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International Law

: The FCPA Blog

Bourke's Verdict: Only In America

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Nowhere else in the world would Frederic Bourke have been prosecuted on the facts of his case. His crime was to invest in a deal in a far-off country where he knew or should have known that bribes would be paid. Prosecutors said he stuck his head in the sand. He didn't pay any bribes himself and in the end he didn't benefit from them. The bribes didn't work and he and the other investors lost their money. But he stuck his head in the sand and the price for that is up to five years in prison, and another five for lying to the FBI about what went on.

What happened to Bourke is uniquely American. A few other countries have taken small steps toward prosecuting overseas corruption -- Germany, the U.K., Japan. But no country comes close to America's ferocity for punishing bribery abroad.

Bourke's case shows just how far the Justice Department will go. All criminal defendants try to portray themselves as victims. But for Bourke it was true. He was prosecuted for conspiracy but his alleged co-conspirator, Viktor Kozeny, wasn't in the courtroom -- he's a fugitive living in the Bahamas. The State of New York indicted Kozeny years ago for stealing $182 million from his investors, including $8 million from Bourke.

Kozeny, the story goes, stole his money, so Bourke blew the whistle -- complaining first to the president of Azerbaijan and then to law enforcement agencies in the U.S. They believed him. Kozeny was charged in New York with fraud on his investors. But the DOJ indicted Bourke anyway. They said he was knowingly part of Kozeny's bribe-tainted deal, and losing his money didn't excuse his crime.

Bourke probably never had a chance with the jury. Another defendant, like Bourke, once said his lawyer advised him the deal was legal. In that case too the jury didn't care. They returned a guilty verdict against David H. Mead back in 1998. His conviction, like Bourke's, showed that American juries just don't like any overseas shenanigans.

And they don't split hairs. As the jury foreman said after Bourke's verdict: "It was Kozeny, it was Azerbaijan, it was a foreign country. We thought [Bourke] knew [about the bribery] and definitely could have known. He?s an investor. It?s his job to know.? Simple, logical, workman-like.

There was nothing encouraging for Bourke before Friday's verdict. He and his lawyers would have known that anyone accused by the Justice Department of being involved in overseas corruption faced bleak odds. Most FCPA-related defendants before him had plea bargained to reduce their jail time. Of the few who'd gone to trial since 1991, none had been acquitted. None.

Bourke stuck his head in the sand and now he'll pay the price. It could only have happened to him in America, under the strictest overseas anti-corruption regime in the world.

A copy of the 2005 indictment against Kozeny and Bourke can be downloaded in two parts here and here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.
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Full post as published by The FCPA Blog on July 11, 2009 (boomark / email).