The implications are mind-boggling [Houston Chronicle/Connecticut Post via NACDL via Americans for Forfeiture Reform, earlier] On paper, NSA is supposed to turn over spy-collected data only if evidence of serious unrelated crime turns up while investigating terrorist threats or other specified matters. However, as Reuters shows in an important new investigation, in drug investigations (and probably other types as well) “law enforcement agents have been directed to conceal how such investigations truly begin — not only from defense lawyers but also sometimes from prosecutors and judges” Thus the common little white lie about how such-and-such was discovered “during a routine traffic stop,” when in fact the traffic stop was intended to intercept something or someone known by previous investigation to be aboard the vehicle. With the origins of investigation routinely “phonied up” in this way, however, it becomes virtually impossible to know how many handoffs of spy information fall into gray areas beyond the clear intent of the authorizing law. [Julian Sanchez, Cato] Our coverage of the Foreign Corrupt Practices Act is here; earlier on surveillance here.
At remedying the culture of bribery that afflicts so much of government in Mexico and other countries, the U.S.’s Foreign Corrupt Practices Act has been an utter and rather absurd failure. But the law has succeeded in its most important objective: making us feel good about ourselves [Steve Chapman, syndicated/Chicago Tribune]
- Notwithstanding the tone of much coverage, companies are not legally required to disclose past FCPA violations to the government when they emerge: “It’s my understanding from in-house counsel that those who [voluntarily] disclose are in the distinct minority,” says one observer. Also, Prof. Koehler notes that even if Wal-Mart successfully defends the Mexican outlays as lawful “facilitating payments,” the company could still be accused of violating FCPA’s “books and records” and internal control provisions as well as Sarbanes-Oxley. [Sue Reisinger, Corporate Counsel]
- Coyote recalls the eyes-averted maneuvers with which his former employer put itself in a posture of formal FCPA compliance when operating in corrupt countries;
- Must-read Scott Greenfield post: “The Foreign Corrupt Practices Act is the corporate version of blue laws, a reflection of American idealism born of our Puritanical origins, our Pollyanna-ish denial of how the sausage of business is made, our jingoistic belief that we are so integral to the economic functioning of the world that we can dictate a cultural and moral code for everyone, and they can either comply with our great American will or suck eggs. It’s a fantasy of self-righteousness, and even Wal-Mart got caught in the reality that the business of business is business, and not puffy-chested Americans can bully Mexicans into succumbing to our moralistic ways.” Also suggests what Wal-Mart might say in response (at least if Wal-Mart were a character in an Ayn Rand novel) and notes “efforts to take this mutt of a law and attempt to reform it, at least to the extent that it not make American multinational corporations chose between being criminals or uncompetitive.”
- Speaking of which, some reforms sought by business: “Bringing Transparency to the Foreign Corrupt Practices Act” [Michael Mukasey and James Dunlop, Federalist Society “Engage”]
- Jeffrey Miron: prosecute Wal-Mart but repeal FCPA [CNN/Cato]
- While agreeing that the FCPA we have at present is pretty bad, Prof. Bainbridge thinks a case can be made for such a law in principle;
- Something to get Capitol Hill Democrats on board for reform? FCPA might menace Hollywood on China dealings [WSJ “Corruption Currents”]
Wal-Mart’s expansion into Mexico, one of the great American business success stories of recent years, may also have led the giant retailer into extensive violations of the Foreign Corrupt Practices Act — in particular, if a New York Times investigation is to be believed, through efforts by U.S. management to sweep under the rug strong evidence that rogue management in Mexico had paid millions of dollars in bribes to facilitate the chain’s expansion. [NYT, AW, Business Insider] Last fall I described the law as “a feel-good piece of overcriminalization” that Congress should never have passed; more on FCPA here.
The financial press has been speculating that the police-payoff scandal that has engulfed some of Rupert Murdoch’s British properties will provide fodder for a U.S. prosecution under the Foreign Corrupt Practices Act. Alison Frankel, Reuters: “In an age of limited resources, I’m not convinced that our government should be bending and twisting the FCPA to make a case against News Corp, however sexy and high-profile that case would be. Remember, just about every FCPA case we’ve seen in the recent flurry of prosecutions has involved alleged bribes of officials in countries with inadequate anti-corruption enforcement systems.” More: Bainbridge.
