Source: http://www.fcpablog.com/blog/tag/bae-systems?currentPage=15
Timestamp: 2017-02-25 09:12:12
Document Index: 179159747

Matched Legal Cases: ['§ 78', '§ 78', '§ 78', '§ 78', '§ 78', '§1018', '§1018', '§ 78']

(101) MondayFeb042008
Jurisdiction Untangled By Richard L. Cassin | Monday, February 4, 2008 at 8:08PM So much of the buzz about the Foreign Corrupt Practices Act right now concerns investigations of name-brand foreign companies -- Siemens, BAE and Panalpina among them. Which makes it natural to ask, how do foreign companies come under the jurisdiction of the FCPA? The best explanation, we still think, comes from the United States Attorneys' Manual. We've posted the following language before, but it's worth repeating. The lesson here is that the jurisdictional trip wires are everywhere, and foreign companies with global businesses are likely to have a tough time slipping the grip of the FCPA. Here's how the Department of Justice instructs its prosecutors to look at it:Under the FCPA, U.S. jurisdiction over corrupt payments to foreign officials depends upon whether the violator is an "issuer," a "domestic concern," or a foreign national or business. An "issuer" is a corporation that has issued securities that have been registered in the United States or who is required to file periodic reports with the SEC. See 15 U.S.C. §§ 78c(a)(8), 78dd-1(a). A "domestic concern" is any individual who is a citizen, national, or resident of the United States, or any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship which has its principal place of business in the United States, or which is organized under the laws of a State of the United States, or a territory, possession, or commonwealth of the United States. See § 78dd-2(h)(1).Issuers and domestic concerns may be held liable under the FCPA under either territorial or nationality jurisdiction principles. For acts taken within the territory of the United States, issuers and domestic concerns are liable if they take an act in furtherance of a corrupt payment to a foreign official using the U.S. mails or other means or instrumentalities of interstate commerce. See §§ 78dd-1(a), 78dd-2(a). For acts taken outside the United States, U.S. issuers and domestic concerns are liable if they take any act in furtherance of a corrupt payment, even if the offer, promise, or payment is accomplished without any conduct within U.S. territory. See §§ 78dd-1(g), 78dd-2(i). In addition, U.S. parent corporations may be held liable for the acts of their foreign subsidiaries where they authorized, directed, or controlled the activity in question, as can U.S. citizens or residents, themselves "domestic concerns," who were employed by or acting on behalf of such foreign-incorporated subsidiaries.Prior to 1998, foreign companies, with the exception of those who qualified as "issuers," and most foreign nationals were not covered by the FCPA. The 1998 amendments expanded the FCPA to assert territorial jurisdiction over foreign companies and nationals. A foreign company or person is now subject to the FCPA if it takes any act in furtherance of the corrupt payment while within the territory of the United States. There is, however, no requirement that such act make use of the U.S. mails or other means or instrumentalities of interstate commerce. See § 78dd-3(a), (f)(1). Although this section has not yet been interpreted by any court, the Department interprets it as conferring jurisdiction whenever a foreign company or national causes an act to be done within the territory of the United States by any person acting as that company's or national's agent.(emphasis in original)From the United States Attorneys' Manual, Title 9, Criminal Resource Manual §1018 “Prohibited Foreign Corrupt Practices” (November 2000).View CRM §1018 Here.
Post a Comment | Email Article | Permalink Print Article tagged BAE Systems, Foreign Companies, Jurisdiction, Panalpina, Siemens | SundayDec092007
Enforcement Sans Frontières By Richard L. Cassin | Sunday, December 9, 2007 at 7:28PM By most counts, U.S. authorities are now investigating between 50 and 60 companies for possible violations of the Foreign Corrupt Practices Act. That's a record number. How many of them will face enforcement actions is anyone's guess. But three investigations worth watching have this in common: the targets are industry-leading multinationals headquartered outside the United States. The U.S. government hasn't said much about the cases, but the message seems clear: if other countries won't police their corporate citizens, American authorities will do it for them -- at least when it comes to international public corruption.Panalpina (Switzerland) -- In February 2007, the Department of Justice said in connection with the Vetco case that bribes in Nigeria "were paid through a major international freight forwarding and customs clearance company to employees of the Nigerian Customs Service . . .” Since then, about a dozen leading oil and gas services companies have announced FCPA investigations resulting from their relationship with logistics leader Panalpina. By mid year, the DOJ and the Securities and Exchange Commission had extended the investigation into Panalpina's activities in Nigeria, Kazakhstan and Saudi Arabia, and had sent letters to its customers, “asking them to detail their relationship with Panalpina . . . ." Schlumberger, Tidewater, Nabors Industries, Transocean, GlobalSantaFe Corp., Noble Corp. and Global Industries are among those involved. In September, Panalpina said it is cooperating with U.S. prosecutors and exiting the Nigeria logistics and freight forwarding market for all oil and gas services customers. With crude prices near triple digits, can the U.S. government afford to cripple output anywhere in the name of FCPA enforcement? Probably not. But the DOJ may have made special arrangements