22 Jan 2010 in Legal Perspective
The Justice Department announced its largest bust under the Foreign Corrupt Practices Act ever on January 20th, arresting 22 people on charges of trying to pay bribes to a foreign official to secure contracts for weapons sales. The foreign official in this case was actually an undercover FBI agent. This signals a new commitment by the Justice Department to conduct large FCPA investigations (this case alone stretched from Las Vegas to London and involved 150 or more investigative agents) with sophisticated tools and strategies.
This FCPA case is against 22 executives and employees of companies in the defense/national security and law enforcement products industry. Following an unprecedented undercover operation, these individuals were all indicted for engaging in schemes to bribe foreign government officials to obtain and retain business. The Wall Street Journal reports that prosecutors were able to use a Las Vegas trade gathering of arms-industry executives (the “Shooting, Hunting, Outdoor Trade Show and Conference”) as an opportunity to arrest 21 of the 22 defendants.
DOJ emphasized that the case represents the largest single investigation and prosecution against individuals in the history of DOJ’s enforcement of the FCPA. The investigation involved approximately 150 FBI agents executing 14 search warrants in nearly a dozen locations in the U.S., as well as seven search warrants in the U.K. Assistant Attorney General Lanny A. Breuer said the case was “the first large-scale use of undercover law enforcement techniques to uncover FCPA violations and the largest action ever undertaken by the Justice Department against individuals for FCPA violations.”
Specifically, 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, however, the scheme was part of the undercover operation, with no actual involvement from any minister of defense. The DOJ said that 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.
Each of the indictments allege that the defendants conspired to violate the FCPA, conspired to engage in money laundering, and engaged in substantive violations of the FCPA. The indictments also seek criminal forfeiture of the defendants’ ill gotten gains.
Hank Bond Walther, Assistant Chief of the Criminal Division’s Fraud Section, is leading the prosecution
