FBI confirms its FCPA Unit is alive and well after incorrect report of its demise

(This article is reprinted with the permission of Main Justice and its “Just Anti-Corruption” subscriber service. It as part of a collaborative effort that facilitates the exchange of important content for the benefit of the members and subscribers of Main Justice and ACFCS.)

The FBI squad dedicated to pursuing Foreign Corrupt Practices Act violations at the Bureau’s Washington Field Office has not evaporated.

“It’s alive and well in northern Virginia,” Timothy A. Gallagher, special agent in charge of the field office’s criminal division, told Just Anti-Corruption today.
The FCPA Blog reported today that the squad (which it referred to as a “unit”), had been disbanded and that the case agents formerly assigned to it were now “working from an array of FBI regional field offices across the country.”

FBI officials said this was not the case.

“It still exists. The squad has not been disbanded,” said Gallagher, who declined to discuss the specific number of agents assigned to it, previously reported to be around a dozen. “I can say that the resource level has not changed.”

The FCPA Blog apparently misunderstood the role of the Bureau’s International Corruption Unit, which the blog incorrectly said had assumed responsibility for FCPA investigations.

“They’re not working the cases. They’re overseeing the program,” Christopher Allen, a spokesman at FBI headquarters, said of the International Corruption Unit.
The International Corruption Unit, part of FBI headquarters, does not conduct investigations. Instead, it has since 2008 assisted FCPA field investigators with administrative, legal and policy queries, and overseen their probes. (See Just Anti-Corruption’s previous report from 2010.)

The Washington Field Office, meanwhile, has conducted, and continues to conduct, FCPA investigations, Gallagher said. The WFO is the local FBI office responsible for Washington, D.C., and northern Virginia. Its proximity to FBI and Justice Department headquarters made it a natural place to house a specialized FCPA unit when one was created in 2007.

“We have an extraordinary working relationship with these folks, you know. They’re right down the street,” Gallagher said.

The Washington Field Office’s FCPA squad in recent years has begun to develop its own cases, whereas in the past they had largely been generated by companies’ voluntary disclosures.

“Being an FBI agent doesn’t involve sitting at your desk waiting for the phone to ring,” he said. “They’re traveling around the world, they’re making contacts, they’re educating their colleagues in other countries.”

He added that the field office prizes “the ability of an agent to get out there, work his sources and bring cases through the door.”

Gallagher’s predecessor in the Washington Field Office, Ronald T. Hosko, currently assistant director of the Bureau’s Criminal Division, declared earlier this year that the FBI would not shrink from using undercover techniques in pursuing FCPA cases despite the highly publicized collapse of the so-called Africa Sting cases.

Courtroom revelations about the Bureau’s handling of an undercover operation against military product brokers – including an informant – proved damaging to the prosecution.

But Hosko in April said of those techniques: “We’ll do it again — see you out there.”

Gallagher also said the FCPA squad could draw on the assistance of eight separate squads of intelligence analysts and two squads of financial analysts.

“Whatever their caseload needs, that’s what they’ll get,” he said. “We have two squads of forensic accountants under my division. These are subject matter experts that work for a supervisory financial analyst. They’re the CPA SWAT team.”

Other field offices can and do investigate FCPA matters, said Gallagher, without mentioning any specific case.

The highly publicized investigation of BSG Resources Ltd., the privately held company owned by the Israeli diamond magnate Beny Steinmetz which is suspected of bribery in Guinea, is being handled out of New York, for example.

“If another field office gets a referral from Main Justice and works it, that’s fine,” said Gallagher, referring to the Robert F. Kennedy Department of Justice Building, not the news organization.

The squad in the Washington Field Office received thanks in the recently announced settlements with Biomet Inc., Smith & Nephew Inc. and the charges announced against former executives at French engineering company Alstom SA.

According to Gallagher, the FCPA squad may pursue suspected violations other than those that fall under the FCPA.

“There are some offenses in corporate fraud which the same agents who’ve developed skill sets working FCPA would be pursuing,” he said, citing intellectual property matters as one example.

“The main focus of the squad is the FCPA.”