May 11, 2011 / 4:43 PM / 8 years ago

US wins corporate conviction in bribery-act trial

* U.S. says first jury trial of company under bribery law

* Definition of “foreign official” withstands challenge

By Brett Wolf

ST. LOUIS, May 11 (Thomson Reuters Accelus) - The U.S. Justice Department has won a conviction in what it says is the first jury trial involving a company accused of violating the anti-bribery Foreign Corrupt Practices Act.

The conviction on Tuesday in California follows guilty pleas secured by the department in several other cases under the 34-year-old act, which bars bribery of foreign officials. It could squelch recent thinking by some legal experts that the act is vulnerable to a court challenge, analysts said.

“People have talked themselves into the idea that they can win these cases and so far there is no evidence that this is true,” said Richard Cassin, a lawyer who helps clients comply with the FCPA and runs a blog on the act.

The federal jury convicted privately-held Lindsey Manufacturing Co of Azusa, California and two of its top executives, Keith Lindsey, 66, and Steve Lee, 60, on multiple FCPA charges for bribing officials of a Mexican state-owned utility company to win $19 million in contracts.

Lindsey makes electricity transmission towers.

“Today’s guilty verdicts are an important milestone in our FCPA enforcement efforts,” U.S. Assistant Attorney General Lanny Breuer said. “Lindsey Manufacturing is the first company to be tried and convicted on FCPA violations, but it will not be the last.”

Although individuals have gone to trial and been convicted for violating the act, companies charged with violations have previously chosen to settle or plead guilty.

Lindsey’s lawyer, Jan Handzlik of Greenberg Traurig LLP, said the firm would appeal, and said it had moved to throw out the case on grounds that include government misconduct.

TRIAL DEFENSE

Cassin said this case was the first in which a company had mounted a trial defense against charges under the act.

The defendants had argued that the FCPA’s definition of “foreign officials” was ambiguous in saying that a foreign official was “any officer or employee of a foreign government or any department, agency, or instrumentality thereof.”

The Justice Department has consistently viewed employees of state-owned companies as foreign officials, Cassin said. The judge overseeing the Lindsey Manufacturing case agreed.

“Judges have upheld the Justice Department’s view of the FCPA, and juries have shown again in this trial that they do not like foreign bribery,” Cassin said.

According to court documents, between February 2002 and March 2009, Lindsey Manufacturing, Lindsey, Lee and others used the company’s Mexican agent, Enrique Aguilar, to funnel bribe payments to officials of the Comision Federal de Electricidad, a Mexican electrical utility.

Lindsey Manufacturing’s bills to the CFE were increased to pass on the cost of paying the bribes, the documents said.

FERRARI AND YACHT

Aguilar’s wife, Angela, authorized transactions in which a brokerage account was used to buy one CFE official a $300,000 Ferrari Spyder and a $1.8 million yacht, as well as to pay more than $170,000 toward his credit card bills. She also authorized the transfer of $500,000 to the brother and mother of another CFE official, court papers said.

Angela Aguilar was arrested in last year after traveling to Houston, Texas and was convicted of participating in a money-laundering conspiracy. Enrique Aguilar remains a fugitive wanted by U.S. authorities.

When sentenced, the defendants could face decades in prison and hundreds of thousands of dollars in fines. Prosecutors are also seeking forfeiture of proceeds of the bribery scheme.

Justice Department figures show that 40 entities faced criminal foreign bribery charges under the FCPA between 2007 and September 2010. All pleaded guilty or otherwise settled the charges without going to trial.

Some legal experts have speculated recently that a successful courtroom challenge could hurt U.S. efforts to enforce the FCPA if, for instance, its definition of “foreign official” were found to be too vague.

However, Cassin said that most bribery schemes involved too many people and left behind too much evidence to be defensible in court. He said that people and companies who found themselves indicted on FCPA charges faced "no good choices." (This article was produced by the Compliance Complete service of Thomson Reuters Accelus. Compliance Complete (here) provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges.)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below