Kreller's Due Diligence Blog
DOJ’s Expanding Jurisdiction
Thursday, June 18, 2015
The recent FIFA corruption scandal can teach us important
lessons about the trends in global anticorruption enforcement. This is
the second time in two months that the compliance world has seen the United
States Department of Justice take large leaps in asserting its jurisdiction
over corrupt practices. The internationalization of American law seems to
be more pervasive than ever, and we can see this in not only the FIFA scandal,
but also in trending global enforcement of anticorruption laws abroad.
Several heads of state (Capitalized?) around the globe have been quoted as saying that the DOJ’s indictment of FIFA officials is an “overreach,” and the assertion of jurisdiction over the FIFA officials around Europe is an invasion of sovereignty. The broad scope of the United States anticorruption enforcement justifies these indictments, though – no matter how tangential the relationships are to the United States. This is a warning signal for other organizations that may have been seemingly immune from DOJ enforcement. And while the FIFA scandal is not an FCPA case, it will no doubt bring scrutiny onto other companies involved in the production, building, and marketing of FIFA’s international operations. Time will tell…
In April, the DOJ exercised yet another wide-net scope over two foreign individuals. The DOJ brought this case in the United States District Court involved the Ukraine, Canada, Venezuela, U.A.E., Neptune and Mars. The complex web of international transactions created a seemingly ripe opportunity for the DOJ prosecutor to assert jurisdiction over the corrupt acts (lavish gifts, cash etc.,) because the organization involved had a tangential connection with the United States as it was a member of the same organization. The Judge did not see it this way. For those of us who had the pleasure of reading dry case-law in our legal educations, the judge in this instance colored it up a bit:
“So if there is ever, ever a policy interest of the United States of America in anything a foreign country — that occurs in a foreign country, the United States Attorney’s Office for the Northern District of California will vindicate the way the laws apply — the honest services law applies. You’re going to wipe out bribery and honest services throughout the world. I want to congratulate you for that.
And I never in my life, in 50 years of criminal practice, seen a more misguided prosecution as the one that you’ve brought.”
Here, we see that there is a limit to the scope of the DOJ’s jurisdictional assertions. As the global enforcement trends continue, we can assume that the scope of the DOJ’s reach will expand. However, as we can see from the Northern District of California, more than a mere touch with U.S. assets is necessary, but not sufficient. The ambiguous line that demarcates federal jurisdiction from no jurisdiction is evasive. SO what does this mean for a compliance practicioner? Evaluate your compliance program and international due diligence protocols regularly, so as to address where a regulator will seek to establish jurisdiction. Routine internal controls evaluation will go a long way to strenghthening the compliance program, and preventing rogue third-parties and partners from committing foreign acts of bribery that place liability on the U.S. based company.