On January 19, 2010, the U.S. District Court for the Central
District of California unsealed an indictment charging Juthamas
Siriwan, the former governor of the Tourism Authority of Thailand
("Governor Siriwan"), and her daughter, Jittisopa
Siriwan, with one count of conspiracy to money launder, seven
counts of money laundering, and one count of aiding and
abetting.[1] The indictment followed the trial in
United States v. Gerald and Patricia Green,[2]
in which a jury convicted the defendants for violating the Foreign
Corrupt Practices Act ("FCPA") by making payments to
Governor Siriwan. The Siriwan indictment is the latest in a series
of enforcement actions designed to punish the recipients of
bribes.
In September 2009, the Greens, executives of a Los Angeles-based
film festival management company, were convicted at trial of nine
substantive FCPA violations, six counts of money laundering, and
conspiracy. As detailed in both the Green and
Siriwan indictments, between 2002 and 2007 the Greens paid
then-governor Siriwan approximately US$1.8 million in exchange for
more than US$14 million worth of contracts. The Greens routed the
payments through numerous businesses and U.S. bank accounts under
their control to bank accounts in the United Kingdom, the Isle of
Jersey, and Singapore held in the name of Jittisopa Siriwan and an
unnamed friend. These payments were disguised as
"commission" payments in the Greens' books and
records.
The FCPA itself does not create liability for bribe
recipients.[3] A count of money laundering under 18
U.S.C. § 1956, however, can be predicated upon a financial
transaction involving proceeds of bribery of a foreign official or
embezzlement in violation of foreign law.[4] In other
words, because bribery and embezzlement are "specified
unlawful activities" under the money-laundering statute, any
party with the requisite knowledge that conducts a financial
transaction involving the proceeds of bribery or embezzlement
valued greater than US$10,000 can be criminally prosecuted when the
transaction takes place in the territorial jurisdiction of the
United States or involves a United States person.
With public statements and action, the DOJ has signaled its desire
to use this intersection between bribery and money laundering to
bolster its FCPA enforcement efforts. In November 2009, Attorney
General Eric Holder declared asset recovery "a global
imperative."[5] The same month, Assistant Attorney
General Lanny Breuer elaborated: "When we can prove the case
we're absolutely going to seize their profits and their land
and their fancy cars and boats. We're committed to doing
it."[6] Similarly, in January 2009, Acting
Assistant Attorney General Matthew Friedrich described the lengths
to which U.S. law-enforcement will go to recover the proceeds of
foreign corruption, saying "Not only will the Department, for
example, prosecute companies and executives who violate the Foreign
Corrupt Practices Act, we will also use our forfeiture laws to
recapture the illicit facilitating payments often used in such
schemes."[7] Friedrich's comments came in the
context of a US$3 million forfeiture action filed in January 2009
to recover bribes Siemens AG paid to a Bangladeshi government
official.[8] Siemens had settled worldwide bribery
allegations in December 2008[9] with a deferred
prosecution agreement, a guilty plea by three subsidiaries, and the
payment of more than $1 billion in fines, disgorgement, and
penalties to the DOJ, SEC, and German authorities.
There have also been previous instances of bribe recipients being
prosecuted for money laundering: in December 2009, Robert Antoine
and Jean Rene Duperval, officials at a Haitian telecom company,
were indicted in connection with the DOJ's broader probe into
bribes to officials of Telecommunications D'Haiti. Their case
is currently pending in the Southern District of
Florida.[10]
Convictions for money laundering can result in severe sanctions,
which often exceed the penalties available under the FCPA and other
anti-bribery laws. Whereas an FCPA violation is punishable by up to
five years in prison and a US$100,000 fine,[11] a
conviction for money laundering can carry a sentence of up to 20
years imprisonment and a fine up to US$500,000 or twice the amount
involved, whichever is greater.[12] Additionally,
laundered funds may be recovered directly through a forfeiture
action. The law even allows U.S. authorities to reach funds
deposited into an account at a foreign financial institution, if
that foreign financial institution has an interbank account in the
United States.[13]
In the current enforcement environment, U.S. companies conducting
business overseas and the financial institutions servicing them
must be vigilant against both FCPA risks and money-laundering
risks. Any transfer of the proceeds of bribery, made with the
requisite knowledge, can form the basis of criminal liability. In
addition, the underlying funds are at risk of forfeiture, and the
financial institutions that receive or hold them may have reporting
obligations. During acquisitions companies should understand the
money laundering laws that require that financial institutions and
other regulated companies perform due diligence and implement
procedures to identify their clients prior to conducting financial
business with them. These "know-your-customer" rules can
carry a double benefit in helping companies identify and avoid both
money laundering and bribery.
Endnotes
[1] United States v. Juthamas Siriwan, Case No. CR
09-00081 (C.D. Cal.)
[2] United States v. Gerald and Patricia Green, Case No.
CR 08-00059 (C.D. Cal.)
[3] See United States v. Castle, 925 F.2d 831 (5th Cir.
1991) (holding that foreign officials may not be prosecuted under
18 U.S.C. § 371 for conspiring to violate the FCPA).
[4] See 18 U.S.C. § 1956(c)(7)(B)(iv).
[5] Attorney General Eric Holder at the Opening Plenary of the VI
Ministerial Global Forum on Fighting Corruption and Safeguarding
Integrity, November 7, 2009, available at
"
href="http://www.justice.gov/ag/speeches/2009/ag-speech-091107.html.%3cbr%3e%0d%0a%3cbr%3e%20"
" style="COLOR: #2b5387; TEXT-DECORATION:
none"http://www.justice.gov/ag/speeches/2009/ag-speech-091107.html.
"
"[6] Prepared Address to the 22nd National Forum on the
Foreign Corrupt Practices Act, November 17, 2009, available
at http://www.justice.gov/ag/speeches/2009
.
[7] DOJ Jan. 9, 2009 Press Release No. 09-020.
[8] United States v. All Assets Held in the Name of Zasz
Trading and Consulting Pte. Ltd., Case No. 09-cv-21 (D. D.C.
Jan. 8, 2009).
[9] DOJ Dec. 15, 2009 Press Release No. 08-1105.
[10] United States v. Esquenazi, et al., Case No. CR
09-21010 (S.D. Fla. Dec. 4, 2009).
[11] 15 U.S.C. § 78dd-2(g).
[12] 18 U.S.C. § 1956(a)(1)(B)(ii).
[13] 18 U.S.C. § 981(k).
O'Melveny & Myers LLP routinely provides advice to clients on complex transactions in which these issues may arise, including finance, mergers and acquisitions, and licensing arrangements. If you have any questions about the operation of the applicable statutory provisions or the case law interpreting these provisions, please contact any of the attorneys listed on this alert.
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