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Ambitious Is Good: FCPA World Monitor

7 Aug

Via the Professor, I’ve read some posts by Rajat Soni, a lawyer who has entered the FCPA Commentariat with his FCPA World Monitor. Claiming to monitor the world is ambitious, but then again, I like ambitious.

Truth be told, I’ve read of couple of posts of Soni’s and I disagree vehemently with both of them. He sounds, in fact, like an acolyte of the aforementioned Professor. That said, and as the man once said, just because he disagrees with me doesn’t mean he’s wrong.

I’ll keep reading (I’ve already subscribed to the site via my RSS reader), if only because I like to know what the opposition is thinking. And who knows, he might trip over something and come down on the right side of an issue someday.

New voices are always welcome. Even if—maybe especially if—he disagrees with me.

By the way, when are we going to get a woman into the Commentariat? There are lots of incredible women lawyers in this space (Lucinda Low comes to mind. As do Cheryl Krause and Palmina Fava). But no one in the Commentariat (I see that Jessica Tillipman and Elizabeth Spahn are “Contributing Editors” to the FCPA Blog, but I’m talking about owning a site).

The Importance of Context

6 Aug

Here’s a sample of the kind of thing I post on fcpa.tv.

You can go to that site, or you can subscribe on iTunes here and watch it on your iPad.

I talk about the importance of context in evaluating potential FCPA violations. No inappropriate behavior occurs in a vacuum. Companies who can show that they take anti-bribery seriously can easily weather an inquiry by the DOJ or the SEC.

Monterey

23 Jul

I’m in Monterey, CA this week for the Carmel Valley eDiscovery Retreat. First day is almost done. Nary an FCPA question to be found.

Here’s one for you. I’m still marinating over the Jackson & Ruehlen briefs, and some of the arguments that were made.

One of the arguments Ruehlen made was about the pleading requirement. Ruehlen said that the SEC failed to plead in its Complaint that the payment was not a facilitation payment.

The SEC opposed the motion to dismiss, claiming that the facilitation payment exception wasn’t so central to the violation that it needed to be pleaded separately.

In his Reply, Ruehlaen argued that if facilitation payments were an affirmative defense, that the SEC would be right. But since its an exception, that’s a problem. And the problem is doubled because if the SEC must plead the negative (that the payment wasn’t a facilitation payment), and in this case, they don’t have the identity (or at least aren’t providing it) of the government official.

Ruehlen logically argues, if you can’t name the official, how can you say that the benefit wasn’t in his non-discretionary authority?

The SEC’s argument is essentially that what’s important isn’t the identity of the recipient, it’s the mind of the payor. I’m in general agreement with that.

But I also think that exceptions to the statute need to plead.

I could be wrong about that. What do you think?

Arguments I Don’t Like

17 Jul

I was still coming off the rant the other day when I was reading the Reply memoranda of Mark Jackson and James Ruehlen in the Noble follow-on actions.  Mistake. It’s a little like going into the grocery store when you’re hungry; you end up over-spending.

And to a certain extend, Jackson’s and Ruehlen’s arguments are sympathetic.  As Jackson says:

The SEC spent years investigating these matters before filing its Complaint.  If the SEC is still unable to provide well-pleaded facts as to all the elements of an FCPA violation, the remedy is dismissal.

And the Complaint is, to be honest, light on facts and heavy on conclusions.  But there are facts, and I’m sympathetic to the SEC’s “sympathy plea” about how establishing facts in foreign bribery allegations is difficult.  I’m also sympathetic to Jackson & Ruehlen’s disdain for that argument. Whether there are sufficient facts pleaded in the Complaint is not what I’m going to write about.  I don’t often write about the ultimate issue, and I’m not going to here.  What I am going to write about are two arguments that Jackson and Ruehlen made that I think cross the line into just plain wrong.  One of them seems worse than that.

The first argument, well, let’s just say that I think it’s probably a hard concept to get across.  What it seems like is that Jackson is saying that he didn’t know that bribing Nigerian officials was wrong.

