DOJ Review of Foreign Bribery Cases Leaves Defendants Baffled

Defense lawyers can’t make sense of the US Justice Department’s decision to proceed in cases they expected to be dropped following President Donald Trump‘s Feb. 10 executive order pausing Foreign Corrupt Practices Act enforcement.

For those representing defendants in active cases under the FCPA, which generally prohibits bribing foreign officials, it’s now unclear what—if anything—the executive order means.

“We contacted the government by telephone and letter, asking them to please advise us as to what criteria or basis was used to make decisions to go forward with prosecution,” defense lawyer Frank Rubino said. “They politely advised us that it’s none of our business.”

Rubino represents Jorge Miguel Vasquez, one of four defendants charged under the FCPA in a case in the US District Court for the Southern District of Florida for allegedly making illicit payments in connection with contracts for voting machines.

“We were expecting they would dismiss our case” because it doesn’t fit within the administration’s announced FCPA goals, he said.

DOJ has moved to dismiss just one of the four FCPA cases headed for trial, and it’s unclear how—or if—the three cases that are still proceeding fall under the priorities outlined in the EO and accompanying fact sheet: eliminating barriers to US competitiveness, promoting “America First” policy, and national security interests.

Meanwhile, a memo from Attorney General Pam Bondi issued shortly before Trump’s order said the criminal division would prioritize investigations of foreign bribery connected to cartels and transnational criminal organizations and “shift focus away from investigations and cases that do not involve such a connection.”

That doesn’t make sense, said Mike Koehler, a professor at the University of Houston Law Center and author of the FCPA Professor website.

“I’ve read every FCPA enforcement action ever brought,” he said. “But I can’t think of any that had any link to cartels or transnational criminal organizations.”

Koehler said trying to read the tea leaves is “really tough” because there just aren’t that many FCPA cases in a given year, and individual enforcement decisions may have nothing to do with the order. The government has long declined to pursue FCPA cases for reasons like national security, he said.

Until the DOJ issues the guidance Trump’s order calls for, defense counsel say they’re navigating blind, hindering their ability to advocate for clients in the new FCPA enforcement environment.

The Justice Department didn’t respond to a request for comment.

‘Detailed Review’

Prosecutors in Vasquez’s case, United States v. Bautista, allege that he and other executives for electronic voting machine company Smartmatic bribed a Filipino official to secure contracts and related payments for voting machines and election services for the 2016 Philippine elections.

“It’s a legitimate company that makes voting machines and sells them across the world,” Rubino said.

Smartmatic made headlines when in 2021 it sued Newsmax Media Inc. and Fox News Network LLC for defamation after the outlets claimed the company helped manipulate the 2020 US presidential election.

The DOJ also authorized two other FCPA cases to advance.

United States v. Zaglin, another Southern District of Florida case, involves three individuals charged with paying bribes to secure contracts for the sale of uniforms and gear for the Honduran national police force. The defendants include the owner of a a military clothing and supply company, a dual citizen of the US and Peru accused of facilitating the bribes, and a Honduran official accused of being on the take.

United States v. Hobson, a case pending in the Western District of Pennsylvania, accuses two Corsa Coal Corp. executives of bribing officials at a company owned and controlled by Egypt in connection with sales of US coal. One of the two defendants pleaded guilty, but the other is fighting the charges.

The government’s filings in each case state simply that it has completed the detailed review called for in the executive order and intends to proceed to trial.

The only FCPA case the government has declined to pursue since the order is United States v. Coburn, in the District of New Jersey. There, two former Cognizant Technology Solutions Corp. executives were accused of authorizing a contractor to bribe government officials in India in order to obtain a planning permit for a corporate campus.

Richard Gaines, who represents former Corsa Coal executive Charles Hobson, said that as far as he can tell, there’s no consistency in the government’s decision to dismiss Coburn while proceeding against his client.

“The decision-making process is not transparent to us,” he said.

A representative for Steven Schwartz—one of the Coburn defendants—in a statement said he was “pleased and relieved that this case is finally over.”

“As we have maintained all along, he is innocent, and these charges should never have been brought,” the statement said.

Counsel for Gordon Coburn didn’t respond to a request for comment.

‘Operational Side’

There are at least two ways to distinguish Coburn from the cases proceeding, said James Koukios, a former prosecutor and co-lead of Morrison & Foerster LLP’s FCPA practice.

First, the alleged bribes in Coburn were more on the “operational side,” he said. The FCPA’s primary concern—the “really bad stuff"—is conduct that involves quid pro quo bribes to win or retain business, he said.

The FCPA generally exempts facilitation payments made to expedite nondiscretionary, routine government actions, and a payment for a permit is arguably closer to that.

Second, Coburn was “a really hard case” and perhaps not worth the resources being put into it, he said.

The case languished for years, and the government had problems getting a key witness from India to testify, among other things.

Koehler, who has long been skeptical of the government’s case in Coburn, suggested the EO may have provided “a convenient exit ramp” in an ill-advised case that had gone too far.

If nothing else, the order has encouraged DOJ to step back and pursue only those cases strictly within the bounds of FCPA, he said.