On May 22, 2017, the U.S. Commodity Futures Trading Commission (CFTC) approved changes to the Whistleblower Rules articulated in the Commodity Exchange Act (CEA). The recent amendments strengthen anti-retaliation protections for whistleblowers and bring the CFTC’s whistleblower program more in line with that of its sister agency, the Securities Exchange Commission (SEC).
In April the High Court in England approved the Deferred Prosecution Agreement (“DPA”) agreed between the Serious Fraud Office (“SFO”) and Tesco Stores Limited (“TSL”), a wholly owned subsidiary of Tesco PLC (“Tesco”), the UK’s biggest retailer, in connection with the much-publicised accounting scandal in 2014. Whilst the DPA itself has not been published because of reporting restrictions (due to the on-going prosecution of individuals by the SFO in relation to this matter), it was approved by Sir Brian Leveson, the same judge that has so far approved all of four of the SFO’s DPAs.
On April 19, 2017, Law Bulletin hosted its 10th annual Chicago White Collar Crime & Corporate Governance Conference at the Swissotel Chicago. Attorneys from across the legal profession, as well as former U.S. Department of Justice and Securities & Exchange Commission officials, shared insights and perspectives on this year’s topic, “Implications of a Trump Administration.” As a panelist on “The Shifting Anti-Corruption Landscape,” I spoke about my experience with anti-corruption investigations and enforcement actions. The discussion touched on some key points.
On January 13, 2017, the Ministry of Justice of the United Kingdom issued a (“call for evidence,”) seeking comment on potential changes to corporate criminal liability law for economic offences, such as fraud, false accounting and money laundering. Currently, corporate criminal liability in the UK, apart from offences charged under the Bribery Act of 2010, follows the common law “identification doctrine” or “directing mind theory.” Continue Reading UK MOJ Calls for Evidence to Weigh Reform Effort Aimed at Tightening Corporate Criminal Liability
The final weeks of 2016 saw an uptick in activity in the bribery and money laundering investigations surrounding mining rights in the West African country of Guinea.
On December 13, 2016, the U.S. Department of Justice arrested and charged Guinea’s former Minister of Mines and Geology, Mahmoud Thiam, with laundering $8.5 million in bribes he allegedly received from a Chinese conglomerate in exchange for, among other things, near total control of Guinea’s mining sector. Continue Reading Allegations of Corruption Continue to Surround Guinea’s Simandou Mines
Earlier this year, the Organization for Economic Cooperation and Development (the “OECD”) launched its latest round of reviews to monitor the anti-bribery efforts of signatory countries to the OECD’s Anti-Bribery Convention (the “Convention”). The Convention, in force since 1999 and adopted by 41 countries, including all 35 OECD member states, requires signatories to criminalize the bribery of foreign public officials engaged in international business transactions. The OECD monitors each signatory’s implementation and enforcement of the Convention through a peer-review system, administered by the OECD Working Group on Bribery (the “Working Group”).
In previous monitoring rounds, the Working Group had in turn: (1) evaluated the adequacy of each country’s implementing legislation, (2) assessed policy effectiveness, and (3) tracked ongoing enforcement efforts and considered progress against earlier recommendations.
This newest round of successive monitoring (“Phase 4”) continues to focus on efforts to implement and enforce the Convention and the supplemental guidelines for combating bribery that parties to the Convention have since adopted. Additionally, Phase 4 takes a “tailored approach” to “identify the unique challenges and achievements of the evaluated country and to assist the country in addressing challenges in a way that is suitable and feasible within its legal system.” Accordingly, Phase 4 aims to highlight country-specific achievements, including practices that have proved effective in combating foreign bribery, and to flag any issues raised by changes in domestic legislation.
In a December 2016 Wall Street Journal interview, the Working Group’s executive, Patrick Moulette, offered that signatory countries have struggled most with implementing Article 2 of the Convention, which calls for imposing liability against “legal,” and not just natural, persons. “[E]nact[ing] a regime for prosecuting companies,” according to Mr. Moulette, “is very easy to say but it’s much more difficult to design in practice,” especially in civil law countries. As a result, “many countries in the [W]orking [G]roup have struggled to enact a regime for holding companies liable for foreign bribery.” The latest round of monitoring will oversee these challenges.
Each Phase 4 evaluation will proceed through a series of evaluative steps involving input from the evaluated country, at least two peer reviewer countries (also known as “lead examiner countries”), and OECD staff. To ensure fairness as well as sensible historical perspective, “[w]herever possible,” Phase 4 aspires for peer-reviews by countries with similar legal systems to and with previous experience in reviewing the evaluated country.
The process is designed to be collaborative and iterative, with ample opportunity for the evaluated country to set the record straight. During the Phase 4 review, evaluated countries will respond to general and country-specific questionnaires, host on-site visits by examiner countries and OECD staff, and submit comments in response to draft preliminary reports. Phase 4 envisions that the on-site visits will “address concrete cases that have arisen under . . . implementing legislation or any other legislation . . . with regard to the bribery of foreign public officials” and generate confidential discussions to “determine how the foreign bribery offence is being prosecuted, what investigative techniques are being utilised, and what hurdles are being faced by countries in the fight against the bribery of foreign public officials.” The latter may include, for instance, difficulties with “establish[ing] a good system to protect whistleblowers,” a “complex area,” in Mr. Moulette’s estimation.
The Phase 4 capstone is the Working Group’s evaluation report, which will set out “core recommendations” the evaluated country is expected to implement. Each country will then have up to two years to submit a responsive report explaining its implementation efforts. Failure to adequately address the Working Group’s recommendations could lead to additional reporting requirements.
The OECD conducted on-site visits in October in the United Kingdom and in Finland, the first two countries reviewed under Phase 4. The United States is not scheduled for review until 2019. The Phase 4 monitoring guide is available here. And the complete calendar of evaluations is available here.
On December 9, 2016, Assistant Attorney General of the Department of Justice’s (“DOJ”) Criminal Division Leslie R. Caldwell announced that DOJ was seeking applicants for an attorney dedicated to enhancing cooperation with the United Kingdom’s Financial Conduct Authority (“FCA”) and the Serious Fraud Office (“SFO”) in London. This initiative signals DOJ’s continued efforts to fight fraud and economic crime on a global and interconnected scale. Caldwell remarked that international crime and worldwide fraud schemes have become the “new normal,” compared to when she began working at DOJ. Continue Reading DOJ Attorney to be Assigned to Work with FCA and SFO on Fraud
In a speech delivered at The George Washington University Law School, DOJ Criminal Division Chief Leslie Caldwell reported that the one-year pilot program in the Fraud Section’s FCPA Unit (the “FCPA Pilot Program”) has resulted in an increase in companies self-reporting potential FCPA violations. Continue Reading DOJ Criminal Chief Reports the FCPA Pilot Program is Working
The UK’s Serious Fraud Office (“SFO”) Chief David Green has reported a high demand for deferred prosecution agreements (“DPAs”) by companies since the introduction of the DPA law in early 2014. Despite a low number of settlements reached by the SFO thus far, Green reports that both the SFO and courts want to make DPAs work for companies that cooperate and voluntarily self-report misconduct. Continue Reading U.K. Sees High Demand for DPAs by Companies
An investment bank brought a legal malpractice claim against Morrison & Foerster after the law firm failed to inform the bank that Puda Coal, Inc. was a shell company, despite receiving a report detailing that fact. A Judge of the New York Supreme Court, however, dismissed the case because the investment bank received the same report, and, as a sophisticated company, could not absolve itself of its own responsibilities. Continue Reading No malpractice claim against underwriter’s counsel for failing to inform client of information already in the client’s possession