FCPA Update: Setbacks For The DOJ Unlikely To Decrease Enforcement Activity

Author:Mr George McKann
Profession:Drinker Biddle & Reath LLP

Following the Department of Justice's February 21, 2012, decision to dismiss remaining charges against defendants in the so-called "African sting" case, some commentators quickly hailed the collapse of the prosecutions as marking the end of the department's aggressive Foreign Corrupt Practices Act (FCPA) prosecution of individuals. That prediction is not likely to come true, however, as the targeting of individuals under the FCPA has been a stated priority of the DOJ and is, in part, a result of U.S. Congressional criticism of the department for not charging enough individuals.

In fact, when the Department of Justice (DOJ) brought charges against 22 individuals in the "African sting" case, it was hailed by DOJ officials as the pinnacle of FCPA enforcement actions. The case represented the largest FCPA sting operation in history and came on the heals of a number of investigations that ended with increasingly large sums being paid in settlement.

Not long after the indictments in the African sting case, however, FCPA prosecutors' momentum began to turn in two unrelated cases. In the first FCPA prosecution to go to a jury verdict, the court rejected the guilty verdict on post-trial motions relating to Lindsey Manufacturing Co. and other defendants. The court ruling focused on prosecutorial misconduct and the weakness of the evidence. U.S. v. Aguillar, Case no. 2:10-cr-01031 (C.D.Cal.). In the second case, the court dismissed all FCPA charges against a former ABB Ltd. official, John O'Shea. U.S. v. O'Shea, H-09-cr-429 (S.D.Tx.). After that court dismissal, the DOJ dismissed all remaining charges.

As the African sting indictments proceeded to the first trial, the court dismissed FCPA charges relating to certain defendants and all money laundering charges. After the decision in O'Shea, the second African sting trial proceeded. The court dismissed the FCPA conspiracy charge against all defendants in the second trial after the government rested its case, and the trial ended in the acquittal of two defendants and a hung jury on the substantive FCPA charges against the remaining three defendants. Comments by jurors after the trial indicated that the jury was substantially in favor of acquittal and only a few jurors credited the government's evidence.

The DOJ announced, on February 21, 2012, that it was...

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