There are few court cases involving the Foreign Corrupt Practices Act. Most of those accused quickly settle and move on. With few court cases that means the appellate decisions helping to interpret the FCPA are rare. Yesterday we had one of those rare sightings.
Frederic Bourke was convicted of FCPA violations in 2009. Bourke co-founded the fashion accessory company Dooney & Bourke, but considers himself an inventor, investor and philanthropist. Unfortunately he fell into business with Viktor Kozeny, the Pirate of Prague. The government charged Kozeny and Bourke with conspiring in a scheme to illegally purchase the state-owned oil company of Azerbaijan, SOCAR, by bribing the Azerbaijani president and other government officials.
Bourke’s main defense to the charges was that he did not have explicit knowledge of the bribery. The government took the position that Bourke had “conscious avoidance”.
Under those circumstances, a jury might conclude that no actual knowledge existed but might nonetheless convict, if it believed that the defendant had not tried hard enough to learn the truth.
However, the government had some statements from Bourke stepping around the bribery issue. Unfortunately, Bourke also got some advice from his attorney “that if Bourke thought there might be bribes paid, Bourke could not just look the other way.” That was in 1999 and before the current era of FCPA enforcement. I think you would be hard-pressed to find an attorney who make that statement today. The Sergeant Schultz defense does not work any more when it comes to bribery.
- US v Viktor Kozeny, Frederic Bourke Jr., et al (.pdf) Second Circuit decision 09-4704
- Second Circuit Affirms Bourke’s Conviction in the FCPA Professor
- The Incredible Half-Billion-Dollar Azerbaijani Oil Swindle Wherein we learn why smart players like Leon Cooperman, George Mitchell, and AIG would entrust buckets of their money to Victor Kozeny, a.k.a. the Pirate of Prague. (Hint: Can you say ‘greed’?) by Peter Elkind in Fortune
- Bourke FCPA Bribery Conviction Upheld by U.S. Appeals Court by David Glovin and Patricia Hurtado in Bloomberg