Frederic Bourke and conscious indifference under the FCPA
The Foreign Corrupt Practices Act (FCPA) is one of the few laws that specifically makes illegal consciously avoiding the actual knowledge of the underlying crime.
The legislative history of the FCPA makes clear that Congress intended that the so-called "head-in-the-sand" defense—also described as "conscious disregard," "willful blindness," or "deliberate ignorance"—should be covered so that company officials could not take refuge from the act's prohibitions by their unwarranted obliviousness to any action or inaction, language, or other signaling device that should reasonably alert them of the high probability of an FCPA violation.
This interpretation was confirmed in the criminal case of Frederic Bourke. Bourke had invested in an enterprise in Azerbaijan, and it later turned out this enterprise was engaged in bribery and corruption to obtain certain oil and gas rights.
Bourke was not a part of the management team that engaged in this bribery and corruption, yet at trial, prosecutors contended that Bourke had "stuck his head in the sand" and consciously avoided clear red flags that corruption was going on.
Moreover, even if Bourke did not affirmatively know that bribes were being paid, he was aware of a high probability such action was occurring, and he consciously and intentionally avoided confirming this fact. In the jury charge, the court explained this “conscious avoidance” could be equated to actual knowledge under the FCPA.
This means the test is not your actual knowledge of the payment of bribes, but your efforts to avoid acquiring that actual knowledge. The conscious avoidance doctrine provides that a defendant's knowledge of a fact required to prove the defendant's guilt may be found when the jury is persuaded that the defendant consciously avoided learning that fact while aware of high probability of its existence, the trial court noted.
The successful prosecution of Frederic Bourke was a significant expansion of a theory of prosecution under the FCPA. While the Bourke case involved an individual and his investment in one transaction, the red flags that were or should have been raised are similar to those which a U.S. company doing business overseas must investigate and evaluate in any transaction. All transactions must be thoroughly investigated, evaluated, and reviewed on an ongoing basis to try and ensure full FCPA compliance.
The conviction of Frederic Bourke has taken on even more significance with the change in the Department of Justice (DOJ) to target more individuals for prosecution of white collar crimes, as with the FCPA. This announcement was articulated in the Yates Memo and says that,
Effective immediately, we have revised our policy guidance to require that if a company wants any credit for cooperation, any credit at all, it must identify all individuals involved in the wrongdoing, regardless of their position, status or seniority in the company and provide all relevant facts about their misconduct. It’s all or nothing. No more picking and choosing what gets disclosed. No more partial credit for cooperation that doesn’t include information about individuals.