CORPORATE CRIME REPORTER

Baker & McKenzie’s Brian Whisler on Wal-Mart, FCPA and Tensions Between Business and Legal
26 Corporate Crime Reporter 19, May 8, 2012

David Barstow’s expose in the New York Times of bribery at Wal-Mart is shaking up the Foreign Corrupt Practices Act (FCPA) world.

Last week, FCPA Compliance and Ethics blogger Tom Fox told us that he thought the Wal-Mart case would stop the big business push for FCPA “reform.”

This week, we interview Brian Whisler.

Whisler is a partner at Baker & McKenzie.

He’s a former federal prosecutor.

And his practice now is primarily Foreign Corrupt Practices Act (FCPA) compliance and investigations.

Whisler says that while the Wal-Mart case is exceptional in many ways, from one perspective it’s not.

And that is – the business side resisting advice from the legal side on FCPA issues.

Or as Barstow reported –

“The lead investigator recommended that Wal-Mart expand the investigation.”

“Instead, Wal-Mart’s leaders shut it down.”

“The theme is resistance – there is always going to be resistance from some corner of the enterprise to being transparent,” Whisler told Corporate Crime Reporter in an interview last week.

“Once you go that route, there is no turning back. It is understandably a very challenging decision. In many instances, there is simply no choice. But here, it is commendable to see all of the steps that have been taken very rapidly to try to recalibrate in the company.”

“But let’s face it, they have a very big hole to dig out of if these allegations are true. They are going to have to contend with a penalty for the delayed response, for potential obstruction.”

“A monitorship would be highly likely.”

“So, they have got a very tough road ahead. Their relationship with the government has quickly become much closer than they would like.”

“In these types of cases, once you make your disclosure, you go and do your thing and come back periodically and report out.”

“Here, there are going to be a lot more demands placed upon Wal-Mart in this context, a lot more regular check ins, and a lot more scrutiny than they would probably otherwise enjoy if it was a more timely disclosure.”

What happens when the corner of the company is the executive suite? How do you make a judgment on criminal charges?

“I won’t speak specifically to Wal-Mart,” Whisler says.

“But if part of the remedial effort terminates the relevant wrongdoers – discipline and termination – you root out the problem children of the company and you start afresh. And that is the context of a broader compliance overhaul – that would be a sensible way of allowing a company to continue.”

“If senior management – the executives who were responsible for the actions or willfully blind to the actions – are rooted out, then the company should be given an opportunity for a fresh start.”

“At the end of the day, prosecuting a legal entity based on the actions of a handful of individuals is particularly onerous.”

One idea is that because of the Times’ article and the profile of this case, the government might take this investigation away from the company, issue it’s own subpoenas, and proceed independently.

“The government has a tolerance threshold,” Whisler said. “If you say you are going to cooperate, you have to demonstrate that in an meaningful way.”

“If you kind of spin your wheels, and you don’t demonstrate that you have a credible, thorough and effective investigation, at some point we are going to shut it down and take it over.”

“I can’t cite you too many examples of that, but I know that they have that threshold. It has been discussed in my presence.”

Whisler spent 15 years as a federal prosecutor. He has been on the defense side for less than four years.

As a former federal prosecutor, does he have a leg up over defense attorneys who have not had that experience?

“The advantage is that when you speak with a corporate client and its employees – you have some measure of credibility,” Whisler said. “You can say – I was in the Department, I worked with these people, I know what their expectations are, I know how they think, I know what they care about and what they don’t care about.”

“When I interface with my former colleagues, whether at Main Justice or in the field, my hope is that I will be able to advocate for my client more effectively because I know what to say and what not to say, and I know what they want to hear as prosecutors.”

“And I know the language that they speak.”

“Obviously, there are a lot of lawyers in this space. Most lawyers self-designate as experts. But I enjoy interfacing with my former colleagues. And I hope I can add some value to my clients as a result of it.”

What about the transition from the Justice Department to the private bar?

“The thing that comes most immediately to mind is that when you are serving in a role as outside counsel conducting an internal investigation for a company, you have to strike the right balance between ferreting out the truth, just as prosecutors do, but doing it in a way that is in the best interest of the company – and advocate on behalf of the company’s best interest,” Whisler said.

“Obviously you don’t have the threat of charges, or subpoena power, or a grand jury to work with when you interview witnesses.”

“You don’t have that hammer that you had at the Department. You have to be a bit more nuanced or savvy about how you are going to ferret out the truth without pressing a witness in a way that some prosecutors would be inclined to do.”

“That’s a tricky balance for some former prosecutors. But I’m not wearing a prosecutor’s hat.”

“And I am careful to reassure witnesses that I interview that this isn’t adversarial. It’s just designed to be an internal review of certain facts and transactions, to elicit the truth of the matter at hand.”

“And that’s my role. You have to be careful to stay away from any habits or tendencies you developed as a prosecutor.”

[For the complete q/a format transcript of the Interview with Brian Whisler, see 26 Corporate Crime Reporter 19(12), May 7, 2012, print edition only.]

 

 


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