TREVOR CLARKE SECURES WORLD FIRST FOR COOK ISLANDS! FIRST PROSECUTION UNDER THE FOREIGN CORRUPT PRACTICES ACT IN THE USA! The DOJ’ first criminal Foreign Corrupt Practices Act enforcement action was intriguing. In an August 1979 criminal information, Kenny International Corporation (“Kenny International”) was charged with violating the FCPA’s anti-bribery provisions. According to the information, Kenny International (a New York corporation) “was engaged, directly and through affiliated corporations, in the distribution and sale of postage stamps of the Cook Islands, an independent South Pacific nation … freely associated with New Zealand.” The major players in the drama were: Finbar Kenny (Chairman of the Board, President and majority shareholder of Kenny International); the Cook Islands Party (a foreign political party); and Sir Albert Henry (see here - the Leader of the Cook Islands Party and the Premier of the Cook Islands). According to the information, Kenny, as an officer and director of Kenny International, corruptly used an instrumentality of interstate commerce (a commercial aircraft) “in furtherance of an offer, payment and promise to pay” $NZ337,000 “to the Cook Islands Party through Sir Albert Henry, an official of said foreign political party, to induce said party and official to use its and his influence to affect and influence an act of the Government of the Cooks Islands” in the “renewal of a certain stamp distribution agreement between Kenny and the Government of the Cook Islands, in order to assist Kenny International to retain its business in connection with the distribution of Cook Islands postage stamps” in violation of the FCPA. The Offer of Proof in the case details as follows. “Beginning in December 1965, Kenny entered into an agreement with the Government of the Cook Islands, which agreement was renewed in 1972 for a ten-year period, whereby Kenny obtained the exclusive rights to the promotion, distribution and sale of Cook Islands postage stamps outside the Cook Islands. In exchange for promotional and distribution services, Kenny was authorized to promote and sell unlimited quantities of each issue or series of Cook Islands stamps provided the Government of the Cooks Islands received 50 percent of the proceeds of all stamps sold outside the Cook Islands.” As detailed in the Offer of Proof, “in January 1978, Sir Albert Henry, as the Leader of the Cook Islands Party, then the majority party in the Cook Islands Legislative Assembly, determined to schedule a general election …”. According to the Offer of Proof, “Kenny and Kenny International could only be assured of renewal of the stamp distribution agreement by the continuation of the Cook Island Party’s control of the Legislative Assembly and the retention of Sir Albert Henry as Premier.” And then an idea was hatched. As detailed in the Offer of Proof – “anticipating that the election would be closely contested, Sir Albert Henry and his fellow party officials determined that to guarantee their party’s continued control in the Legislative Assembly it would be necessary to transport by air from New Zealand, a distance of approximately 1,800 miles, Cook Islands Party supporters to vote for them in the forthcoming election.” According to the Offer of Proof, in January 1978, approximately one month after President Carter signed the FCPA, “a personal representative of Sir Albert Henry and the Cook Islands Party solicited the financial assistance of Kenny and Kenny International in connection with the election.” The Offer of Proof states as follows. “It was requested of Kenny and Kenny International that they subsidize the air transportation costs of the Cook Islands Party Supporters. Such a voter subsidy was illegal under Cook Islands law. Kenny, on behalf of Kenny International, desiring the retention of Sir Albert Henry as Premier in order to insure the renewal of the stamp distribution agreement, agreed to provide the requested financial assistance upon the condition that Sir Albert Henry and the Cook Islands Party keep secret the source of the funds.” Did Sir Albert Henry win? Initially yes. The Offer of Proof states that “as a direct result of the votes cast by [Cook Islands Party] supporters whose travel was paid for by Kenny International, [the Cook Islands Party] won a majority of seats in the Legislative Assembly and Sir Albert Henry remained in office as Premier. However, in proceedings contesting the election, the High Court of the Cook Islands “disallowed the votes of the Cook Islands Party supporters whose travel had been subsidized as ‘unlawful votes tainted by bribery.” As stated in the Offer of Proof, “as a consequence, the Cook Islands Party lost its control of the Legislative Assembly to the opposition party and Sir Albert Henry was removed from office.” Kenny International pleaded guilty to violating the FCPA’s anti-bribery provisions and agreed to pay a $50,000 fine. As for Finbar Kenny, pursuant to the plea agreement, he agreed to voluntarily appear in the High Court of the Cook Islands and plead guilty in his individual capacity to a criminal charge for “participating in a scheme whereby money payable to Her Majesty the Queen was fraudulently used for private purposes, namely to finance the charter of aircraft.” Kenny also agreed to pay “restitution in the amount of $NZ337,00 to the Government of the Cook Islands.” Further, pursuant to the plea agreement, Cook Islands Development Co. Ltd. (of which Kenny was the Director) also agreed to plead guilty in the Cook Islands to a criminal charge similar to Kenny’s plea referenced above. Pursuant to the Kenny International plea agreement, the company and Finbar Kenny also agreed to entry of a final judgment of permanent injunction prohibiting future FCPA violations. fcpaprofessor/postage-stamps-sir-albert-henry-flying-voters-and-the-fcpa
Posted on: Mon, 02 Dec 2013 06:25:49 +0000
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