When In-House Counsel Loses Their Moral Compass

When In-House Counsel Loses Their Moral Compass

Last week, we blogged about what a firm should do when a “good” client uses it for bad. This week, we look into what happens when attorneys are part of Foreign Corrupt Practices Act (FCPA) misconduct.

Louis Ramos and Benjamin Klein of DLA Piper recently delivered an in-depth report on the topic. They begin by providing some “jarring examples” of admitted misconduct by counsel:

  • “I should have refused to draft the contract that we used for paying bribes.”
  • “I was making these bribe payments.”
  • “I knew better than to get involved in such illegal conduct.”
  • “I lost my moral compass.”

They drew these from the court hearing transcripts of the FCPA enforcement actions of two veteran lawyers: former Keppel Offshore & Marine Ltd. In-House Counsel Jeffery Chow and former PetroTiger Ltd. General Counsel Gregory Weisman.

For Ramos and Klein, the admissions provide a “sobering truth”:

“Those responsible for protecting their companies from corruption-related risks can be held criminally accountable for their lapses in judgment.”

The report details the two cases of misconduct.

During his more than two decades at Keppel, Jeffrey Chow was responsible for drafting and preparing contracts for the company’s agents, including at least one contract that paid bribes to government officials. In his August 2017 plea, Chow admitted to ignoring the red flags, including “millions of dollars” in overpayments to an agent in Brazil, and that he was well aware that company funds were being funneled to foreign officials.

The misconduct not only cost Chow his reputation, but also the company millions. In December 2017, Keppel Singapore and Keppel USA agreed to pay more than $422 million to American, Brazilian, and Singaporean authorities to resolve the bribery charges.

In the PetroTiger matter, the former co-CEOs and General Counsel Gregory Weisman pled guilty to conspiring to violate the FCPA. Per the report, the group was accused of paying $333,500 in bribes to a Colombian national oil company employee to help secure a multimillion-dollar oil services contract.

According to the Department of Justice, Weisman tried to conceal the bribe payments at first by funneling them through the foreign official’s wife, claiming they were for consulting services, which she didn’t perform.

In trial testimony, Weisman admitted that he “had a clear understanding” that his company was “paying bribes to win business.”

The authors remind us that the Chow and Weisman examples, unfortunately, are not isolated incidents.

“[T]here are several other criminal cases in recent years in which the DOJ has targeted in-house counsel.”

Finally, Ramos and Klein draw several conclusions from these FCPA enforcement actions, among them that neither Chow nor Weisman could escape prosecution by trying to place the blame others and prosecutors can use a failure to respond effectively — or at all — against them. It’s also necessary that companies should ensure that all employees, including in-house counsel, can confidentially and anonymously report potential misconduct and protect them from retaliation.

In summary, the prosecutions of Weisman and Chow are a warning: It’s not only important for in-house counsel to ensure that their companies are complying with the law, but also that their individual conduct is beyond reproach.

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