Today, the the U.S. Chamber Institute for Legal Reform (ILR) and more than 30 state, national, and international business and advocacy groups sent a letter responding to guidance released by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) regarding their enforcement of the Foreign Corrupt Practices Act (FCPA).
The DOJ and SEC guidance was a positive step forward that clarifies many of the agencies’ enforcement positions, but critical issues remain unresolved. The agencies have provided clear rules of the road in some circumstances, but the business community is left guessing on others.
Specifically, the coalition’s letter praises the agencies for identifying components of an effective compliance program and acknowledging thresholds that must generally be met before an entity is considered a government instrumentality. The letter also applauds the guidance’s alignment of the agencies’ positions on subsidiary liability, its favorable treatment of voluntary reporting, its clear acceptance of a mens rea standard for corporate criminal liability, and its inclusion of specific examples of enforcement actions that the agencies declined to pursue, and why.
However, the letter also observes that the guidance fails to assure the business community that the agencies will give sufficient weight to strong compliance programs, falls short of clearly defining who is a “foreign official,” and introduces new uncertainty with respect to the agencies’ expectations in the wake of a merger or acquisition. Furthermore, the letter points out that the guidance does not illustrate, through examples or hypotheticals, the level of due diligence expected when businesses hire outside vendors and contractors to engage in foreign markets. Finally, the letter asks the DOJ and the SEC to make disclosure of their declination decisions a routine practice.
In February 2012, a similar business coalition sent a letter to the DOJ and the SEC that identified numerous areas of ambiguity, uncertainty, and inconsistency that the FCPA guidance could address. In April 2012, ILR hosted a roundtable discussion with officials from DOJ and the SEC to discuss the guidance and the business community’s need for certainty and clarity under the law.
A long-running lawsuit against Chevron in Ecuador has been racked with allegations of fraud by the plaintiffs’ lawyers, including the latest bombshell claims that the lawyers ghostwrote the judge’s decision against the company. After reviewing the case in the American Lawyer, Michael Goldhaber concludes that “the likely truth of Chevron's core allegations should now be evident to anyone who studies the evidence without ideological blinders - including the attorneys and judges.”
Who are the real beneficiaries when third-parties fund litigation in Australia? “Clearly, the funders find it lucrative… and some evidence suggests that in certain cases the funders walk away with a bigger share of the settlement than the plaintiffs,” writes ILR President Lisa Rickard in The Australian . Initial proposals to regulate third-party litigation funding are inadequate, she adds, and the government should work to craft a more rigorous regulatory framework.
“Always be on high alert when someone tries to sell you a fix to a problem you didn’t know you had,” warns IBM general counsel Bob Weber in Forbes. He’s referring to third-party litigation funding, which may seem benign but in fact dangerously introduces a gambling mentality to the court process and promotes the interests of funders and lawyers over their client.
A judge has awarded $181 million – about $19,700 per hour – in fees to a law firm that sued Johnson & Johnson on behalf of the state of Arkansas, according to Reuters. The firm was hired by the attorney general on a contingency fee basis to sue the company over the risks associated with the antipsychotic drug Risperdal.
In a letter to the European Commission, ILR President Lisa Rickard warns that mass legal action under the EU’s draft data-protection proposal could lead to abuses similar to those in the U.S. class action system. “We have yet to see the case made for EU measures on collective redress, and since there is no guarantee that the problems of the U.S. class action system would not be replicated, it is imperative that any EU measures that are adopted include certain essential safeguards,” Rickard’s letter says. (Law 360)
An Ecuadorian judge who once presided over a lawsuit against Chevron submitted an affidavit that the plaintiffs lawyers in the case offered a $500,000 bribe to the judge if they were allowed to write the decision, reports ThomsonReuters. The case, which has been tainted with allegations of illegal and improper conduct, resulted in a $19 billion verdict against Chevron. The company continues to fight the enforcement of the verdict in American courts.
The Associated Press reports that Louisiana’s attorney general has paid more than $15 million to outside law firms that he hired to sue over the gulf oil spill, many of whom have donated money to the AG’s campaigns. The judge overseeing the case recently took issue with the use of outside counsel, saying they have “obstructed and frustrated the progress of the litigation” instead of cooperating with other attorneys in the case.
The plaintiffs’ lawyers in a multibillion environmental lawsuit have been accused of defrauding the investors that were funding the suit, Roger Parloff reports in Fortune. In a letter to lawyers, the funders write “we believe that you and particularly your U.S. representatives engaged in a multi-month scheme to deceive and defraud in order to secure desperately needed funding, all the while concealing material information and misrepresenting critical facts in the fear that we would have walked away had we known the true state of affairs.”