These assumptions are legal conclusions based on assumptions about the laws of another nation, unsupported by citation to any indication that Jackson knew the acts sought or methods used were actually illegal, and are therefore insufficient to establish Jackson’s state of mind. (emphasis in original)

The motion continues a page or two later:

The SEC next gives the back of its hand to Jackson’s argument that the Complaint must be dismissed because the few well-pleaded facts in the Complaint are equally consistent with a legal alternative explanation, that Jackson believed any payments were lawful facilitating payments.

First, can I just say that “gives the back of its hand” is such a colorful phrase, and masterfully used here.  This is just good legal writing, in my opinion.

If only the underlying legal premise were accurate. Bribery is wrong.  Bribes are wrong.  Do we really need the FCPA to teach us this?  Can we really say “well, it’s legal under the FCPA, so I didn’t know it was wrong?”  Okay, how about US domestic bribery statutes?  How about every country in the world’s domestic bribery statutes?

Which makes me pause for a second.  Maybe I’m wrong.  Maybe its actually an interesting legal question, to which I don’t actually have an answer.  Corrupt intent means that you have to understand that what you’re doing is wrong.  If something is legal under US law, but illegal in the country in which you’re operating, can you say “US law says I’m fine, therefore I had no corrupt intent?”  I think it’s a stretch to say that.  More than a stretch, an overreach.  I’ve asked the DOJ what they think of this legal question.  I’m going to go out on a limb and say they’re not going to comment.

The second argument…well, let’s just say I’m hoping that there’s more to the story than what’s in the dry motion papers filed by both sides.

Because if a defense attorney did to me what these attorneys did to the SEC enforcement lawyers, I’d be pissed.

Here’s how it looks.  The defense attorneys agreed to toll the statute of limitations.  Those tolling agreements were signed by the defense.  Then, they claim a statute of limitations defense because the SEC didn’t attach the agreements to the Complaint.  The SEC’s response is dead on:

While the defendants are certainly correct that the SEC did not allege the existence of the tolling agreements, this was on the assumption that defense counsel would make only good faith arguments in their motion to dismiss.  That assumption proved inaccurate, and, thus, if the Court deems it necessary, the SEC requests leave to amend the Complaint to add that allegation….

That was in the original opposition brief.  In Jackson’s reply brief, the defense doubles down on failure.

As a preliminary matter, the tolling agreements cannot be considered on this motion because the SEC chose not to allege them in the Complaint.  The omission cannot be cured by attaching the documents to the SEC’s response brief.  (citations omitted)

If it were me…denied.

Seriously?  While the defendants admit the existence of tolling agreements, they do so in a footnote, and say “nyah, nyah, you didn’t attach the tolling agreements to the complaint.”

I’m with the SEC on this one, fully.  Here’s the way this works: if you sign tolling agreements, your statute of limitations argument only works if the acts were 5 years ago plus the time you agreed to toll.

I don’t know whether there is sufficient evidence in the complaint, but neither of these two arguments makes me sympathetic to Jackson or Ruehlen.

What I Read

6 Jun

Everyone needs to keep up with the times. I attended a panel at Compliance Week where the former Chief Compliance Officer of Walgreens listed “pace of change” as one of the primary stressors of CCOs.

This is especially true in the FCPA field, where new cases come out and new investigations are announced on a weekly, if not daily, basis.

I’ve been complimented more than once for knowing a lot about the enforcement record, but just yesterday, having coffee with Tom Fox and Mike Koehler, they were talking about cases: I was nodding and smiling and making “oh, yes” sounds, but I have to admit I had no idea what those cases were about. Team, Inc.? Thanks, Tom, for popping the cork on my ego.

I’ve also found that since Walmart hit the news in such a big way, there’s a remarkable amount of uninformed commentary out there. People who—as Alexandra Wrage once said—feel they can comment on FCPA because they know how to spell it.

