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March 12, 2014

Judge: Evidence Not Getting Any Fresher in FCPA Case

The government’s use of the Foreign Corrupt Practices Act has exploded in recent years, but the track record once those cases get some scrutiny isn’t so good.

In the latest example, an official with the Securities and Exchange Commission announced that the agency is dropping its charges that executives at Deutsche Telekom bribed officials in Montenegro (although they are continuing to pursue a second set of civil allegations).

The SEC accused the execs of paying off government officials to freeze out the competition, but the case spiraled into six countries, with hundreds of witnesses speaking dozens of languages, the WSJ Risk & Compliance Journal reports.

One judge in the case, at least, seemed to lose patience with the investigation. “This is an old case…in terms of the underlying facts and nobody is getting any younger and the evidence is not going to be any fresher.”

Even before this case, the FCPA’s record isn’t great:

  • In 2012, a federal judge dismissed charges against 16 people the Justice Department accused of bribing officials in Gabon, calling it “the end of a long and sad chapter in the annals of white collar criminal enforcement.” Washington Post
  • Also in 2012, a federal judge took the unusual step of dismissing charges without even hearing the defense since the prosecutors’ case was so weak. Forbes
  • And in 2011, a judge dismissed charges against two manufacturing executives, citing prosecutorial misconduct that included providing false testimony to obtain a search warrant, making unauthorized searches, and giving incorrect testimony to a grand jury. Bloomberg

For years, companies would settle FCPA charges before trial, given the potential for huge – and possibly lethal – penalties. But, as recent trials have shown, some of these cases are built on the flimsiest of footing.

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