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Money Laundering Indictment of Thai Government Official Underscores DOJ Efforts to Punish Recipients of Foreign Bribes and the Increasing Intersection Between Money Laundering and FCPA Charges

January 1, 0001

 

On January 19, 2010, the U.S. District Court for the Central District of California unsealed an indictment charging Juthamas Siriwan, the former governor of the Tourism Authority of Thailand ("Governor Siriwan"), and her daughter, Jittisopa Siriwan, with one count of conspiracy to money launder, seven counts of money laundering, and one count of aiding and abetting.[1] The indictment followed the trial in United States v. Gerald and Patricia Green,[2] in which a jury convicted the defendants for violating the Foreign Corrupt Practices Act ("FCPA") by making payments to Governor Siriwan. The Siriwan indictment is the latest in a series of enforcement actions designed to punish the recipients of bribes.

In September 2009, the Greens, executives of a Los Angeles-based film festival management company, were convicted at trial of nine substantive FCPA violations, six counts of money laundering, and conspiracy. As detailed in both the Green and Siriwan indictments, between 2002 and 2007 the Greens paid then-governor Siriwan approximately US$1.8 million in exchange for more than US$14 million worth of contracts. The Greens routed the payments through numerous businesses and U.S. bank accounts under their control to bank accounts in the United Kingdom, the Isle of Jersey, and Singapore held in the name of Jittisopa Siriwan and an unnamed friend. These payments were disguised as "commission" payments in the Greens' books and records.

The FCPA itself does not create liability for bribe recipients.[3] A count of money laundering under 18 U.S.C. § 1956, however, can be predicated upon a financial transaction involving proceeds of bribery of a foreign official or embezzlement in violation of foreign law.[4] In other words, because bribery and embezzlement are "specified unlawful activities" under the money-laundering statute, any party with the requisite knowledge that conducts a financial transaction involving the proceeds of bribery or embezzlement valued greater than US$10,000 can be criminally prosecuted when the transaction takes place in the territorial jurisdiction of the United States or involves a United States person.

With public statements and action, the DOJ has signaled its desire to use this intersection between bribery and money laundering to bolster its FCPA enforcement efforts. In November 2009, Attorney General Eric Holder declared asset recovery "a global imperative."[5] The same month, Assistant Attorney General Lanny Breuer elaborated: "When we can prove the case we're absolutely going to seize their profits and their land and their fancy cars and boats. We're committed to doing it."[6] Similarly, in January 2009, Acting Assistant Attorney General Matthew Friedrich described the lengths to which U.S. law-enforcement will go to recover the proceeds of foreign corruption, saying "Not only will the Department, for example, prosecute companies and executives who violate the Foreign Corrupt Practices Act, we will also use our forfeiture laws to recapture the illicit facilitating payments often used in such schemes."[7] Friedrich's comments came in the context of a US$3 million forfeiture action filed in January 2009 to recover bribes Siemens AG paid to a Bangladeshi government official.[8] Siemens had settled worldwide bribery allegations in December 2008[9] with a deferred prosecution agreement, a guilty plea by three subsidiaries, and the payment of more than $1 billion in fines, disgorgement, and penalties to the DOJ, SEC, and German authorities.

There have also been previous instances of bribe recipients being prosecuted for money laundering: in December 2009, Robert Antoine and Jean Rene Duperval, officials at a Haitian telecom company, were indicted in connection with the DOJ's broader probe into bribes to officials of Telecommunications D'Haiti. Their case is currently pending in the Southern District of Florida.[10]

Convictions for money laundering can result in severe sanctions, which often exceed the penalties available under the FCPA and other anti-bribery laws. Whereas an FCPA violation is punishable by up to five years in prison and a US$100,000 fine,[11] a conviction for money laundering can carry a sentence of up to 20 years imprisonment and a fine up to US$500,000 or twice the amount involved, whichever is greater.[12] Additionally, laundered funds may be recovered directly through a forfeiture action. The law even allows U.S. authorities to reach funds deposited into an account at a foreign financial institution, if that foreign financial institution has an interbank account in the United States.[13]

In the current enforcement environment, U.S. companies conducting business overseas and the financial institutions servicing them must be vigilant against both FCPA risks and money-laundering risks. Any transfer of the proceeds of bribery, made with the requisite knowledge, can form the basis of criminal liability. In addition, the underlying funds are at risk of forfeiture, and the financial institutions that receive or hold them may have reporting obligations. During acquisitions companies should understand the money laundering laws that require that financial institutions and other regulated companies perform due diligence and implement procedures to identify their clients prior to conducting financial business with them. These "know-your-customer" rules can carry a double benefit in helping companies identify and avoid both money laundering and bribery.




[1] United States v. Juthamas Siriwan, Case No. CR 09-00081 (C.D. Cal.)

[2] United States v. Gerald and Patricia Green, Case No. CR 08-00059 (C.D. Cal.)

[3] See United States v. Castle, 925 F.2d 831 (5th Cir. 1991) (holding that foreign officials may not be prosecuted under 18 U.S.C. § 371 for conspiring to violate the FCPA).

[4] See 18 U.S.C. § 1956(c)(7)(B)(iv).

[5] Attorney General Eric Holder at the Opening Plenary of the VI Ministerial Global Forum on Fighting Corruption and Safeguarding Integrity, November 7, 2009, available at
">http://www.justice.gov/ag/speeches/2009/ag-speech-091107.html.

[6] Prepared Address to the 22nd National Forum on the Foreign Corrupt Practices Act, November 17, 2009, available at http://www.justice.gov/ag/speeches/2009.

[7] DOJ Jan. 9, 2009 Press Release No. 09-020.

[8] United States v. All Assets Held in the Name of Zasz Trading and Consulting Pte. Ltd., Case No. 09-cv-21 (D. D.C. Jan. 8, 2009).

[9] DOJ Dec. 15, 2009 Press Release No. 08-1105.

[10] United States v. Esquenazi, et al., Case No. CR 09-21010 (S.D. Fla. Dec. 4, 2009).

[11] 15 U.S.C. § 78dd-2(g).

[12] 18 U.S.C. § 1956(a)(1)(B)(ii).

[13] 18 U.S.C. § 981(k).