FCPA: Conscious Disregard is Knowledge

This weekend’s news covered a Friday verdict from the Southern District Court of New York that found Frederick Bourke guilty of conspiring under the Foreign Corrupt Practices Act (“FCPA”). Broadly, the FCPA prohibits American businesses from making payments to foreign officials for the purpose of doing business. Despite character witness Former Senator George Mitchell, jurors found Bourke conspired with his business partners to bribe Azerbaijan officials so as to effectuate control of a state-run oil company. Jurors found Bourke had knowledge of the payments, or alternatively, should have known of the payments. The discussion online suggests the due diligence responsibilities of American business under the FCPA is now much broader.

The FCPA applies to actors on behalf of the American business (this includes employees, agents, and shareholders). A successful anti-bribery claim requires the government to prove beyond a reasonable doubt, among other things, that defendant knew that something of value was being offered to a foreign official. This knowledge element need not be actual; it could in fact be acquiesance or conscious disregard. What factual evidence constituted Bourke’s knowledge, or conscious disregard of, in this case? There was the tape: a 1998 conversation between Bourke and an investor discussing possible corporate structures to avoid civil and criminal liability, that included the topic of bribes. This corporate structure later arranged and paid for recipient Azerbaijan officials to fly to NYC for medical treatment. Bourke’s false statements to the FBI in 2002 regarding payments probably didn’t help the matter … There was also testimony: two of Bourke’s business partners – who in fact directly participated in the illegal payments – testified that Bourke knew his investment monies were going to Azerbaijan officials. The fact that both witnesses already plead guilty with prosecutors, or that the timing of some of the dates testified to were inconsistent, did not dissuade jurors of Bourke’s knowledge. If anything, jurors interviewed later said they found Bourke just simply should have known about the illegal payments; “he’s an investor[;] it’s his job to know.”

Sentencing is scheduled for October of this year; appeal is anticipated.

(Photo courtesy of Wikimedia Commons).

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