Wednesday, March 17, 2010

Nexus Technologies Inc. et al. - Part I

Unfortunately, the FCPA enforcement action against Nexus Technologies Inc., a Philadelphia-based export company ("Nexus"), Nam Nguyen (Nexus's President and Owner), and his siblings and fellow Nexus employees, Kim Nguyen and An Nguyen came to an end yesterday.

As noted in this DOJ release, Nexus pleaded guilty to "a conspiracy to bribe officials of the Vietnamese government in exchange for lucrative contracts to supply equipment and technology to Vietnamese government agencies in violation of the FCPA." The release also notes that Nam and An Nguyen "pleaded guilty to conspiracy, a substantive FCPA violation, a violation of the Travel Act and money laundering" and that Kim Nguyen "pleaded guilty to conspiracy, a substantive FCPA violation and money laundering." In June 2009, Joseph Lukas (a former Nexus partner) pleaded guilty to conspiracy and to violating the FCPA (see here).

The DOJ release notes that "in connection with the guilty pleas, Nexus and the Nguyens admitted that from 1999 to 2008 they agreed to pay, and knowingly paid, bribes in excess of $250,000 to Vietnamese government officials in exchange for contracts with the agencies and companies for which the bribe recipients worked" and that the defendants "admitted that the bribes were falsely described as 'commissions' in the company's records."

The DOJ release further notes that in pleading guilty, "Nexus also acknowledged that, as a company, it operated primarily through criminal means and agreed to cease operations as a condition of the guilty plea."

Why did this post start with "unfortunately?"

Because, unlike most FCPA defendants (corporate or individual) Nexus and the Nguyens actually mounted a legal defense based on FCPA's elements, including the key "foreign official" element.

You wouldn't know it just by reading the above DOJ release, but this enforcement action centered on payments to employees of various commerical arms of Vietnam's Ministry of Transport, Ministry of Industry, and Ministry of Public Safety.

While the case may not have been the strongest "test case," Nexus and the Nguyens, in what is believed to be an FCPA first, challenged the DOJ's interpretation that employees of state-owned or state-controlled enterprises ("SOES") are "foreign official" under the FCPA. As readers likely know, this issue is a frequent topic of discussion on this blog (see here for prior "foreign official" posts).

The "foreign official" issue was fully briefed and I will explore in a future post (Nexus Technologies Inc. et al. - Part II) the issues raised by the briefs, including the DOJ's surprising argument that it does not even need to identify specific "foreign officials" to charge an FCPA antibribery violation as well as the DOJ's thin and misguided justification for its legal theory that employees of SOEs are "foreign officials" under the FCPA.

For the record, the judge in the case, without any comment or analysis, denied the motion to dismiss. Thus, DOJ may claim victory on its "foreign official" interpretation; however, in its brief DOJ specifically argued that a decision on the "foreign official" element was premature and ultimately a jury issue.

For all the talk, including on this blog, about the Africa Sting Case, BAE, Siemens, etc., this little noticed FCPA enforcement action in Philadelphia had the potential to shape the future of FCPA enforcement like no other - considering that over 50% of recent FCPA enforcement actions involve "foreign officials" only under DOJ's dubious legal interpretation - which still, notwithstanding this resolution, has no judicial support.

Stay tuned for more.


  1. Since the grand jury know the names of these Vietnamese Officials, can we (the public, or the press) request this type of info, if it is available as court transcripts?

  2. Yes, the names of certain individuals are in the court pleadings or found in the court transcripts of oral arguments. My post on the sentences contains the name of one individual referenced in Nam Nguyen's sentencing memo.