Issue link: https://digital.shearman.com/i/1265921
PERENNIAL STATUTORY ISSUES FCPA DIGEST July 2020 18 The 2020 YTD enforcement actions have presented a few substantive statutory related issues within the FCPA-specific context. There were some notable assertions of statutory and jurisdictional reach by the DOJ this year that may have an impact on future FCPA enforcement. JURISDICTION IN RE AIRBUS As part of its global settlement, Airbus consented to the DOJ's assertion of jurisdiction based on several minor territorial hooks. The Airbus Information asserts, "[i]n furtherance of the corrupt bribery scheme, Airbus employees and agents, among other things, sent emails while located in the United States and traveled to the United States." 4 In addition to monetary bribes, as discussed above, Airbus allegedly paid for Chinese officials, and occasionally their families, to attend all-expenses-paid events in Utah and Hawaii. The Hawaiian events occurred over the course of six days in 2013. Furthermore, the DOJ alleges that two emails were sent by an Airbus executive while in the United States to change certain meeting minutes related to illicit consultant payments in an effort to conceal them. Additionally, the same executive sent another email while in the United States to express his approval of a leisure event in China aimed at top-level officials of Chinese airlines. In sum, the U.S.-based travel, which was allegedly intended to discuss business opportunities with government officials, and the three emails served as the sole basis for the assertion of territorial jurisdiction for DOJ enforcement. While such territorial acts might be sufficient to form a basis for asserting jurisdiction over a discrete bribery act to which they may be directly related, these passing touches on the U.S. seems extenuated and a flimsy foundation on which to base a criminal penalty of $2.09 billion for a purported far-flung and varied bribery scheme that at best had very little to do with the U.S. Moreover, although some DOJ prosecutors appear to have held the view that it is both necessary and justified to stretch the jurisdictional reach of the statute to reach extraterritorial conduct by non-U.S. companies where there is an apparent lack of political will to bring cases against "national champions"—a view strongly held and applied with respect to a number of French companies in the past—such a view seems somewhat outdated with respect to this case and France's new-found willingness to bring significant transnational corruption prosecutions against its own companies. Nevertheless, that Airbus agreed to jurisdiction on these terms alone indicates the prosecutorial weight of the U.S. government and serves as a notice to other similarly placed 4 In re Airbus S.A. (2020) (emphasis added). 5 United States v. Coburn, No. 19-cr-00120-KM (D.N.J. Feb. 14, 2020). companies facing a wide-spread DOJ investigation that jurisdictional arguments may offer little protection. UNITED STATES V. COBURN & SCHWARTZ Emails proved a common theme this year. A ruling in the case of Coburn & Schwartz, former executives of Cognizant Technology Solutions, found that emails could be considered separate "units of prosecution." 5 Coburn had moved to dismiss certain counts of the indictment against him, claiming some of the counts were impermissibly multiplicitous of other counts in the indictment. That is, he argued a single offense of bribery was dispersed among three separate counts stemming from three separate emails. On February 14, 2020, Judge Kevin McNulty found to the contrary. Looking at the nature of legislative intent in the drafting of the FCPA, Judge McNulty stated that the precise act which Coburn was charged with, "to make use of interstate commerce facilities, such as email," permitted the government to charge as separate offenses the sending of three emails in furtherance of the same bribery scheme. We have likely not seen the final say on whether individual emails are punishable as separate FCPA counts—but the ruling provides some initial insight, at least, into the permissible reach of DOJ jurisdiction here. UNITED STATES V. NAPOUT Beginning as early as the Siemens decision in 2008, the government has asserted jurisdiction over non-U.S. companies and individuals for conduct largely outside the United States based on, at best, tangential use of interstate instrumentalities, such as foreign-to-foreign wire transfers that pass through correspondent banking accounts (i.e., accounts belonging not to them but to their banks) or foreign-to-foreign emails that passed through U.S.-based servers. In the one case in which a court addressed the legitimacy of this position, SEC v. Straub, it held that the requirement of territorial act was merely a jurisdictional fact about which the defendant need not have any knowledge or intent. 6 Under Straub, the DOJ would not need to prove that the defendant knew it's emails would be routed through or stored in the United States. The recent case of U.S. v. Napout, although not a FCPA case, may, however, provide some additional arrows for the defense quiver. Napout involved corruption charges against FIFA and CONCACAF officials based on alleged violations of honest services wire fraud. 7 The defendants—foreign nationals employed by foreign organizations who were bribed in connection with the award of foreign business contracts—argued that their conduct was extraterritorial and outside the scope of the wire fraud statute. The Second Circuit agreed that the wire fraud statute was indeed not extraterritorial, but it concluded that there were sufficient territorial acts—payments from and to bank 6 SEC v. Straub, No. 11-cv-9645 (S.D.N.Y. Dec. 29, 2011). 7 United States v. Napout, No. 18-2750 (2d Cir. 2020).