Prosecutors told the jury during Frederic Bourke’s trial that instead of doing adequate due diligence for his investment, he’d “stuck his head in the sand.” A jury convicted him conspiring to violate the Foreign Corrupt Practices Act and making false statements to federal investigators.
How did the head of a prominent handbag company end up in this position? What did Bourke do?
He invested in a deal in a country where he knew or should have known that bribes would be paid. He didn’t pay any bribes himself. He didn’t benefit from the bribes. He lost his money in the investment.
Bourke invested in Czech-born Viktor Kozeny’s unsuccessful attempt in 1998 to gain control of Azerbaijan’s state oil company. Kozeny himself had a shady background and was known as the Prague Pirate. Kozeny’s plan was to bribe senior government officials in Azerbaijan with several hundred million dollars in shares of stock, cash, and other gifts to ensure that those officials would privatize the State Oil Company of the Azerbaijan Republic (SOCAR) in a rigged auction that their investment consortium could win. Prosecutors offered evidence that Bourke “consciously avoided” learning about the bribes by not asking questions about them. Jurors were allowed to convict if they found Bourke knew or took steps to avoid learning of the payments.
The jury looked at the shady deal, the shady partner and in a shady country and must have thought that bribery was obvious. Bourke just chose to ignore the warning signs.
The sentence for Bourke is up to five years in prison for the FCPA violation, and another five for lying to the FBI.
References:
- Back to Bourke by Richard L. Cassin of The FCPA Blog
- Knowing What You Don’t Know by Richard L. Cassin of The FCPA Blog
- Use of “Conscious Avoidance” Doctrine in Frederic Bourke Conviction Expands Corporate Executives’ FCPA Exposure by F. Joseph Warin on Securities Docket
- DOJ Press Release on Bourke Verdict (July 10, 2009)
- Bourke Convicted of Bribery in Kozeny’s Azerbaijan Oil Deal by David Glovin for Bloomberg
- Jury Charge in US v. Bourke hosted on JD Supra
- Left Defenseless by Adele Nicholas for Inside Counsel
Well written and relevant. I have a blog post on the elements of an FCPA violation (http://is.gd/1OMzd). Your post puts it all into perspective with a true news story.