Legal News

FCPA Goin? Prime Time: Huge Bribery Sting Leads to Arrest of 22

By Ashby Jones

Wow.

It’s not every day that the DOJ unveils a case with indictments against 22 white-collar people. But that’s what we got earlier Tuesday, when the Justice Department unveiled indictments charging executives and employees in the military and law enforcement equipment industry with violations of the Foreign Corrupt Practices Act. Click here for the BLT blog’s story; here for the DOJ announcement itself.

As part of the DOJ’s efforts, nearly two dozen corporate executives and employees were arrested Monday in Las Vegas and in Miami. The DOJ announced that it was the first large-scale foreign bribery investigation using undercover federal agents.

An undercover FCPA sting? It seems so. Justice Department officials said the defendants, including an executive at Smith & Wesson, believed they were bribing the minister of defense of a foreign country through a sales agent to obtain contracts.

"Indeed the undercover techniques used in this case should cause all would-be FCPA fraudsters to pause and to ask: am I really paying off a foreign government official or could this be a federal agent?" said Assistant Attorney General Lanny Breuer (pictured). "Of course, if you even have to ask yourself this question in all likelihood you shouldn't be doing whatever it is that you are doing."

The self-described FCPA Professor — Butler University’s Mike Koehler — raises an interesting point, however.

According to the release, writes Koehler, the “indictments allege that the defendants engaged in a scheme to pay bribes to the minister of defense for a country in Africa.”

However, observes Kohler, there was a catch: There was “no actual involvement from any minister of defense.” Rather, 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.”

We’ve no idea if this fact will ultimately work to provide an opening to defendants, but it might mean one fewer witness for defense lawyers to have to worry about.

Full post as published by Law Blog - WSJ.com on January 19, 2010 (boomark / email).