I saw two people talking about FCPA on the news after that other FCPA expert, Donald Trump, made his well-informed comments, and they were saying with a straight face how the DOJ was “out to get” Walmart. Like Chuck Duross has on his calendar for last Thursday:

9am: Meeting with Company X about their disclosure
10am: meeting with Lanny
11am: get Walmart

You can’t fix stupid.

So it’s more important than ever that people get their FCPA news from reliable sources.

I’m going to make it easy for you. Here’s a list. All these people are, in my newly humbled opinion, absolutely worth listening to.

One caveat: there are people not on the list who I’m sure are worth reading. Please feel free to add your own list in the comments.

These are in no particular order:

Law Firm Memos:

Shearman & Sterling. Their FCPA Digest is the Bible of FCPA yearly reports. You can get it at fcpa.shearman.com, a must-see destination for anyone interested in FCPA. Personally, I can’t digest the Digest (it’s several hundred pages long), so my recommendation is just to download and read the executive summary. It’s about 25 or so pages, and it covers trends and ideas. Probably the best overall law firm FCPA publication out there. And it’s free. Let me take this opportunity once again to thank Dan and the team at S&S for their hard work and willingness to share.

Chadbourne & Parke: not your ordinary FCPA quarterly digest, Scott Peeler puts out a thoughtful piece every quarter focusing not on the normal “here are this quarter’s cases,” but reflecting a deeper analysis of one or two issues that impact us in a real way. Plus, he’s one of the few lawyers, and Chadbourne one of the few firms, that doesn’t see compliance as a loss-leader to the investigation work.

Dorsey & Whitney: more on the “here are the cases” side of the house, but monthly. I also find that they bring in more of the international cases that I tend to ignore, but shouldn’t. It’s my go-to whenever I want to know about what enforcement is looking like outside the US.

Videos:

If I may be so bold as to self-link (but only because Tom is on there), This Week in FCPA is the only weekly video out there. We try to relate how current events impact compliance in a programmatic way. Plus, we get to rant whenever we want.

Tom Fox has started a video section at JD Supra that’s worth watching.

And even more egotistically, I’ve started FCPA TV, a YouTube channel with short videos.

Blogs:

Tom Fox: my This Week in FCPA co-host. One thing about Tom, he posts every day. Buy his book to catch up, and then start reading.

FCPA Blog: The G-dfather of FCPA blogs, Dick Cassin (and now plus his team), covers a ton of stuff.

FCPA Professor: I disagree with just about everything Mike Koehler writes, but he’s incredibly well-informed. We tend to look at the same facts and draw different conclusions, but he knows more about the history of the FCPA than just about anyone. Plus, he’s my go-to person when I want to look at the underlying documents. He seems to have copies posted before anyone else.

Mike Volkov: Just moved over to LeClair Ryan. He’s got a tremendous amount of experience, and he’s really smart. He’s taking his new-found blogging freedom out for a spin (if you haven’t read his John Edwards piece, it’s a wonder), so go on over and be amazed. For me, he’s the anti-Koehler. I find myself agreeing with about 99% of what he says (except maybe the Edwards thing).

Matt Ellis: a newcomer to FCPA blogging (relatively speaking) who stormed into the space and is making his mark. He’s engaging, he has a great “voice” and his experience—especially in Latin America (but certainly not limited to it)—is incredible.

Francine McKenna: as accounting issues are right in the FCPA wheelhouse, spend some time reading Re: The Auditors, Francine’s blog. Francine is an amazing writer, and someone who, on a daily basis, tells truth to power. I don’t just read her blog, I admire it. And her.

Corruption Currents: Sam does a great job rounding up people worth reading and facts worth knowing. It’s no coincidence that a lot of the people above are regularly linked by Sam.

That’s it for now. I’ll supplement as people tell me, “how could you have skipped ______?!”

Remember the Context

4 Jun

I’m at Compliance Week. You seriously wish you were too. It’s a fantastic conference.

I was talking to a government official—one who deals with FCPA—who shall remain unnamed*, talking about gift-giving scenarios and why they were problematic, and how to handle them. Such as: situations where you’d be giving a benefit to the children of a government official. I said that it was tough to approve.

