William “Billy” Jacobson, a former Assistant Chief in the Criminal Division’s Fraud Section from 2007 to 2008, sat down with us recently for a wide-ranging discussion on the Foreign Corrupt Practices Act and the DOJ’s enforcement of the law. Jacobson, who is now co-general counsel at Weatherford International, handled countless FCPA cases during his time at Justice, including the Siemens AG case which resulted in the most expensive FCPA settlement to date. Below is an edited transcript of the interview.
Main Justice: How closely do the DOJ and SEC work together on FCPA matters?
William Jacobson: It’s very close, and I think it’s going to get even closer now that there’s a dedicated SEC group working out of Washington, which makes all the sense in the world. There always was a core group of SEC lawyers who worked on the vast majority of FCPA cases with the DOJ lawyers, and so there was already daily contact between the two agencies. The coordination was important — you wanted to make sure that the two agencies weren’t going to do something that may have hampered each other’s efforts. So literally daily communication, but not necessarily on any one case. If I was supervising a case load of 70 cases, any day I could have five cases to talk to the SEC about.
MJ: Practically speaking, how do you manage 70 cases?
WJ: You try to manage them. It was hard. I was just supervising them though, there were people and there are people who are doing the lion’s share of the day-to-day work at the section and they are the names that you don’t hear about. You might see their names on the pleadings, but that’s about all you see of them. Like Lori Weinstein, who worked on the Siemens case and did a great job on that, as well as an AUSA named John Griffith. They’d do the lion’s share of the work, I’d just do the upper level supervision of them. There are people who work tirelessly to get these cases done. You supervise the cases, but you’re obviously not in the weeds in 70 cases. You can’t be.
MJ: As one of the people who came up with the idea for the “sting case,” what do you think it’s implications are for the future?
WJ: I think it’s going to have a big deterrent effect because, regardless of how often these techniques are used, people won’t know when they’re being used and when they’re not. People who follow these things are going to be more skittish and less prone to have these conversations than they were in the past because they might think there’s a possibility that the guy they’re speaking to is wearing a wire, or they think they’re being videotaped. Obviously, the government’s hope is that it has a dissuasive effect even when it’s not being used. That said I think it is going to be used in future cases, or, for all we know, it’s being used right now. I think it’s going to shake people up.
MJ: What was your reaction to the BAE settlement?
WJ: I think the DOJ did a really good job. What I question is what the U.K. did. I question the SFO settling for only £30 million. I mean, it’s a very small amount of money to what it could have been, given the amount of time that the Serious Fraud Office was looking at the issue. And then they dropped the case against the only individual that they had charged, which was remarkable — something that never would have happened in the U.S. In the U.S., you’re never going to get an agreement with the government where the corporation agrees to settle if the government drops the charges against its employees. It will never happen, and it shouldn’t happen, but it happened at the SFO. So I really do question what the SFO was thinking.
MJ: How far behind the U.S. is Europe with regards to their anti-corruption efforts?
WJ: They’re catching up, but they’re not where the U.S. is, nor should we expect them to be. They’re five to 10 years behind, but hopefully they’ll get there. I think a lot of people in the U.S. government are very negative about the U.K., because they did so little for so long, but I think you’ve got to give credit where credit is due. At least they’ve been doing stuff in the last couple of years and they’re going in the right direction. So I don’t really see the need to harp on their failures that they had prior to 2008 or 2007. That said, the BAE settlement is odd.
MJ: Some in the FCPA community have complained that there is a dearth of judicial rulings on FCPA issues. Are there any specific issues you’d like to get a judge’s opinion on?
WJ: There are many. It would be nice to see the facilitating payment issue explicated in a judicial opinion. For example, DOJ posits that there’s some sort of dollar limit to what can be considered a facilitating payment. Certainly a $10 payment to get your visa is facilitating, but a $100,000 payment is not a facilitating payment, DOJ would say. Well, if it’s for the same purpose, just because it’s a higher amount, why isn’t it also a facilitating payment? If there is truly a dollar limit to a facilitating payment is a question I think a lot people would like answered. And where’s the line between a discretionary and a non-discretionary act, such that paying a government official to do it is a facilitating payment, or not? Very gray lines.
