Clifford Chance Partner David DiBari on International Corporate Crime Enforcement

In the UK, prosecutors must get judicial approval before moving forward on corporate deferred prosecution agreements.

David DiBari
Managing Partner
Clifford Chance
Washington DC

In the United States, it’s still an open question — but both the DC Circuit and Second Circuit have sided with those who argue that the judiciary shouldn’t interfere with the Justice Department’s discretion in cutting these deals with large corporations.

David DiBari is managing partner at the Washington DC office of Clifford Chance.

He is co-author of a recent client alert titled — Second Circuit Agrees with the D.C. Circuit in Sharply Limiting Judicial Review over DPAs.

In its July 12, 2017 decision in United States v. HSBC Bank USA, N.A., the U.S. Court of Appeals for the Second Circuit in New York sharply limited the scope of judicial review and supervision over deferred prosecution agreements, DiBari writes.

In doing so, the Second Circuit agreed with the April 5, 2016 opinion of the U.S. Court of Appeals for the District of Columbia Circuit in United States v. Fokker Services B.V, which was the first Circuit Court decision to strictly limit the scope of judicial review of deferred prosecution agreements.

“Fokker was the first appellate decision to hold that, because of constitutional separation of powers, a U.S. district court may not refuse to approve a DPA because it disagreed with the merits of the Department of Justice’s charging decisions or the terms of the DPA. As the second appellate decision on this issue, the HSBC opinion extends the reasoning in Fokker beyond the context of initial court approval of a DPA, and clarifies the very limited scope of judicial supervision over a DPA while it remains pending on the court’s docket.”

DiBari says that the appeals courts got it right.

“In my view, the deferred prosecution agreement is a deal between the executive branch and the defendant,” DiBari told Corporate Crime Reporter in an interview last week. “These agreements are often very closely negotiated. They involve factors that have come from five or more years of investigation, discussion and interaction between the parties and reflect the sum of a company’s cooperation, the findings throughout that period of time.”

“The Second Circuit and the DC Circuit had it right. Absent some extraordinary circumstances, the court’s role is to act under the Speedy Trial Act and grant the deferment of the running of the time under the Act to permit the defendant the opportunity to demonstrate its good conduct and not to try and second guess the prerogative of the prosecutor and the executive branch in agreeing to the terms or getting into the merits of the deal itself.”

Much of DiBari’s practice focuses on economic sanctions, anti-corruption and anti-money laundering.

How will the Trump Justice Department move in the sanctions area?

“We are still waiting for the Trump Justice Department to exist,” DiBari says. “A number of appointments are still in process. There is quite a bit of uncertainty as to who actually will be holding the key positions when it comes to running cases at a senior level.”

“On a day to day basis, I don’t think we are going to see much difference from mainline prosecutors in terms of how they handle these cases. We expect vigorous enforcement when it comes to Iranian sanctions. We will see enforcement of the Russian sanctions to the extent violations are identified. I don’t expect to see much change in the vigor of enforcement when it comes to the sanctions space.”

There has been heated rhetoric from the Trump administration on Iran and Cuba. Are you saying that rhetoric won’t translate into a real enforcement difference?

“For the past ten years, the Justice Department has been vigorously enforcing these cases, pushing the envelope. There were circumstances where they were taking a historically more aggressive interpretation of the sanctions prohibition than even the Office of Foreign Assets Control was.”

“The rhetoric certainly has been strong out of the current administration. It was during the campaign. And it hasn’t lessened after the inauguration. But it’s difficult to see how the Justice Department could be more vigorous than it has been in sanctions enforcement today.”

It’s interesting that under Trump, the first two Foreign Corrupt Practices Act (FCPA) settlements were declinations with disgorgement. Is it too early to declare a trend?

“It’s too early to see a trend. Those are legacy cases that were going on before he took office. We are going have to wait for a bit more time to see how that shakes out. But the FCPA Pilot Program encourages companies to come forward to make the voluntary disclosures, to demonstrate they are good corporate citizens, to deal with the bad actors in a responsible way and to fully cooperate with the Justice Department consistent with the principles laid out in the Yates Memo. Companies that do it right will be in a good place once it comes to resolution of the case.”

“But it’s too early to say we are going to see a significant increase in declinations under the Trump administration.”

In the past, President Trump has called the FCPA a “horrible law” that puts the United States at a “huge disadvantage.” Will that Trump sentiment filter down into enforcement practice? And is corporate criminal practice immune from politics?

“As a practical matter, it is not immune from politics. It creeps into enforcement priorities, among other factors. It’s definitely not immune from politics.”

What about Trump’s antipathy to the FCPA and whether it will filter down into the practice?

“There is a lot of FCPA enforcement against non-US companies as well as against US companies. He thinks it’s a bad deal because the US holds its companies to higher standards than other countries do. That has been changing significantly over the past couple of years — the UK Bribery Act, the anti-corruption law in Brazil, where prosecutors have toppled their own government in enforcing that law. I don’t think we will see a decrease in FCPA enforcement. But I’d rather be a US company caught with a problem than a non-US company.”

There is some historical evidence that the Justice Department is tougher on foreign multinational companies than US based multinationals. Are you seeing that?

“US companies typically are more attuned to the issues and are in better shape, have better compliance programs and therefore have stronger mitigating arguments if something goes wrong than non-US companies. Non-US companies are catching up. But they might not have as strong of a compliance culture as a US company and as a result are more apt to make mistakes. In my experience, it’s less a matter of the Department being harder on non-US companies. It’s more a matter of non-US companies not having as strong a historic compliance culture as US companies.”

[For the complete q/a format Interview with David DiBari, see page 31 Corporate Crime Reporter 31(13), July 31, 2017, print edition only.]


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