On January 18, 2009, 22 people were arrested for alleged FCPA violations as part of a massive sting operation conducted by the Federal Bureau of Investigation (FBI) and the Department of Justice (DOJ), in conjunction with the UK’s City of London Police. These arrests were the product of multiple indictments against individuals alleged to have offered illicit payments to undercover operatives posing as foreign officials.
More than underscoring the DOJ’s ability to aggressively enforce the Foreign Corrupt Practices Act (FCPA), these arrests show that the DOJ can and will take a proactive role in investigating alleged FCPA violations, and that the United States and the United Kingdom are closely coordinating international anti-corruption enforcement efforts.
Sixteen Indictments Returned; Individuals Targeted
In what has been called the largest single investigation against individuals in the history of DOJ’s enforcement of the FCPA, the DOJ has arrested 22 executives and employees of companies in the military and law enforcement products industry. According to the 16 separate indictments, these individuals attempted to pay improper “commissions” to FBI agents posing as representatives of procurement officers for a top minister of an African country. The proposed payments were purportedly in exchange for lucrative contracts to sell military and law enforcement supplies. No actual foreign officials were involved in the investigation.
In connection with the undercover operation, federal agents arrested 21 individuals at a trade gathering of arms-industry executives in Las Vegas. One other individual was arrested in Miami. Fourteen search warrants were executed throughout the United States, and the UK’s City of London Police simultaneously executed seven search warrants in connection with the investigation.
Specifically declining to name any of the corporate entities with which these individuals are affiliated, the DOJ has charged the defendants with conspiring to make corrupt payments to a foreign official, violating the FCPA, conspiring to commit money laundering, and aiding and abetting. The DOJ also seeks forfeiture of all property derived from proceeds traceable to the alleged offenses. In all, 16 separate indictments were returned for the following individuals: Daniel Alvarez and Lee Allen Tolleson, Helmie Ashiblie, Andrew Bigelow, R. Patrick Caldwell and Stephen Gerard Giordanella, Yochanan R. Cohen, Haim Geri, Amaro Goncalves, John Gregory Godsey and Mark Frederick Morales, Saul Mishkin, John M. Mushriqui and Jeana Mushriqui, David R. Painter and Lee M. Wares, Pankesh Patel, Ofer Paz, Jonathan M. Spiller, Israel Weisler and Michael Sacks, and John Benson Wier III.
Click here for full DOJ press release
Three important lessons may be taken from this unprecedented investigation.
First, this investigation was the result of a proactive law enforcement effort involving FBI agents posing as agents of government officials seeking bribes. US law enforcement authorities are likely to continue to use undercover operations, in addition to investigations stemming from voluntary disclosures and other traditional sources of information about potential FCPA violations.
Second, the DOJ has shown that it can and will cooperate with peer international enforcement authorities in investigating FCPA violations. Pursuant to the Organization for Economic Co-operation and Development’s Working Group on Bribery, international enforcement authorities frequently share information about investigations. Simultaneous execution of search warrants demonstrates that at least the United States and the United Kingdom are closely coordinating their efforts to enforce anti-corruption legislation.
Finally, underscoring the strong message sent last year about prosecution of individuals under the FCPA, the DOJ has started 2010 with the clear, unmistakable point that individuals will continue to be primary targets of FCPA prosecutions. Compliance with the FCPA is a matter of personal responsibility for employees and executives as well as companies.
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