A more nuanced thing that I’ve been thinking about is what can you pay government officials for, if anything, if there’s no corrupt purpose to it. For example, say you’ve got a doctor who is an employee of a state-run hospital in Latin America and a pharmaceutical company wants to pay that doctor to do research but the doctor’s hospital is also a customer of the pharmaceutical company and they’re buying its product. Can the company pay that doctor to do legitimate research if the doctor is also making recommendations to buy the product? There’s likely no corruption there, so can you employ a government official?
MJ: What trends do you expect to see in FCPA enforcement going forward?
WJ: It’s definitely going to continue hot and heavy. Once you get the snowball going downhill it’s really hard to stop it. Especially when the U.S. has done such a good job at pushing that snowball down the hill of other countries. We’ve been doing a lot to get the U.K. to bring enforcement actions, and they’re just starting to do it. Germany’s been doing a lot, other countries in Europe have been doing a lot. Japan has even gotten into the game. China seems to be bringing a lot of domestic corruption cases. The trend is definitely going in the right direction.
The obvious story from 2009 is the prosecution of individuals. You look at the FCPA circa 2004 or 2005 and it was all prosecutions against companies, maybe even into 2006 and 2007. The focus on individuals is a big deal, and I’m sure it will continue, because that has the most dissuasive effect imaginable. The single best way to get someone not to do something is by having them imagine being in jail for doing it.
I’m interested to see whether these industry-wide inquires continue to happen. We started a medical device inquiry while I was at DOJ, where we essentially asked these companies to look into their own shop and tell us if they had problems. That inquiry has cost these companies lots and lots of money. Many of them have found problems within their own organizations, so they fixed those. But I wonder if DOJ tries that same tactic with another industry in the future, whether the industries might push back a little bit and say: “If you have some sort of suspicion that we’re doing something wrong, come and tell us and point us in the right direction. But we’re really not in the mood to start a massive internal, international investigation of all our operations.” I wouldn’t be surprised if some industries start to push back a little bit.
MJ: What could the FCPA team be doing better?
WJ: I think the team at Fraud could do a little better job of understanding where businesses are coming from and the realities of the business world. That is not at all to excuse out-and-out corruption, because corruption is corruption. But I think they could do a little better job of keeping things in perspective and understanding that many companies are trying to get things right, but it’s not always easy. You can’t control every one of your employees. Sometimes you’re faced with very difficult business circumstances where the failure to do something is maybe in the gray area.
Michael Chertoff, when he took over the Criminal Division, made a big point about saying “Let’s do cases in real time. Let’s take a case, go for it, and sure some small things will fall by the wayside.” And that’s what we did with the Siemens case. The focus was always take a few really big, provable problems and bring the case. We always knew we weren’t going to find everything that Siemens did wrong because we’d be investigating for 20 years. I’ve gotten the sense that DOJ’s getting away from that a little bit lately. They’ve gotten lost in the weeds a little bit, focusing too much on the little things and losing the big picture. I think they can improve on that a bit.
MJ: Are you enjoying your new job?
WJ: Yeah. I’ve had the opportunity to really improve a compliance program in a very difficult industry, the oil field service industry. I’ve been given, really, whatever resources I want and feel I need to build a state-of-the-art compliance program. It’s been fun, quite frankly. I’ve been able to surround myself with people I like working with. I’ve been able to implement the procedures and the policies and the practices that I think are necessary for our difficult industry and run that on a day-to-day basis. It’s been really interesting getting to know one business intimately, as opposed to working with several different companies and maybe never getting to know one company from top-to-bottom. And I’m still very much in the learning phase of the company. It’s arguably the most important industry in the world, and it’s doing business in all of the worst places in the world to do business, so it’s a fascinating place to be. It’s a great challenge.
MJ: Thanks for taking the time to speak with me.
WJ: Happy to do it.
An upcoming report by the Office of Professional Responsibility clears the key authors of a legal memorandum justifying waterboarding of allegations that they violated professional standards, Newsweek reports.
An earlier draft of the report concluded that former Office of Legal Counsel lawyers Jay Bybee, now a federal appellate court judge, and John Yoo, now a law professor, failed to meet their professional obligations when crafting a 2002 memo blessing the use of harsh interrogation techniques.
Associate Deputy Attorney General David Margolis, a career lawyer, “downgraded that assessment to say they showed ‘poor judgment,’” during a final review of the report, according to Newsweek. Under department rules, poor judgement does not rise to the level of professional misconduct — which means no referrals to state bar associations for potential disciplinary action.
