Tag Archives: Frederick T. Davis

Does the Foreign Sovereign Immunities Act bar prosecution of sovereign owned enterprises? The Supreme Court’s disposition of this thorny issue may create mischief

by Frederick T. Davis

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Fred Davis

Sovereign Owned Enterprises, or “SOEs,” are commercially active businesses that are owned by foreign governments.  A UN agency estimates that they account for about ten percent of global economic activity.  As they become increasingly active in international business in competition with privately owned or publicly traded companies, they risk prosecution if their activities violate criminal laws.  On January 17, 2023, the Supreme Court heard oral argument on a case that presented a radical possibility: that SOEs are immune from any prosecution in the United States.  The case is complex, and the issues pending before the Court consequential.  No clear outcome emerged from the briefing and argument, and the most likely alternative dispositions could lead to untoward results.

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What the Hoskins Rule 29 Acquittal Reveals About Contesting “Jurisdictional” Issues in American Criminal Justice

by Frederick T. Davis

On February 26, 2020, Judge Janet B. Arterton of the federal district court in Connecticut granted a motion under Rule 29 of the Federal Rules of Criminal Procedure to acquit a defendant of seven counts of which he had been convicted by a jury in November 2019.  A post-conviction Rule 29 acquittal is uncommon: A prosecutor armed with a jury verdict only rarely is found not to meet the quite lenient standard that the factual evidence, when viewed “in the light most favorable to the government,” provided a basis for a reasonable jury to convict.  Even more unusually, the issue on which Judge Arterton found the prosecution lacking did not go to whether the defendant committed the acts of which he was charged or had the requisite state of mind, but whether the criminal statute applied to him at all—an issue that in much of the world is considered to be a question of “jurisdiction” (or, in Europe, of “competence”).  The decision raises troubling questions about how threshold issues in criminal cases are resolved under American criminal procedures. Continue reading →

United States v. Connolly and the Risk That “Outsourced” Criminal Investigations Might Violate Foreign Blocking Statutes

by Frederick T. Davis

In May 2019, Chief Judge Colleen McMahon of the United States District Court for the Southern District of New York issued a noteworthy – and much-commented upon (PDF: 198 KB) – ruling with significant implications for the conduct of corporate internal investigations by outside law firms. United States v. Connolly, No. 16-CR-370 (S.D.N.Y. May 2, 2019).  Judge McMahon’s basic holding was that if there is “extensive coordination” between lawyers conducting a corporate investigation and the prosecutor’s office with whom they are in discussions or negotiations, the lawyers’ acts are “fairly attributable to the government” under the reasoning of Garrity v. New Jersey, 385 U.S. 493 (1967), thus raising the question whether statements obtained by the lawyers have been “compelled” by state action and therefore cannot be used directly or indirectly to inculpate the declarants. The target of the court’s pointed criticism was basically the government: by extensive “outsourcing” of a criminal investigation, Judge McMahon warned, a prosecutor’s office risks procedural error that could imperil a prosecution. Judge McMahon’s opinion is also notable for a reason that has not been the subject of analysis and should be of grave concern to lawyers who conduct internal investigations internationally: under her reasoning, such lawyers face a real risk of criminal prosecution under what are known as “blocking statutes” in countries where the lawyers conduct interviews or otherwise gather evidence. Continue reading →

Policing Your Own Jardin – France Signals Eagerness to Take Control of Its White Collar Enforcement

by Antoine F. Kirry, Alexandre Bisch, Frederick T. Davis, Robin Lööf, Line Chataud, Ariane Fleuriot, Fanny Gauthier, and Alice Stosskopf

In light of well-publicized U.S. enforcement actions against French companies (Alstom, Total, Technip, Alcatel, BNP), the French government asked MP Raphaël Gauvain to consider measures to protect French companies faced with foreign extraterritorial judicial and administrative procedures. His long-awaited report was published on June 26, 2019. Entitled “Restoring French and European Sovereignty and protecting our companies from extraterritorial laws and measures,” this 100-page document points out the lack of effective legal tools available to French companies faced with extraterritorial proceedings. Drawing on this, the report makes several recommendations. Continue reading →

French Anti-Corruption Authority Raises Alarm About M&A Transactions

by Antoine F. Kirry, Frederick T. Davis, and Alexandre Bisch

The French Anti-Corruption Authority (AFA) is zeroing in on corruption risks hidden in acquisition targets of French companies, in France and overseas.

In a statement reported yesterday, AFA representatives alerted would-be acquirers to the need to conduct in depth pre-acquisition anti-corruption due-diligences.  The AFA observed that most companies and investment bankers seem insufficiently aware of this need, and urged them not to underestimate the reputational damage that may result from potential corruption issues in target companies, in addition to potential sanctions. Continue reading →

France Boosts Tax Fraud Prosecution

by Antoine F. Kirry, Frederick T. Davis, Eric Bérengier, Alexandre Bisch, Robin Lööf, Aymeric D. Dumoulin, Alice Stosskopf, Fanny Gauthier, and Line Chataud

On October 23, 2018, the French Parliament enacted a law aimed at combatting fraud (the “Law”).[1] The most innovative provisions of the Law change key procedural aspects of tax law enforcement, which is likely to result in an increased number of criminal tax fraud prosecutions against both individuals and legal entities. The Law also addresses customs and social security frauds.

Tax Fraud Prosecution: Open the Floodgates Continue reading →

A French Court Authorizes the First-Ever “French DPA”

by Frederick T. Davis

In December 2016 the French government finally passed the so-called “Loi Sapin II” in order to bolster its ability to penalize overseas bribery. Its unstated but clear goal was to achieve some degree of parity with US efforts in this area, which had led to a number of highly publicized cases where well-known French companies had paid fines totaling well over $2 billion to the US treasury to resolve criminal matters that could well have been resolved in France.  A key provision of the new law is a procedure that permits a negotiated outcome, similar in concept to a US Deferred Prosecution Agreement (“DPA”), that avoids a criminal conviction.  On November 14, 2017, the first such agreement was announced by the National Financial Prosecutor of France.  While many details of the deal will not be known until the release of the court’s opinion approving it, which may be available as early as the end of November, the fact of the outcome and its known parameters are very significant. Continue reading →

The Second Circuit Clarifies How U.S. Constitutional Principles Apply in Multijurisdictional Investigations

By Frederick T. Davis

In United States v. Allen (PDF: 511 KB), the Second Circuit held that self-incriminating statements compelled by a foreign sovereign cannot be used, directly or indirectly, in a U.S. prosecution. The opinion thoughtfully analyzes how U.S. constitutional principles apply in cross-border investigations and may have some impact on how such investigations are conducted in the future.

During the well-known investigations of alleged manipulation of the London Interbank Offered Rate (“LIBOR”), U.K. citizens and low-level bank employees Anthony Allen and Anthony Conti were suspected of artificially adjusting exchange rate information to affect LIBOR and benefit their confederates.  The U.K. Financial Conduct Authority (“FCA”) compelled Allen and Conti’s testimony under the Financial Services and Markets Act 2000 (“FSMA”). The FSMA provides that the FCA could not use Allen and Conti’s statements against them but could use the “fruits” of any investigation developed on the basis of their statements. The FCA also compelled testimony from Paul Robson, one of Allen and Conti’s co-workers, who provided generally exculpatory information regarding himself, Allen and Conti.  Later, the FCA commenced an enforcement action against Robson and provided him with transcripts of Allen’s and Conti’s statements, which Robson carefully reviewed.  The FCA ultimately decided not to prosecute Allen, Conti, or Robson. Continue reading →