of persuasion: The Gebardi  line of cases, while not always entirely consistent, seem to indicate that prosecutors can generally invoke complicity or conspiracy liability even of someone who could not be prosecuted as a principal unless there’s a strong showing that this is contrary to congressional intent, while the extraterritoriality analysis, on the other hand, typically puts the burden on the prosecutor to show that a statute was intended to apply extraterritorially in the circumstances raised by a specific indictment.) The court dismissed the conspiracy and complicity charges against Hopkins, but remanded the case on the assumption that Mr. Hoskins might still be directly liable under the FCPA if the government could prove that he was acting as an agent of Alstom’s US subsidiary.

In my view, the court’s decision was clearly correct. But the court could have gone further to address another issue that, while not formally before the court, will need to be addressed on remand: The implications of the OECD Anti-Bribery Convention. The OECD Convention is far more important to the appropriate interpretation of the FCPA than the court acknowledged, provides compelling support for the Hoskins outcome, and should also control the resolution of the issue the appeals court left open for consideration on remand. Continue reading

Guest Post: By Refusing to Respect Attorney-Client Confidentiality, European Courts Threaten To Undermine Anti-Bribery Enforcement

GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris and New York offices of Debevoise & Plimpton and a Lecturer at Columbia Law School, who contributes the following guest post:

In the fight against transnational bribery and other forms of corporate crime, a key element of some national prosecution agencies’ strategy is to encourage corporations to “self-report” to the government and to cooperate with any subsequent investigation. The United States Department of Justice (DOJ) pioneered this strategy, but other jurisdictions are beginning to adopt it as well. The basic approach is to offer companies both a stick and a carrot: The stick: If corporations do not self-report and are ultimately discovered, they will be prosecuted vigorously. The carrot: A self-reporting, cooperating company can obtain a more favorable settlement, and perhaps avoid prosecution altogether. From a public policy perspective, it is vastly more efficient for prosecutors to work with corporations in the fight against corruption, essentially enlisting them as partners to detect, investigate, and bring to justice the individuals responsible for corruption, than for prosecutors to do all this work themselves.

From the company’s perspective, though, the decision whether to self-report is difficult: By making a first phone call to a prosecutor, the company all but commits to negotiating a settlement and abandons both the chance of non-detection and the (perhaps scant) possibility of a successful defense. At a minimum, starting this process will entail large costs (particularly legal fees), as well as risks, including the risk that prosecutors may discover more matters to be investigated. There is also the problem, already discussed on this blog, of evaluating whether a negotiated outcome in one country will preclude or deter prosecution in another. And at least at the early stages, the company may not even be certain whether a violation has in fact taken place, or how widespread or egregious such violations may have been. For these reasons, when a company’s leaders learn that there may have been violations of anti-bribery or other laws, the company will retain a seasoned legal team to oversee a thorough internal investigation of the facts in order to make a reasoned decision whether, and where, to self-report.

When a company asks lawyers to do this, it is essential that the attorneys’ work be protected by the attorney-client privilege, at least until such time as the company decides to share fruits of the investigation with prosecutors. If a company knew that everything learned or generated by its lawyers in the course of an internal investigation could be subject to seizure or forced disclosure to prosecutors, then companies would face a huge disincentive to start the process of conducting an internal investigation at all, since doing so could simply create a handy road map – and compelling evidence — for the prosecutor. In the United States, although the conduct of such an internal investigation poses a number of possible traps for the unwary, if the investigation is properly managed then the company can generally be assured that no prosecutor will get her hands on the fruits of its lawyers’ work unless and until the company specifically authorizes such disclosure. Matters are more complicated in Europe, however. For example, in-house counsel are generally not considered to be “attorneys” capable of generating a protectable professional privilege. And in some countries, such as France, the client does not necessarily have the power to “waive” the secret professionel (the rough equivalent of the attorney-client privilege) at all. Most notably—and most troublingly—recent court decisions in the UK and Germany have gone even further in making the results of lawyers’ internal investigations discoverable by prosecutors without the company’s consent. These decisions, if not reviewed or curtailed by legislation, will create huge disincentives to self-investigation, and hence to self-reporting. Continue reading

Guest Post: Further Developments on French Law Regarding Anti-Bribery Prosecutions by Multiple States

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

The Supreme Court of France recently reversed two criminal judgments on the application of the international double jeopardy principle (or ne bis in idem, as the principle is known in Europe and elsewhere) in transnational bribery cases (and others). Taken together with some other recent developments, these developments suggest a renewed determination in France to regain leadership from US prosecutors in enforcing international bribery norms in France.

The ne bis in idem principle limits prosecutors’ power to pursue individuals or companies already convicted or acquitted elsewhere, including in other countries. Several European countries have domestic laws endorsing this principle; in France, the prosecutor is not bound by non-French outcomes if the French prosecution is “territorial” (that is, if an element of the offense took place on French soil) but cannot prosecute a defendant already pursued elsewhere if the only French basis for prosecution would be so-called “extraterritorial” principles (such as French citizenship of the perpetrator or the victim). Separately, a number of Europe-wide treaties, the most effective of which is the Convention Implementing the Schengen Agreement (CISA), have provisions that, with some exceptions, basically mean that no one can be prosecuted twice in Europe for the same offense.

But these provisions do not apply to US prosecutors, who are by far the most aggressive and effective pursuers of cross-border crimes such as overseas bribery. US courts interpret the Double Jeopardy clause of the Fifth Amendment to mean only that a single sovereign cannot prosecute the same defendant twice for the same offense. Some have argued that the US position creates a tension with Article 4.3 of the OECD Anti-Bribery Convention, which provides that when more than one country is competent to prosecute, they must consult to “determin[e] the most appropriate jurisdiction for prosecution,” clearly contemplating that only one country prosecute a given defendant for the same acts. But for reasons I have explored elsewhere, as well as in this space here and here, US prosecutors have not followed the spirit of Article 4.3, instead acting as the “final arbiter” of outcomes around the world, not hesitating to bring actions if they deem non-US outcomes insufficient.

Two formally unrelated decisions of the Paris Court of Appeals in 2016 – the ones that the French Supreme Court just vacated – seemed to complicate matter still further: Continue reading

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.

Continue reading

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