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Yesterday, the National Association of Criminal Defense Lawyers slammed the expanding use of NSA intelligence by domestic law enforcement agencies, particularly noting the use of this intelligence to prosecute violations of the Foreign Corrupt Practices Act:

Washington, DC (August 5, 2013) – Today, Reuters news service reported that “A secretive U.S. Drug Enforcement Administration unit is funneling information from intelligence intercepts, wiretaps, informants and a massive database of telephone records to authorities across the nation to help them launch criminal investigations of Americans.” Reuters further reports that it has undated documents that “show that federal agents are trained to ‘recreate’ the investigative trail to effectively cover up where the information originated, a practice that some experts say violates a defendant’s Constitutional right to a fair trial. If defendants don’t know how an investigation began, they cannot know to ask to review potential sources of exculpatory evidence – information that could reveal entrapment, mistakes or biased witnesses.” And late yesterday, The Houston Chronicle reported that “The National Security Agency is handing the Justice Department information, derived from its secret electronic eavesdropping programs, about suspected criminal activity unrelated to terrorism[,]” including in cases alleging conduct including sex offenses and corporate criminal activity under the Foreign Corrupt Practices Act. The information sharing programs reported by Reuters and The Houston Chronicle over the last 24 hours are yet further examples of the national security state seeping into the traditional justice system.

National Association of Criminal Defense Lawyers (NACDL) President Jerry J. Cox said: “NACDL has long feared that overbroad national security policies would become the norm for all criminal prosecutions and today we know our concerns were not unfounded. Two months after Edward Snowden’s initial disclosures about various U.S. government surveillance activities, we know very little more about the parameters of the NSA surveillance programs. These latest reports are particularly troubling for accused persons who cannot vindicate fundamental constitutional rights without access to accurate and complete information. This puts liberty at risk of being lost without due process of law, which is an affront to the Constitution.”

Indeed, there are further, significant Constitutional implications to these reports. In the American criminal justice system, prosecutors are required to disclose all information in the government’s possession that is favorable to the accused, pertaining to either the determination of guilt or imposition of sentencing. These reports suggest that prosecuting government agencies are provided data collected via seemingly limitless NSA surveillance programs that the American people have been repeatedly told have stringent safeguards and exist only for the purpose of gathering information about international terrorists. Additionally, the Reuters report indicates that programs of intentional non-disclosure of the actual sources of information in connection with non-terror-related activity may be in place. Yet, those accused of criminal activity have no access to any exculpatory information collected by these NSA programs. (Ivan J. Dominguez, Nation’s Criminal Defense Bar Alarmed by Reports of NSA Surveillance Data Use and Intentional, Systematic Non-Disclosure in Domestic, Non-Terror-Related Criminal Cases, NACDL Press Release, 5 Aug. 2013)

The implications of using the NSA intercepts to leverage enforcement of the Foreign Corrupt Practices Act are enormous given the history of the law:

Yet paying foreign officials to secure contracts abroad was simply a part of doing business in the 1970s. Hundreds of U.S. companies paid bribes out of perceived necessity. Counting on its influence as the most world’s powerful economic force, the United States decided to eliminate the practice and passed the Foreign Corrupt Practices Act (FCPA) of 1977. The FCPA outlawed bribery and imposed financial accounting requirements on all U.S. persons and certain foreign issuers of securities. Thirty-five years later, FCPA enforcement is contentious. Corruption is an extraordinarily fact-specific crime, so the government can’t foresee and enumerate all of the activities that are prohibited. At the same time, businesses require clear lines and definitions to comply with the Act.

The U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC) rarely enforced the law until about a decade ago. Since then, the government has accelerated enforcement, broadened its reading of the Act, tried new prosecutorial strategies, and even experimented with sting operations. Today, the SEC and DOJ investigate between 70 and 80 potential FCPA violations at any given time—this is more than at any other time in the Act’s history.  Since 2009, the DOJ has entered into more than 40 corporate resolutions of FCPA investigations, resulting in nine of the top 10 monetary settlements in FCPA history, including more than $2 billion in fines recovered. In 2012 alone, the government collected $260,571,467 in financial penalties from corporations violating the FCPA. (Institute for National Security and Counterterrorism, The FCPA Landscape, Spring 2013)

The intentional non-disclosure of NSA intercepts used to start investigations into FPCA violations implies that the Department of Justice has managed to leverage illegal surveillance practices into a massively profitable extortion system that denies corporate and individual targets access to fundamental rights. Moreover, US companies doing business abroad are presented with a host of liability risks from conducting what might be otherwise ordinary, routine business practices:

To enforce the FCPA’s anti-bribery provisions, the federal government is authorized to pursue forfeiture – administratively, civilly or criminally – of the proceeds traceable to criminal violations of the FCPA. “Proceeds” includes any property, real or personal, tangible or intangible, that the wrongdoer would not have obtained or retained but for the crime.  For example, a company’s profits from its contract with a foreign government agency, allegedly obtained as a result of corruptly “wining and dining” the contract procurement official or by virtue of the company having given a lucrative job to that official’s spouse, could be subject to forfeiture. (Reichwald et al, DOJ’s Escalating Use of the Foreign Corrupt Practices Act To Seize Customer Bank Accounts, Manett, Phelps and Phillip, LLP, 12 July 2012).

Ultimately, this will have a chilling effect of the ability of US companies to conduct ordinary business abroad, with larger implications for international trade, attracting foreign investment capital, and the rule of law itself.

The DOJ’s more aggressive enforcement has included focusing on individuals, not just companies. Indeed, US Attorney General Eric Holder has said that “prosecuting individuals is a cornerstone of [the DOJ’s] enforcement strategy.” This statement, made in spring 2010, came shortly after a person was sentenced to over seven years in prison upon pleading guilty to, among other things, conspiring to violate the FCPA.

With the DOJ’s focus on individual accountability, corporate executives are now at risk for business procedures that, until recently, they might have considered routine rubberstamping, such as securing government permits, processing customs papers, and procuring sales licenses.

“The same holds true of various routine interactions with business associates,” says Shah. “Take, for instance, a US medical-device company’s sales manager who sponsors the attendance of an industry conference by a healthcare provider in China. If the healthcare provider is employed by a state-owned hospital, he or she could be considered a government official, consequently increasing the potential risk of FCPA violation.” (PriceWaterCoopers, Foreign Corrupt Practices Act, Growing Your Business, 2011)

It’s time for Congress to review the Department of Justice’s practices regarding both the secret sharing of NSA intelligence with the DOJ and the use of civil forfeiture to enforce the FPCA. At the very least, the DOJ should not be able to use civil forfeiture as an enforcement tool; the revenue created for the DOJ through FPCA civil forfeiture represents a structural incentive for the federal government to violate the rights of companies and individuals engaged in international trade for profit.

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2 Responses to “The Civil Forfeiture Implications of Using NSA Intercepts to Prosecute Violations of the Foreign Corrupt Practices Act”

  1. [...] implications are mind-boggling [Houston Chronicle/Connecticut Post via NACDL via Americans for Forfeiture Reform, earlier] On paper, NSA is supposed to turn over spy-collected data only if evidence of serious [...]

  2. [...] implications are mind-boggling [Houston Chronicle/Connecticut Post via NACDL via Americans for Forfeiture Reform, earlier] On paper, NSA is supposed to turn over spy-collected data only if evidence of serious [...]

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