Insights

On April 28, the Fifth Circuit found in U.S. v. Harris that the government must take into account the value of the work performed in assessing damages in procurement fraud cases, even when sentencing individuals. In a perhaps unique fact pattern, the court upheld the conviction for 16 counts of wire fraud, but overturned the two-year prison sentence of an Army colonel because the government had calculated damages based on the full $1.3 million value of the contracts, rather than properly reducing that total for the value of the work performed.

Employers of all stripes, shapes, and sizes should take heed: the Department of Justice announced in a press release on December 17 that it is actively working with the Department of Labor to "increase the frequency and effectiveness of criminal prosecutions of worker safety violations." Citing "troubling statistics on workplace deaths and injuries," the DOJ issued a Memorandum to all United States Attorneys announcing the Department's "renewed commitment" to pursuing criminal prosecution and penalties as an additional enforcement tool for violations of three federal statutes focused on workplace safety and health: the Occupational Safety and Health Act of 1970 (OSH Act), the Federal Mine Safety and Health Act of 1977 (Mine Act), and the Migrant and Seasonal Agricultural Worker Protection Act. 

Crowell & Moring attorneys lend their voices to WFED radio today. Listen in at 12:30 pm EDT as these practitioners discuss the triggers of a federal investigation, how to formulate an investigative plan (including review of recent key developments), and corrective action measures.

President Obama's historic visit to Burma/Myanmar on November 19, 2012 marks an important milepost in that country's path toward a more open society, and recognizes economic and other reforms in that country. In advance of the President's visit, on November 16, 2012, the Secretaries of the Treasury and State eased the ban on imports of Burmese-origin goods. This action is part of a gradual unwinding of once-expansive U.S. sanctions targeting the Government of Burma, and follows on the July 2012 authorizations for new investment in, and exports of financial services to, Burma. The easing of U.S. sanctions greatly opens up the potential for trade between the United States and Burma. While U.S. companies may be considering entering the long-closed Burmese market, they should not do so without first extensively evaluating a range of business and compliance risks. This Alert focuses particularly on money laundering and corruption risks that a U.S. company will have to navigate when doing business in Burma. 

On January 31 2011, the UK Justice Minister, Ken Clarke, announced that the Bribery Act ("the Act"), which had been due to come into force in April 2011, will be delayed for at least three months. This was confirmation of what many believed would happen after the Government announced, in early January 2011, that there was to be a review of the legislation following growing concerns from UK businesses and trade organisations that the wording of the Act is ambiguous and that it lacks clarity.

The Ministry of Justice has this week announced that the UK Bribery Act 2010 ("the Act") will come in to full force in April 2011.

Last Friday, April 30, 2010, the United States Sentencing Commission finalized significant revisions to the Federal Sentencing Guidelines. These changes directly implicate the relationship between a corporation's chief compliance officer and the board of directors and the manner in which a corporation should respond to the discovery of criminal conduct.

On the same day the Second Circuit issued an eagerly anticipated opinion finding DOJ violated the constitutional rights of KPMG executives in United States v. Stein, and in the face of increasing pressure from Congress, the DOJ has revamped its policy on criminal prosecution of corporations for the second time in as many years. The new policy has implications for any company facing the decision whether – and to what extent – it should cooperate with a government investigation of alleged corporate misconduct.

U.S. Deputy Attorney General Paul J. McNulty announced yesterday that the Department of Justice has superseded the recently embattled “Thompson Memo” setting forth “Principles of Federal Prosecution of Business Organizations.” The new guidelines, embodied in a document already branded the “McNulty Memo,” depart from the Thompson Memo in two important areas: (i) waivers of attorney-client privilege and work-product protections; and (ii) advancement of legal fees to employees under investigation and indictment."

U.S. Deputy Attorney General Paul J. McNulty announced yesterday that the Department of Justice has superseded the recently embattled “Thompson Memo” setting forth “Principles of Federal Prosecution of Business Organizations.” The new guidelines, embodied in a document already branded the “McNulty Memo” depart from the Thompson Memo in two important areas: (i) waivers of attorney-client privilege and work-product protections; and (ii) advancement of legal fees to employees under investigation and indictment.

Friday the 13th is considered unlucky in the United States, something Norway's state-controlled oil company, Statoil ASA, will not soon forget after settling charges under the Foreign Corrupt Practices Act last Friday for a whopping $21 million. This is the second recent settlement in actions brought by U.S. authorities in cases involving only limited contacts with the United States. Last July, the Securities & Exchange Commission (SEC) obtained consent judgments (including fines and disgorgement of profits) from three UK citizens who were former employees of various UK and Nigerian subsidiaries of ABB Ltd., a Swiss corporation whose American Depository Receipts (ADRs) are traded on the NY Stock Exchange. In that case, the UK citizens were allegedly involved in a bribery scheme in connection with seeking a contract to provide equipment for an oil drilling project in Nigeria with some of the cash involved in the scheme – including a kickback to one of the UK citizens – going through U.S. banks.

The Advisory Committee on the Federal Rules of Evidence has proposed a change that would promote cooperation with federal regulatory, investigative and enforcement authorities and at the same time remove the fear that such cooperation would permit discovery by third parties of attorney-client privileged and work product protected materials that are shared with these federal authorities. The proposed rule declares that these disclosures do not operate as a waiver of the privilege or protection in favor of non-governmental persons or entities. The proposed rule, Rule 502, also states the disclosure of privileged and protected communications and information does not operate as a waiver in a state or federal proceeding if the disclosure is inadvertent and made in connection with federal litigation or administrative proceedings and if the holder of the privilege or work product protection took reasonable precautions to prevent disclosure and reasonably prompt measures to rectify the error. Additionally, the proposed rule would limit the scope of a waiver by disclosure of attorney-client privileged or work product protected communications or information. No longer would subject matter waiver be required. Instead, only undisclosed communications or information that ought in fairness to be considered with the disclosed communication or information would be subject to waiver. The proposed rule requires Congressional enactment. It deserves support for it resolves circuit splits with respect to selective waiver and inadvertent disclosure. However, whether the proposed rule will achieve another of its goals – reducing the costs involved in reviewing and protecting material that is privileged or work product – reducing the costs involved in reviewing and protecting material that is privileged or work product – remains to be seen. Plainly, though, the proposal is a step in the right direction.

In reliance upon the Thompson Memorandum, the Department of Justice unconstitutionally pressured accounting firm KPMG to curtail its practice of advancing legal fees to company employees under investigation and prosecution, according to the June 26 Opinion issued by U.S. District Judge Lewis A. Kaplan. The ruling emanates from defense motions and a resulting three day hearing conducted by Judge Kaplan in May to address defense claims in the case of United States v. Stein (S1 05 Crim. 0888). The defense argued that Southern District prosecutors violated the Sixth Amendment right to counsel and Fifth Amendment Due Process rights of former KPMG employees by essentially forcing KPMG to abandon its fee advancement policy.