What Does the Lindsey Ruling Mean for the Future of FCPA?

Last week, U.S. District Judge A. Howard Matz sent down a ruling that overturned the corruption convictions of Lindsey Manufacturing Co. executives, who had been accused by government prosecutors of participating in bribes that violated the U.S. Foreign Corrupt Practices Act. Given that this was the first major corporate prosecution under the FCPA, what does the ruling mean for the future of the anti-corruption law?

Writing for The Huffington Post, Brad Reid—the managing director of the Dean Institute for Corporate Governance and Integrity at Lipscomb University—suggests that the government’s approach to the prosecution of Lindsey’s president Keith Lindsey and CLO Steven Lee lost sight of the original ideas behind laws like the FCPA. “The important lesson for all is that ‘winning’ is not the only thing,” he writes. “Winning is the outcome of superior products and services in the business context. Winning in law should mean that justice under law is served.”

Reid also quotes part of the summary that opens Matz’s decision that he feels “says it all”:

In this Court’s experience, almost all of the prosecutors in the Office of the United States Attorney for this district consistently display admirable professionalism, integrity and fairness. So it is with deep regret that this Court is compelled to find that the Government team allowed a key FBI agent to testify untruthfully before the grand jury, inserted material falsehoods into affidavits submitted to magistrate judges in support of applications for search warrants and seizure warrants, improperly reviewed e-mail communications between one Defendant and her lawyer, recklessly failed to comply with its discovery obligations, posed questions to certain witnesses in violation of the Court’s rulings, engaged in questionable behavior during closing argument and even made misrepresentations to the Court.

Main Justice writer Rachel G. Jackson sees the ruling as a moment to wonder, “Are prosecutor misconduct allegations gaining traction with judges?” She quotes Barry Pollack of Miller & Chevalier Chartered as saying: “I think it is a buildup over time of frustration with some of the government’s repeated failures to turn over evidence to the defense to gain some tactical advantage. . . Judges have become sensitized to some of the tactical game playing that goes on in these prosecutions and are sending a pretty clear message that they’re not going to tolerate it.”

Looking at the other side of the process, Thomson Reuters’ Alison Frankel examines “What FCPA defendants can learn from blockbuster Lindsey win.” She talked to two key figures from the trial’s defense counsel, Jan Handzlik and Janet Levine about Matz’s ruling:

Both Handzlik and Levine told me Friday that there are, in fact, encouraging lessons in the Lindsey story for defendants facing FCPA charges, even though Matz’s ruling won’t have a direct impact on anyone else’s case. “The message is the same as it is in any of these high-profile cases,” said Levine. “When the government cares too much about winning and forgets fairness and justice are supposed to be the hallmarks of prosecution, [it makes] decisions that should not have been made.” As the Justice Department has made a priority of FCPA prosecution in the last few years, Levine said, it has brought questionable cases. . .

“We’ve become a nation of cooperators,” Handzlik said. He agreed with Levine that the Lindsey case shows it’s important to test the strength of FCPA prosecution—even for corporate defendants, not just individuals. “We approached this case from the beginning with the attitude that we were going to fight,” he said. Lindsey is in some regards a typical FCPA defendant, according to Handzlik, who said that in addition to charging huge multinationals with bribing foreign officials, the Justice Department “has made a practice of going after small companies with a limited ability to fight—they have no choice but to roll over because it’s a matter of life and death.“