The unnamed government official said something very interesting, that I thought it was worth it to pass along. We were discussing the difference between “influencing” a government official and corruptly influencing that official.

He said, in essence: don’t forget that we look at these things in context. Is your gift-giving policy a real one? Is it enforced within the company? Did this go through your process? Did you document—once again, Tom Fox is right—your approval process?

Plus, is your overall program a real one? Have you operationalized a policy? Or do you have a paper program?

Every issue is viewed in the context of your overall program, and how seriously you take your anti-corruption responsibilities.

Good to know.

*I often hear, “who shall remain nameless.” This is wrong. That is, if the person you don’t identify was given a name at birth, it’s wrong. “Nameless” means that the person doesn’t have a name. “Unnamed” means you’re not going to identify the person. Absent a very strange circumstance, it’s always more correct to say “who shall remain unnamed.” Sorry, the grammar geek in me is coming out.

Thank You For Your Service

25 May

For those New Yorkers who were here in the weeks following 9/11, one memory sticks out: whenever a fire truck passed, people on the street would stop and clap.  The NYFD laid their lives on the line—many gave their lives—to help people stuck in the Towers.  Each and every member deserved that applause.

I was reminded of that flying into Atlanta not too long ago.  When I walked through the terminal, there was a group that, whenever there was a solider in uniform, would clap.  It was uplifting to see.

And a little shaming.

Why don’t we remember more often that there’s a group of people who, for little pay and virtually no recognition, daily put their lives on the line for us?  I’m ashamed to admit that when I see a soldier in uniform—including last night, there was an Army major on my plane—I often have the urge to thank them, or clap.  I don’t.  Last night was especially shaming because the guy sitting next to me said “thanks for your service.”

How difficult is that? “Thanks for your service.”

We can’t—I can’t—take for granted the sacrifice our soldiers, sailors, and Marines make on a regular basis.  Because they are out there risking their lives, we’re free to live ours here.

So thank you.  For all the times I’ve neglected to say it, thank you.  For all that you do, thank you.  For keeping me and my family safe, thank you.

The Compliance Defense Isn’t Dead…But It Should Be

8 May

It’s not often that I find myself disagreeing with two of the FCPA commentators I most respect, Tom Fox and Mike Volkov.  It’s even rarer that I find myself disagreeing with Tom and Mike, and agreeing with another commentator who I respect immensely, but disagree with almost always, The FCPA Professor, Mike Koehler.

Tom and Mike Volkov say that the FCPA reform effort is dead.  Koehler says it might just be sleeping.  Koehler is right.  It’s not exactly advanced political analysis to say that what politicians say before November and do after November aren’t always aligned.  In Washington, calling something dead doesn’t mean it’s gone.

But take one example—something I’ve written about more than once—the compliance defense.  I don’t know if it is dead or not, but it should be.

You can pick your reasons.  I agree with Volkov that it will never be used.

But here’s one more reason: how do you write it?

The thing about effective compliance is this, there’s no blueprint.  And there’s a reason for that: effective compliance is less about what procedures or policies you have in place, and much more about how seriously you take those policies and procedures.  And how do you legislate that?

You can have two companies with the same policies, the same processes.  One company has an effective compliance program, and one doesn’t.  Because one company believes in compliance, and one doesn’t.  How do you structure a compliance defense that rewards the former but not the latter?

Let’s not hide the ball: it’s impossible.

You can’t legislate “take it seriously.”

And that’s the fatal flaw in the compliance defense: by its very nature, it would be a list of requirements, none of which captures the only thing which truly differentiates between companies that should be liable and those which deserve leniency.  And by focusing on the appearance of a program rather than the strength of commitment to the program, it would—despite Professor Koehler’s protestations—give credit for paper programs.  Because a program can appear strong without being truly strong.

Please, don’t make me write about this again.