It’s unclear why Margolis softened the initial findings. A Justice Department official told Newsweek he acted without input from Holder.
The report, which has been expected for months, is undergoing declassification. The final version will provide fresh details about how waterboarding was adopted and the role top White House officials played in the process, Newsweek reports. For instance:
Two of the most controversial sections of the 2002 memo—including one contending that the president, as commander in chief, can override a federal law banning torture—were not in the original draft of the memo, say the sources. But when Michael Chertoff, then-chief of Justice’s criminal division, refused the CIA’s request for a blanket pledge not to prosecute its officers for torture, Yoo met at the White House with David Addington, Dick Cheney’s chief counsel, and then–White House counsel Alberto Gonzales. After that, Yoo inserted a section about the commander in chief’s wartime powers and another saying that agency officers accused of torturing Qaeda suspects could claim they were acting in “self-defense” to prevent future terror attacks, the sources say. Both legal claims have long since been rejected by Justice officials as overly broad and unsupported by legal precedent.
We’ll have more throughout the day.
Posted in News | Comments Off
The New York Times ombudsman in a column Sunday said former Department of Homeland Security Secretary Michael Chertoff should be more forthcoming about his relevant clients when speaking with the news media.
Chertoff, who is also a former appeals court judge and was a head of the Justice Department’s Criminal Division during the Bush administration, told the Times in recent articles that more body scanners should be installed in airports. The Times reporters, Eric Lipton and John Schwartz, were following up on the case of Umar Farouk Abdulmutallab, the accused “underwear bomber” who allegedly tried to blow up a Detroit-bound airplane on Christmas Day.
The Times reporters failed to note that Chertoff is a consultant to a manufacturer of the scanning devices, resulting in this Jan. 15 Editor’s Note.
The reporters didn’t ask Chertoff about his clients, and he didn’t volunteer the information, the Times’s public editor, Clark Hoyt, wrote. Chertoff represents a manufacturer through the Chertoff Group, a risk-management firm he formed in March, Hoyt wrote.
“I always answer when I’m asked,” Chertoff told Hoyt. “But I don’t think it is my obligation to put myself in the head of a reporter” and pose the questions.
Chertoff did tell NPR and CNN interviewers about his business relationship when they asked, Hoyt reported.
Interestingly, Chertoff wrote an Op-Ed article for The Washington Post, published New Year’s Day, that carried a one-sentence biography divulging that his clients included a scanner manufacturer — a note he said he volunteered.
“If I’m affirmatively getting out there,” [Chertoff] said, as opposed to being called by a reporter, “I make it my business to disclose.”
That’s a distinction I don’t buy. What difference does it make whether a source seeks a forum or a reporter happens to call? Knowing Washington’s culture of revolving doors and news spin, the Times reporters should have asked the obvious question. But if Chertoff had a connection he thought the public needed to know in one instance, he should have made it clear in the others.
Posted in News | Comments Off
The New Jersey U.S. Attorney was sworn in today before 400 people including Attorney General Eric Holder and state dignitaries, the NBC New York Web site reported.
Some of the notable New Jerseyans, who were in attendance according to the news Web site, include:
-Supreme Court Justice Samuel Alito, who administered the oath.
-Sen. Frank Lautenberg (D-N.J.)
-Sen. Robert Menendez (D-N.J.)
-Gov. Jon Corzine.
-Gov.-elect Chris Christie, who was the George W. Bush U.S. Attorney for New Jersey.
-Former Homeland Security Secretary Michael Chertoff, who served as New Jersey U.S. Attorney under President George H.W. Bush.
-New Jersey FBI Director Weysan Dun.
Holder said Fishman will be one of his top advisers, according to NBC New York. In October, the Attorney General tapped Fishman to be on the Attorney General’s Advisory Committee of U.S. Attorneys, a body that serves as the voice of the U.S. Attorneys at Justice Department headquarters in Washington.
“I will rely on a man I trust,” Holder said at the ceremony, according to the news Web site.
Fishman officially took the helm of the U.S. Attorney’s office in October, shortly after he won Senate confirmation. He replaced acting U.S. Attorney Ralph Marra, who is under investigation by the DOJ Office of Professional Responsibility.
OPR is probing Marra over remarks he made this summer that could have aided Christie’s campaign for governor. The comments were about a July sting, which netted more than 40 defendants. Corzine and Christie both used investigation to show their anti-corruption credentials during the heated race for governor.
