CORPORATE CRIME REPORTER
FCPA Unit Assistant Stuckwisch to Kirkland & Ellis
26 Corporate Crime Reporter 15(12), April 9, 2012
William Stuckwisch, an Assistant Chief of the Foreign Corrupt Practices Unit of the Fraud Section at the Department of Justice, has joined Kirkland & Ellis as a partner in the firm’s Washington, D.C. office.
Over the past two years, Stuckwisch has supervised over half the cases of the FCPA Unit and handled a number himself.
“I led the investigation of KBR and its partners in the so called TSKJ joint venture. They had engaged in a massive scheme to bribe Nigerian government officials in connection with a liquified natural gas plant project on Bonny Island in Nigeria,” Stuckwisch told Corporate Crime Reporter in an interview last week. “That investigation eventually resulted in the prosecution of five companies and three individuals.”
We wanted to pick Stuckwisch’s brain for details on the Department’s FCPA practice.
So, we began asking questions.
How many Justice Department prosecutors work pretty much full time on FCPA matters?
“There are a couple of dozen prosecutors who spend a significant amount of time if not all of their time on FCPA cases,” Stuckwisch says.
“Even if you are not in the FCPA Unit, if you are in the Fraud Section, you may handle one or more FCPA matters. Increasingly, U.S. Attorneys are getting involved in FCPA investigations and cases. And so, the Fraud Section’s resources are being augmented by Assistant U.S. Attorney resources.”
How can it be that fewer than twenty FCPA cases a year get resolved and yet support an entire army of defense lawyers, consultants, and accountants?
“Part of it is attributable to the complexity of FCPA investigations,” Stuckwisch says. “They are invariably international in scope. So, there is a lot of travel. They often involve an analysis of a company’s accounting records. Professionals are brought in to assist with that kind of forensic investigation. Often, a company will find out that a problem isn’t isolated and an investigation will expand. Those are unavoidable features of an FCPA investigation.”
“The Department is certainly cognizant of the costs of an FCPA investigation.”
“And one thing that companies need to consider is – are there ways to minimize or manage the costs of these investigations?”
“Approaching the prosecutors or the SEC enforcement attorneys on a case early on, discussing the scope of an internal investigation, discussing what type of forensic accounting review is necessary, are all very important things for a company to do.”
“Unfortunately, many corporate counsel just assume that the Department expects them to do much more than the Department or the SEC may expect them to do.”
The corporate lawyer has an incentive in an FCPA case to cooperate and disclose to the government. And now under Dodd Frank the whistleblowing individual has an incentive. So, will this lead to a race to the government?
“That’s definitely a risk,” Stuckwisch says. “And many people pointed that out in commenting on the SEC’s proposed implementing rules. It might be much more difficult for a lawyer advising a corporation when you may or may not have a whistleblower out there. If you are company, you want to get credit for voluntarily disclosing something. Yet, if a whistleblower beats you to the door, you are not going to get that credit. So, the calculus has changed somewhat. It may lead companies to go into the government prematurely in some circumstances, where they haven’t been able to look into the possible violation. There may not be anything there at the end of the day. But nevertheless, they make a judgment that it is better to go in and talk to the government, because there might be a whistleblower out there.”
“So yes, it does set up that kind of dynamic.”
Deferred and non prosecution agreements are the way the government settles big corporate cases now. You will find exceptions, but they are rare. Companies can be criminally convicted and go on oing business. Why not get similar results with a conviction?
“The Department has found them to be valuable tools in order to achieve deterrence, secure corporate reforms, and efficiently resolve cases, without imposing undue collateral consequences on corporations,” Stuckwisch says. “There are examples of companies who have been convicted and continue to do business.”
“But there is no question that it is worse for a company to have a criminal conviction and much more likely that the company will suffer collateral consequences than if they resolve a case with a deferred prosecution agreement or a non prosecution agreement.The alternative you cite is that a company either has to go to trial – which is fraught with all kinds of risks and can draw out a case for many years – or hope that their case is one of the types that the government is not going to insist on indicting the company and securing a conviction. Those would be the only alternatives – get a conviction or decline the case.”
“For the last twenty years now, we have had available to us these intermediate options. The Justice Department has determined that they serve its enforcement interests. And companies, when faced with the alternatives and the particular facts and circumstances of their case, decide that it’s better to put things behind them than it is to fight and hope to avoid a conviction at trial.”
Shouldn’t the Justice Department publicize declinations?
“There are arguments on both sides of that question,” Stuckwisch said. “You are correct. The Department’s practice has not been to publicize declinations. Department officials regularly talk about how cases do result in declinations. Voluntary disclosures, cooperation, good remediation can lead to a declination. I know there is frustration in parts of the FCPA bar and among companies that declinations are not publicized. The argument is that it would help companies decide on whether to voluntarily disclose or how to respond to an investigation.”
“It will be interesting to see whether in the coming years the Department does provide additional information on declinations.”
What is the difference between a declination and a non prosecution agreement?
“A declination involves either a short letter or the Department simply telling the company or individual that it is not pursuing the investigation any further, that it is dropping the investigation.” Stuckwisch said. “But it is not a contract between the government and the defendant. There is no letter, as in a non prosecution agreement, that requires the company to sign on to certain obligations that clearly define the scope of the agreement by the government not to prosecute.”
“Non prosecution agreements can involve monetary penalties that declinations don’t. So, there is a significant difference for a company between a non prosecution agreement and a declination.”
[For complete Interview with William Stuckwisch, see 25 Corporate Crime Reporter 15(12), April 9, 2012, print edition only.]
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