Defenders of the government’s aggressive prosecutions under the Foreign Corrupt Practices Act are finding more and more to be defensive about. The latest in the string of setbacks for the Department of Justice came Monday, when a jury acquitted two defendants in the Justice Department’s 2009 Gabon “sting” operation and the case against three others ended in a mistrial. Alison Frankel: “So far, the Justice Department has not managed to convict a single Gabon sting defendant who contested its charges.” [WaPo, WSJ blog and related, earlier]
More: “A Guest Post From The Africa Sting Jury Foreman” [FCPA Professor]
For the third time in weeks, a federal judge has thrown out in whole or part a prosecution under the Foreign Corrupt Practices Act (FCPA), this year’s booming subject of white-collar law enforcement. What’s more, judges in more than one of the cases have criticized the tactics of the U.S. Department of Justice in truly scathing terms, just as they have criticized DoJ tactics in environmental and other white-collar prosecutions over the past year. Isn’t it time — I ask at Cato at Liberty — for Congress to investigate? [earlier; related, Nathan Vardi/Forbes] (& welcome Instapundit, Damon Root/Reason, Memeorandum, Samuel Rubinfeld/WSJ “Corruption Currents”, Radley Balko readers).
I’ve got a new post at Cato at Liberty summarizing the case for rolling back, not just clarifying, the vague yet draconian Foreign Corrupt Practices Act (& Point of Law, @RameshPonnuru). More: FCPA Professor. Related: Open Society Foundation publishes lawprofs’ defense of FCPA. How convincing is it? [FCPA Prof]
More from Scott Greenfield, including some comments on the FCPA-entrenching tendency of the DoJ-white collar bar partnership, and this from commenter “Libertarian Advocate”: “Seen through a different prism, the FCPA is a loud and unambiguous statement by the federal government that it reserves unto itself the exclusive right to corrupt foreign entities and officials.” And FCPA Professor isn’t on board with our criticism. Further: PoL on specific reform proposals.
Deferred prosecution agreements and their close relatives non-prosecution agreements (DPAs/NPAs) have become a major tool of white-collar prosecution in recent years. Typically, a business defendant in exchange for escape from the costs and perils of trial agrees to some combination of cash payment, non-monetary steps such as a shakeup of its board or manager training, and submission to future oversight by DoJ or other monitors. Not unlike plea bargains in more conventional criminal prosecution, these deals dispense with the high cost of a trial; they also dispense with the need for the government to prove its allegations in the first place. DPAs may also pledge a defendant to future behavior that a court would never have ordered, or conversely fail to include remedies that a court would probably have ordered. And they may be drawn up with the aim of shielding from harm — or, in some other cases, undermining — the interests of third parties, such as customers, employees, or business associates of the targeted defendant, or foreign governments.
So there was a flurry of interest last year when federal district judge Richard Leon in Washington, D.C., declined to approve a waiver, necessary under the Speedy Trial Act, for a DPA settling charges that Fokker Services, a Dutch aerospace company, sold U.S.-origin aircraft systems to foreign governments on the U.S. sanctions list, including Iran, Sudan, and Burma. While acknowledging that under principles of prosecutorial discretion the Department of Justice did not have to charge Fokker at all, Judge Leon said given that it had, the judiciary could appropriately scrutinize whether the penalties were too low.
Now a three-judge panel of the D.C. Circuit has unanimously overruled Judge Leon. It pointed out that under well settled law, charging decisions are entrusted to the DoJ or other executive branch prosecutors, not the judiciary, and that judges may not intervene to insist that additional or more stringent charges be filed – and that is what the pattern in this case amounted to, in the appeals panel’s view.
So far so good, you might think. But the language of the appellate ruling in places might be read to suggest that courts should simply defer to the Justice Department’s judgment and green-light the DPAs it may negotiate, period. And that would be disturbing, since over-lenience is only one of the possible problems with these devices. Noting the rule-of-law concerns that scholars have voiced about DPAs, Michael Greve writes that the new Fokker Services decision “in sharp contrast, oozes with ‘trust your friendly prosecutor’ language” and speaks of dispensing with “seeking a conviction that the prosecution may believe would be difficult to obtain or would have undesirable collateral consequences.” Greve adds: “Inquiring minds might want to know whether the conviction would be ‘difficult to obtain’ for practical reasons — or because the charges are preposterous and brought for reasons bordering on extortion. …No judicial scrutiny means more than boundless prosecutorial discretion. It means mobilizing the courts to create a due process façade for highly suspect bargains.” Let’s hope the ruling isn’t read that way.
[cross-posted from Cato at Liberty]