directly with the Nigerian government for customs clearance and permitting on behalf of the oil services companies. That will allow them to keep working but still comply with the FCPA. Meanwhile, the investigation of Panalpina continues. Prior posts about Panalpina are here.Siemens (Germany) -- In early October 2007, the German engineering and industrial giant settled global corruption charges with Munich prosecutors. Siemens paid a fine of €201 million and at the time admitted to questionable payments around the globe of approximately €420 million. But the settlement didn't resolve the FCPA investigation by U.S. authorities, and Siemens later disclosed that its internal review, run by a U.S. law firm, has identified questionable payments of up to €1.3 billion. The company is also facing possible charges of public corruption in Italy, China, Hungary, Indonesia and Norway. When Siemens finally reaches a deal with U.S. prosecutors, it will likely pay the highest penalties ever for FCPA offenses. The current record of $44.1 million is held by Baker Hughes. Prior posts about Siemens are here.BAE Systems (United Kingdom) -- The defense contractor is accused of paying £1 billion to Prince Bandar (who allegedly passed money to other officials) in return for help selling Typhoon jet fighters to the Saudi government. The Serious Fraud Office started an investigation but Prime Minister Tony Blair shut it down last year, citing national security. That darkened the OECD's tenth anniversary celebration of its Anti-Corruption Treaty, to which the United Kingdom is a signatory. Meanwhile, the U.S. Department of Justice picked up the investigation and started gathering evidence about possible FCPA violations directly from British witnesses. The U.K. government has already complained about U.S. investigative tactics. And Prince Bandar has lawyered up big time -- retaining Freeh Group International, whose partners include former FBI director Louis Freeh, former head of enforcement at the SEC Stanley Sporkin, and a retired British high court judge, Sir Stephen Mitchell. Prior posts about BAE are here.
Post a Comment | Email Article | Permalink Print Article tagged BAE Systems, Foreign Companies, Panalpina, Serious Fraud Office, Siemens | SundayDec022007
The Empty Chair By Richard L. Cassin | Sunday, December 2, 2007 at 6:38PM It's official. Britain's absence from the global war on public corruption is now a full-fledged scandal. Nearly ten years after the U.K. ratified the Anti-Bribery Convention of the Organisation for Economic Co-operation and Development (OECD), there hasn't been a single British prosecution. And as England shirks, its friends are both baffled and alarmed.The only investigation of overseas graft launched by the Serious Fraud Office involved BAE's alleged billion-pound bribe to Saudi royals. But Prime Minister Tony Blair quashed the inquiry last year, spooking the international community. As the Wall Street Journal said, "The OECD, which isn't prone to naming and shaming uncooperative member states took the unusual step of voicing 'serious concerns.' But that didn't move Mr. Blair, who warned the probe could harm relations with Saudi Arabia." The New York Times reported that during the OECD's recent tenth anniversary celebration of the Anti-Bribery Convention in Rome, its head, Angel Gurria, said "national security concerns — the reason Mr. Blair gave for terminating the BAE investigation in Britain — 'should not be used' as a reason for quashing bribery investigations. He also voiced concern that anti-corruption efforts were in danger of weakening. "Meanwhile, the U.S. Department of Justice is finding creative ways to work around recalcitrant U.K. prosecutors. The Americans have opened their own investigation of BAE, collecting evidence by flying at least one British witness to Washington, routing him through Paris to avoid attention. When that maneuver came to light, how did Whitehall react? It protested to U.S. authorities and warned the witness to mind his manners.What's behind Britain's bizarre behavior? We remember the Middle East in the 1980s, where the partnership between the British Foreign Office and big U.K. companies was unspoken but evident. To the envy of Americans and others, Her Majesty's Government went door-to-door with British salesmen, helping them hawk their goods and services to the region's oil-rich regimes. We thought the arrangement was a useful remnant from the days of the East India Company and the Raj. But was it less benign than we assumed?The question has to be asked: Does the U.K. government fight overseas bribery or promote it? The answer is crucial. After all, if Britain is thumbing its nose from the sidelines, why should new recruits like South Korea and Germany stick around for the battle? What moral authority will the OECD have to lecture Nigeria or Kazakhstan about the importance of the rule of law? Why should Australia, France or China worry what their citizens do abroad, if the British government is already doing worse? And what about that level playing field American business people -- who are bound by the U.S. Foreign Corrupt Practices Act -- were promised decades ago?In April 2005, the smart folks at the White Collar Crime Prof Blog reported the OECD's unusual criticism of the U.K.: "[The OECD's progress] report notes that 'given the size of the UK economy and its level of exports and outward FDI, along with its involvement in international business transactions in sectors and countries that are at high risk for corruption, it is surprising that no company or individual has been indicted or tried for the offence of bribing a foreign public official since the ratification of the Convention by the UK.'" [emphasis added]Nothing has changed since those words were written. So today we're also asking: Where is Britain in the global battle against public corruption?View the November 21, 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions Here. View (by subscription) the November 28, 2007 Wall Street Journal Article Here.View the November 25, 2007 New York Times Article Here. View the April 4, 2005 White Collar Crime Prof Blog Post Here. View the March 17, 2005 OECD Country Report on the U.K. Here. Post a Comment | Email Article | Permalink Print Article tagged BAE Systems, Britain, OECD, United Kingdom | MondayNov262007
