Last week’s news that the US Department of Justice had indicted nearly two dozen people for alleged foreign corporate bribery is out of our geographical area, but the case is so big – the largest such case ever brought under the Foreign Corrupt Practices Act (FCPA) – and the investigation so unprecedented – the FBI went undercover for this one – that it may be a good indication of where the US is headed with prosecuting this type of corruption.
The defendants – executives and employees of companies that sell military and police equpment, including Smith & Wesson – were arrested last week in Las Vegas and Miami, and indicted for allegedly bribing people they thought were foreign government officials.
Some details, from the Department of Justice news release:
The indictments allege that the defendants engaged in a scheme to pay bribes to the minister of defense for a country in Africa. In fact, the scheme was part of the undercover operation, with no actual involvement from any minister of defense. As part of the undercover operation, the defendants allegedly agreed to pay a 20 percent "commission" to a sales agent who the defendants believed represented the minister of defense for a country in Africa in order to win a portion of a $15 million deal to outfit the country’s presidential guard. In reality, the "sales agent" was an undercover FBI agent.
Int’l: US Shows Robust Enforcement of FCPA
Published: 27 January 2010
By Beth
A Wall Street Journal blog interpreted the case as “the FCPA goin’ prime time.” An op/ed in Jurist, a site from the University of Pittsburgh’s School of Law, noted that the indictment is just part of the US’s escalation of FCPA enforcement in recent years. Main Justice interviewed a consulting source who pointed out that the bust might make companies who use third-party associates overseas start to scrutinize those associates’ work.
In other news of the US government taking corruption and crime seriously, the head of the agency that advises senior US officials on international crime-fighting last week dubbed corruption, crime and terrorism the “unholy trinity.” David T. Johnson, who leads the Bureau of International Narcotics and Law Enforcement Affairs, said getting rid of the trinity involves international cooperation to fight money laundering and to go after the sources of crime and terrorist money.
Meanwhile, some say that the UK’s company registration rules make a mockery of anyone’s attempts to control money laundering. UK laws make it possible for anonymously controlled companies, registered in secret tax havens, to control companies in the UK, which means that terrorists and other bad guys can move money through the country, wrote University of Essex professor Prem Sikka in The Guardian last week. (The US, or at least a few US states, isn’t much better: The National Law Journal reported earlier this month that businesspeople, state treasurers and the American Bar Association are coming out against a Senate bill that would require US states to gather the names of the people who control a company registered in the state. A few states currently don’t require much information about owners upon registration, something that the Senate bill would change.)
Serbia: Balkan Warrior Continues
An operation last year that led to the seizure of 2.2 tons of cocaine off the coast of Uruguay, the additional seizure of 500 kilos of cocaine in Argentina and the arrests of at least 10 people has led the Serbian authorities to widen the investigation to two more Serbian nationals suspected of international drug trafficking. The special prosecutor for organized crime noted that this is the fifth time the authorities have broadened their investigation. As of last week, police were searching buildings in Belgrade and Novi Sad that the two men own or have used.
Paper: Montenegro Prosecution Wants Djukanovic Statement
Montenegro’s state prosecution has asked the capital Podgorica’s high court to get a statement from Prime Minister Milo Djukanovic regarding the investigations of four murders, reported the daily Dan last week. A former Djukanovic ally had apparently made statements to the prosecution that the prime minister and alleged cigarette smuggler Stanko Subotic had been involved in a total of nine murders. Montenegro’s Supreme Court will decide whether Djukanovic will give a statement. (Djukanovic’s immunity as prime minister saved him from being indicted over 1990s tobacco smuggling, according to one Italian source; it’s unclear how his immunity will affect his ability to give statements to prosecutors in Montenegro.)
News From Farther East
Russian authorities last week arrested a policeman who became known last year as the “YouTube Cop” after he posted a video on the site that alleged widespread corruption in his southern town’s police force. Though Alexei Dymovsky’s video had earlier prompted a top police official to admit that police forces had been turned into criminal businesses, Dymovsky was quickly fired. Last week he was charged with fraud and corruption after police said there was no evidence for any of his claims. If convicted, Dymovsky faces up to six years in prison.
Azerbaijan’s anti-organized crime police arrested several Chinese nationals last week for allegedly running a kidnapping scheme. The case, according to the local press, was a gruesome one: The gang allegedly kidnapped a Chinese woman in Baku, demanded $300,000 in ransom, and sliced off one of her forefingers before the police were able to intervene.
Third Corruption Trial for Berlusconi?
On Friday, a Milan prosecutor wrapped up an investigation into alleged embezzlement and tax fraud that involves Berlusconi, Mediaset and its controlling company Fininvest.
The prosecutor accuses Berlusconi and American TV producer Frank Agrama of acting together to embezzle money from Mediaset, damaging shareholders and evading taxes in the United States and Italy -- charges the prime minister's lawyer has rejected and the company has called "absurd."
It’s up to a judge to rule whether the investigation has come up with enough evidence to charge Berlusconi, who already faces another fraud and false accounting case related to Mediaset, as well as a case alleging that he bribed his former lawyer $600,000 to keep mum during two court cases in the 1990s.
But Berlusconi might not even have to face those trials. The draft of a new “short trials” bill approved by the Senate last week would limit the length of court cases – from initial trial all the way to final appeal – to between six and a half years to 10 years, depending on the severity of the crime. The bill’s backers say it will reform Italy’s notoriously slow court system. Critics say it’s a law that seems to be tailored to keeping Berlusconi out of legal trouble, particularly because the law applies retroactively to ongoing cases.
It is a striking coincidence that Italy’s legislature is choosing this particular moment to move a bill like this through. It’s almost like the last time Berlusconi faced these same two corruption trials – his parliamentary allies coincidentally passed a law giving Berlusconi and other senior Italian leaders immunity from prosecution.
Italy’s Constitutional Court struck that law down last year, paving the way for the trials to resume. But the short trials bill is now before Italy’s lower house, where Berlusconi has a sizeable majority as well. And earlier this month, Berlusconi was reportedly working on a bill to restore immunity from prosecution for all members of parliament.