Fishman said he would make sure his office is fair and ethical. He added that his office would also fight gang crime and terrorism, according to the NBC news Web site.
Posted in News | Comments Off
Former Bush official Michael Chertoff, an ex-New Jersey U.S. Attorney, told The Record’s Herb Jackson today that it was “a stretch” to say that New Jersey acting U.S. Attorney Ralph Marra made unethical comments that could have aided former U.S. Attorney Chris Christie’s campaign for governor.
The Justice Department is probing Marra over the public remarks he made after his office netted 44 individuals – including 29 elected or public officials — in a corruption investigation last month, The Associated Press reported yesterday. Christie, Marra’s former boss, has used the arrests to argue he would be better at preventing public corruption than Democratic Gov. Jon Corzine.
Here’s what Marra reportedly said:
“There are easily reforms that could be made within this state that would make our job easier, or even take some of the load off our job. There are too many people that profit off the system the way it is and so they have no incentive to change it. The few people that want to change it seem to get shouted down. So how long that cycle’s going to continue I just don’t know.”
Here’s what Chertoff told Jackson in an interview:
Q: Did Marra cross a line with his comments?
A: I’m not going to comment on something somebody said that I didn’t see or hear. Generally there are a set of rules, you’re not supposed to comment, give a personal opinion about someone’s guilt or innocence, you’re not supposed to talk about evidence that hasn’t actually been made public in court. So those are pretty clear rules. I think every U.S. attorney always has a little rhetorical flourish. I don’t ever remember seeing a U.S. attorney, including myself, get out and say we’ve arrested people for horrendous acts of terrorism, we don’t want to comment about whether we think it’s good or bad. That’s obviously a little foolish. So I think the key’s generally to avoid saying anything that would prejudice the defendant in the case.
Q: Does the fact Mr. Marra’s former supervisor is a candidate for governor running on the a reform platform-
A: [Interrupting]I think it’s a stretch to try to fit this is into a political discussion. The rules are - Obviously a US attorney won’t come out and say I support a political candidate, but you know there’s always an election in this country, and if the rule is you can’t say anything that might be a topic of public interest then you wouldn’t be able to have a press conference. So I think generally the rule is not to comment on guilt or innocence, not to talk about evidence that’s not in the case. But I think general comments about the significance of the case, whether it’s a corruption case or a bank fraud case or a securities fraud case, a mortgage fraud case, that’s kind of common frankly.
Posted in News | Comments Off
David Nahmias will step down Sunday as Northern District of Georgia U.S. Attorney to take his seat on the Georgia supreme court, the Atlanta Business Chronicle reported today.
Georgia Gov. Sonny Perdue appointed Nahmias to the court last week. Nahmias, a Bush-holdover, became a U.S. Attorney in 2004 after spending several years in the Justice Department Criminal Division as a counsel to Assistant Attorney General Michael Chertoff and later as a Deputy Assistant Attorney General in the division. He also spent time as a clerk for D.C. U.S. Circuit Judge Judge Laurence H. Silberman and Supreme Court Justice Antonin Scalia after graduating from Harvard Law.
Posted in News | Comments Off
Perdue interviewed nine candidates for the appointment. The Georgia governor said Nahmias is a person “we can trust to guard this country’s bedrock principles.”
Posted in News | Comments Off
Participating in a panel discussion at O’Melveny & Myers, former Assistant Attorney General of the Criminal Division Alice Fisher and other former Bush DOJ officials expressed concern about the new enforcement environment, reports the BLT.
Fisher, now a partner at Latham & Watkins, likened the Obama administration’s stepped up enforcement to Dr. Octopus, a villian from the Spiderman movies, “His arms just keep going and going and going,” she said.
The rhetoric sounded like talk you hear during campaign season.
Former U.S. Attorney for the Eastern District of Virginia Chuck Rosenberg said that businesses feel like they are taking “a walk in the woods with a very hungry grizzly bear. …The bear’s going to get you if you’re a lagger.”
Former Secretary of Homeland Security Michael Chertoff simply stated, “It’s going to be rough, is the bottom line.” Chertoff is now senior of counsel at Covington & Burling.
The panel was moderated by former Bush Homeland Security adviser to Ken Wainstein, who is a partner at O’Melveny.