Upcoming Speaking Engagements

4 May

Women in eDiscovery, Philadelpha, May 9th
ABA National Institute on Internal Investigations, San Francisco, May 16th
Compliance Week, Washington, DC, June 4th
Sedona Conference on Cross-Border Discovery & Data Privacy, Toronto, June 20-21 (Attending)
AML & Anti-Corruption Roadshow, San Francisco, Houston, NYC, June 25, 26, 28

Completely Off Topic: I Hate My iPhone

21 Feb

Let me take a short break from anti-corruption and eDiscovery and just tell you that I hate my iPhone 4S.

This should bother Apple.

I am the guy who is so in love with his iPad that I actively promote its use among my friends and colleagues. I brag about its functionality. I relate how I don’t lug along my laptop anymore: I just pop my iPad and a bluetooth keyboard into my briefcase and off I go. I show off my favorite Apps, and obsess—I don’t think that’s too strong a word—whenever I see another iPad, wondering if that person has better apps than me. (Purely from a can-I-use-my-iPad-better perspective, not competitively or anything). I’m being totally open and honest with you here.  Ask me a question, even a small, quick question, about the iPad, and you should expect a 30-minute presentation on why you should buy one.

So Apple really doesn’t want someone like me—’cause who doesn’t like the best kind of free advertising—in my car looking at an Apple flagship product and saying “what a piece of crap!”

My iPhone 4S user experience is so bad I almost ordered myself a Samsung Galaxy Nexus on Verizon. Seriously, I went all the way through sign up (on AmazonWireless…great deal at $99 for a $299 phone) and backed out right before hitting “buy.”  The only reason—the only reason—I backed away from the ledge was because I didn’t want to have to explain another electronics purchase to my wife.

Let me list just four issues I’m having with my iPhone 4S:

  1. Siri is useless.  I think Siri is neat, don’t get me wrong.  But until Siri works with my 1-year-old yelling 4 inches away, and the TV on, and my kids in the background, it might as well not work at all.  Because let me tell you, unless there’s absolute silence in the room when I talk, all I get is, “I didn’t understand you.”  Real life has background noise, Apple.
  2. The music player doesn’t play music.  My iPod function on my iPhone doesn’t work.  It plays one or two songs, and then stops.  I can’t get it to play anything once that happens.  I basically have to restart the phone.  This is just great when I’m, say, on a run.  Not entirely conducive to movement, when you have to stop, pull out the phone, figure out why it’s not playing, and then restart.  Every other song.
  3. A neat computer, a crappy phone.  I remember once I was extolling the functions of my new watch to my sister.  “It can do this…it can do that, etc.”  I asked her what her watch did and she said, snidely, “it tells time.”  Well, the iPhone is a crappy phone.  As reported recently, there are about 100 pages in the support community about how you talk, and the person can’t hear you.  This happens to me every other call.  The speaker comes on even though I have headphones plugged in.  The person answers, and I say “hello?”  And, nothing.  They can’t hear me.  If it happened with my buddy, that’s fine.  But when it happens when I’m calling a heavy-hitter law firm partner, it makes me look bad.
  4. Battery life.  I used to parrot a Steve Jobs’ master response to battery life complaints.  He said that an earlier iPhone drained quickly because there was so much cool stuff on the iPhone, you simply used it a lot.  When you use a phone more, the battery drains faster.  That’s what I thought when I started hearing these battery life complaints.  But no, that’s not it.  I can basically see my battery percentage drop as I look at my phone.  I’ve tried redoing contacts, undoing location services, changing the time zone setting.  Nothing works.  Including the battery.

Apple, please, please fix this.  I want so much to love every product you make.  I bought the original iPhone, and the iPhone 3, and the iPhone 4, and the 4S; and yes, I’m probably going to buy the iPhone 5 (the other reason I didn’t buy Android was I figured, they’re going to come out with the 5 sooner or later, why not wait?  This, despite the sure and certain knowledge that AT&T isn’t going to let me upgrade to the 5 so soon after upgrading to the 4S).

‘Cause, Apple, if you lose me, you lose your perfect customer.

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