Tuesday, April 20, 2010

Two-Tiered Justice?

Certain corporations (acting through employees and agents) in certain industries, most often selling certain things, to certain customers can seemingly violate the FCPA's anti-bribery provisions with very little consequence. In fact, with increasingly frequency, such companies are not even charged with FCPA antibribery violations and/or may not even have to plead guilty to anything. See here for the recent Daimler, here for the recent BAE, and here for the (somewhat) recent Siemens "bribery, yet no bribery" enforcement actions. Sure these companies coughed up hundreds of millions of dollars, in some cases offered up a few subsidiaries to take the fall, but yet were allowed to escape the full legal consequences of their action despite DOJ and SEC allegations that these companies paid hundreds of millions of dollars in bribes to obtain or retain hundreds of millions, and in some cases billions, of dollars of business. The deterrent message in these cases is so strong that the U.S. government continues to do business with these companies - see here for the recent $28 million dollar contract between the U.S. government and a BAE business unit - see here for a general overview of Siemens post-bribery scandal U.S. government contracts.

Charles Paul Edward Jumet of Fluvanna County, Virginia will probably not be getting U.S. government contracts in the near future.

In fact, he probably will not be doing much of anything (other than sitting around) in the near future.


Because yesterday he was sentenced to approximately 7.25 years in federal prison (see here for the DOJ release).

His crime?

Conspiring to violate the same law that Daimler, BAE, Siemens, its employees, and several other corporations, apparently are immune from violating ... the FCPA's anti-bribery provisions.

Surely, Jumet's conduct was more egregious than that of Daimler, BAE, Siemens, and others?

Well, not exactly.

Not to make light of his crime, but according to the DOJ, the total amount that Jumet and others paid to Panamanian government officials to receive a lighthouse and buoy contract was approximately $200,000 - an amount that pales in comparison to the hundreds of millions of bribe payments in the above referenced enforcement actions.

Even though Jumet's sentence is equal part FCPA and equal part making false statements to federal agents, it is not surprisingly being termed the "longest prison term imposed against an individual for violating the FCPA."

The DOJ release contains the usual get tough language (i.e. "foreign corruption carries with it very serious penalties," "bribery isn't just a cost of doing business overseas [... but] a serious crime that the U.S. government is intent on enforcing."

Serious penalties and intent on enforcing against whom is the question.

The issue is not whether the DOJ was too lenient in the Daimler, BAE, and Siemens case or whether the DOJ was too harsh in the Jumet case.

Rather, the issue is that there appears to be a two-tiered justice system when it comes to FCPA enforcement.

As noted in the DOJ's release, Jumet's co-defendant John Warwick, who also pleaded guilty, is scheduled to be sentenced by the same judge on May 14th. (See here for prior posts on this entire enforcement action).


  1. Dear Professor, it's good that you continue to ask these tough questions, I agree with you. DOJ should be renamed to DOI - department of injustice.

  2. Who represented Jumet? Who represented BAE? Siemens? Daimler? Whose counsel was part of the "revolving door" between Justice and the white collar bar? How do we think Mark Mendelshon's clients will fare in the future?

  3. Jumet was represented (according to media reports) by Robert James Wagner of the Eastern District of Virginia’s Public Defender’s Office.

    Daimler was represented by Willkie Farr & Gallagher LLP, Hogan & Hartson LLP, and Skadden Arps.

    BAE was represented by Linklaters LLP.

    Siemens was represented by Davis Polk & Wardwell (at least in terms of resolution).

  4. The guys who couldn't pay big bucks went to jail. The guys who could - didn't.

    Do the expensive law firms need any additional advertising?

  5. Who's really corrupt here? The Panamanian who grabbed a couple hundred grand, or Eric Holder's cozy little insiders' club, who apply "different spanks for different ranks."

    It amazes me when we Americans get on our high horse about corruption in foreign lands. Heck, it may be the only thing still manufactured in the USA.