The FBI’s much heralded FCPA Unit had consisted of at least 12 agents working out of the Washington, D.C. field office since around 2008, with a full-time focus on FCPA cases.
The FCPA Unit had been named in dozens of DOJ and FBI dispatches — as early as the government’s press conference about the Siemens enforcement action in December 2008. After that, the FCPA Unit appeared in releases about BAE Systems, the Africa sting arrests, the Control Components-related indictments and pleas, Nordam Group, Pfizer, the Alstom-related arrests earlier this year, Innospec and its agent Ousama Naaman, Bizjet, Magyar Telekom, and many more.
But without any prior public announcement, the FBI confirmed to Julie DiMauro, executive editor of the FCPA Blog, that agents who were once part of the D.C.-based FCPA Unit are now working from FBI regional field offices across the country. The FBI’s International Corruption Unit (ICU) is responsible for FCPA investigations, the spokesperson said. The ICU also handles corporate fraud, antitrust, and intellectual property rights, among others.
Why the change in the way the FBI investigates and helps prosecute FCPA cases? And why now?
A spokesperson told DiMauro the FBI has broadened both the focus and the geography of the squad that used to target just FCPA violations. She said the FBI’s commitment and energy in investigating FCPA cases hasn’t changed but she declined to be more specific.
Here are other reasons that could be behind the FBI’s new org chart:
1. The FCPA Unit’s performance. In March 2012, the DOJ was forced to dismiss all charges against 22 FCPA defendants — even three who had already pleaded guilty. After a multi-year undercover sting operation and an FBI takedown by 150 agents, the biggest mass prosecution in FCPA history went haywire. A federal judge called it ‘a long and sad chapter in the annals of white collar criminal enforcement.’ After two separate Africa sting trials that lasted a total of six months, there were three acquittals and juries deadlocked on all counts as to seven other defendants. The government’s 0 – 10 result led one defense lawyer in the case to describe it as a ‘made-up fantasy.’ Defendants also claimed the FBI’s mishandling of the government’s chief witness tainted the case from the start.
2. New management at the DOJ. Earlier this year, Lanny Breuer stepped down after heading the DOJ’s criminal division for four years. He put more emphasis on FCPA enforcement than any other occupant of his office. He was replaced at the DOJ by Mythili Raman, who had served as chief of staff for the criminal division.
3. Changing views of graft. Attorney General Eric Holder went to Russia in May last year and called corruption a ‘gateway crime – one that allows money laundering, gang violence, terrorism and other crimes to thrive.’ When FCPA offenses were still viewed as stand-alone crimes, a dedicated FCPA Unit at the FBI made sense. After corruption came to be seen as part of the bigger global picture, the FBI’s narrow focus became obsolete.
4. Think global, act local. An FBI spokesperson said the new decentralized handling of FCPA cases is effective because agents spend less time traveling for each investigation. It’s also true that local knowledge can be important whenever suspected crimes of any type are investigated.
5. Less need for the g-men. With more self-reporting by companies than ever, and a rich SEC whistleblower reward program that’s bringing in solid tips on most days, the dedicated FCPA Unit became redundant. Sleuthing and going undercover to find new FCPA cases isn’t necessary when a gusher of potential prosecutions is already swamping the DOJ and SEC.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.