Will The Local Law Defense Help BAE? By Richard L. Cassin | Monday, November 26, 2007 at 9:08PM BAE Systems is being investigated by the U.S. Department of Justice for possible violations of the Foreign Corrupt Practices Act. It allegedly paid £1 billion to Saudi Prince Bandar in return for his helping BAE sell 72 Typhoon jet fighters to Saudi Arabia. Prince Bandar may have moved a lot of the money through U.S. bank accounts and -- with BAE's knowledge -- to other members of the Saudi royal family. Those relatives -- along with the prince himself -- presumably are "foreign officials" for purposes of the FCPA. That could make the payments illegal. So if BAE is prosecuted, what defenses can it raise?One might be the rarely-spotted local law defense. The FCPA allows otherwise prohibited payments if the "payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the foreign official’s" country. 15 U.S.C. §§ 78dd-1(c)(1), 78dd-2(c)(1) and 78dd-3(c)(1). This affirmative defense -- one of only two -- was added to the FCPA in 1988. But it only works if the payment is legal under the written laws of the country in question -- a hurdle that has rendered the defense practically useless except in industry-specific scenarios, such as drug trials paid for by foreign pharmaceuticals but managed by government-employed doctors.The Notes to the 1988 House and Senate Conference Agreement say in relation to the local law defense: "The House receded to the Senate, with an amendment to make it an affirmative defense that a payment to a foreign official is 'lawful under the written laws and regulations of the foreign official's country.' [emphasis in original] The Conferees wish to make clear that the absence of written laws in a foreign official's country would not by itself be sufficient to satisfy this defense. In interpreting what is 'lawful under the written laws and regulations,' the Conferees intend that the normal rules of legal construction would apply."We doubt there are any laws or regulations now on the books in Saudi Arabia that would expressly permit members of the royal family to earn a commission on arms sales to the government. But would the King issue a decree -- the country is a true monarchy, after all -- that retroactively authorizes and approves the BAE payments? We don't know the answer. But the question is sure to raise issues for Saudi Arabia and its royal family that are well above our pay grade. Meanwhile, we imagine BAE is giving this some serious attention as it plots its potential defense strategy.View the Notes to the 1988 House and Senate Conference Agreement Here.
Post a Comment | Email Article | Permalink Print Article tagged Affrmative Defense, BAE Systems, Foreign Official, Saudi Arabia | SundayNov252007
The U.S. Is Gathering Evidence Against BAE By Richard L. Cassin | Sunday, November 25, 2007 at 9:58PM The U.K. and Saudi governments deny that any laws -- including the U.S. Foreign Corrupt Practices Act -- were broken. But questions persist about the £1 billion payment earlier this year by U.K. defense giant BAE Systems to Prince Bandar, the former Saudi ambassador to the U.S., for brokering his country's purchase of 72 Typhoon jet fighters.The November 26, 2007 online edition of the Guardian newspaper now says the U.S. Department of Justice obtained documents from Swiss banking sources and more evidence from a U.K. businessman who was part of the deal. "According to US sources," the Guardian says, "businessman Peter Gardiner, who possesses boxes of invoices allegedly detailing payments made by BAE to members of the Saudi royal family, was flown by FBI agents to Washington on August 20 to give testimony there. It was arranged for him to travel via Paris to avoid British attention. Department of [J]ustice investigators are also seeking out the location of other potential witnesses from the UK. When Washington's moves came to light, US sources say that protests were made by the British, and Gardiner was warned his testimony was 'contrary to international protocols'. Gardiner refuses to comment."The Guardian and other sources also report that Prince Bandar has retained Louis Freeh, a former head of the FBI, to represent him. “There have been no charges filed,” Freeh said in an interview with a U.S. newspaper. “The prince denies any impropriety and violating any statutes in the United Kingdom or the United States.” Some of the payments being investigated reportedly involve deposits to U.S. bank accounts controlled by Prince Bandar directly or through the Saudi embassy.BAE Systems describes itself on its website as "the premier global defence and aerospace company . . . . With 96,000 employees worldwide, BAE Systems' sales exceeded £15 billion (US $27 billion) in 2006." It says it's the 3rd largest global defense company and that its U.S. operations make it the 6th largest defense company in the United States.If BAE or Prince Bandar or both are charged or threatened to be charged with violating the FCPA, will they assert as an affirmative defense that "the payment . . . that was made, was lawful under the written laws and regulations" of Saudi Arabia? If they can prove that, then they're off the hook. View the Guardian's November 26, 2007 Story Here.
Post a Comment | Email Article | Permalink Print Article tagged Affrmative Defense, BAE Systems, Foreign Companies, Foreign Nationals, Saudi Arabia | Page