Friday, June 17, 2011

NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “Defending the Individual in FCPA Cases: Managing the Company, Dealing with the Facts,” Friday, June 17, 2011

Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)

The penultimate discussion was moderated by Marc J. Rochon, who was joined by Mary Carter Andrues, Pamela R. Davis, Jeffrey H. Knox, and C.E. Rhodes.

This panel dealt with a hypothetical company which had a deferred prosecution agreement with SEC/DOJ involving small value facilitation payments which were actually bribes. The hypothetical involves an email sent to the company’s auditing committee by a sales agent in Egypt alleging the bribes are taking place.

Following the disclosure to the audit committee, outside counsel is retained, and (due to the deferred prosecution agreement) DOJ/SEC needs to be informed of the situation.

Mr. Rhodes indicated that the company should retain counsel for the whistleblower in response to hypothetical questions involving that individual’s exposure and rights.

Ms. Andrues, acting as counsel for the hypothetical whistleblower, reviewed the information she would want to have access to, and the potential issues she would need to address, including the relevant law in the foreign country (Egypt) that could impact the investigation.

Mr. Knox indicated that he (acting as hypothetical prosecutor) would potentially provide background information to counsel for the whistleblower. However, both Ms. Andrues and Ms. Davis (acting as hypothetical whistleblower counsel) indicated that it was unlikely they would contact the prosecutor, although both indicated that the call could be useful to obtain the lay of the land.

Mr. Rochon proposed a one-way flow of information from company counsel to counsel for the whistleblower as a way to get the attorney up to speed without compromising company’s counsel’s ability to remain as counsel in the event the whistleblower ends up cooperating with the government.

Another employee, an accountant, also needs counsel, and has given statements indicating involvement and potential additional exposure. The panel agreed that counsel for that individual might not allow an interview of that client, although the employee will almost certainly be terminated. Ms. Davis indicated that he may be facing termination even after an interview. The panel agreed that if the accountant still wanted to go forward with the interview, he should be thoroughly advised regarding the risks. However, the panel expressed significant doubts that the company would facilitate investigation.

Another hypothetical client was then discussed: in-house counsel who failed to act on the whistleblower’s initial complaints and who’s (at a minimum) negligence appears to have led to this problem. Because this hypothetical client’s version of the events was unsupported by documents or other witnesses, the panel agreed that this individual would clearly not be allowed to be interviewed by anyone, regardless of employment consequences.

During these exchanges, it was repeatedly discussed that the company’s agreement with DOJ/SEC required them to disclose information it discovered, and that this factored into every decision regarding allowing the various clients to be interviewed.

Mr. Rhodes commented regarding employment futures of these individuals. All appear to be unlikely to remain with the company, but the in-house counsel is most likely to be fired immediately. The accountant was deemed likely to be terminated after another interview. The tension between the interests of the company and the individual appeared especially intense in this scenario.

With regard to interview requests by DOJ/SEC, Ms. Andrues and Ms. Davis expressed skepticism regarding the amount of protection and value of proffer letters. In the event that the interviews were to take place, and a recording was required and defense counsel was not going to be given a copy, it was unlikely that the interview would occur. Mr. Knox noted that admissions by officers during interviews would be considered admissions by the company.

In response to a comment from the audience regarding the dangers of conducting investigations in foreign countries, Mr. Rhodes and Mr. Rochon agreed that local legal issues will always influence investigations and should be carefully considered.

(dt)

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