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Over the past several months, FCPA has become a familiar acronym in Asian legal circles.
U.S. prosecutors are currently pursuing dozens of cases under the anti-bribery Foreign Corrupt Practices Act, and many multinationals' Asian operations have come under scrutiny. In February, capacitor maker Maxwell Technologies Inc. admitted its employees bribed Chinese officials and paid $14 million to the U.S. Department of Justice and Securities and Exchange Commission. The following month, IBM admitted no wrongdoing but paid $10 million over alleged FCPA violations in China and Korea. Just last week, British drinks giant Diageo likewise admitted no wrongdoing but paid U.S. authorities $16 million to resolve charges that it made hundreds of improper gifts and payments to officials in South Korea, India and Thailand, in exchange for tax and sales benefits.
International law firms are responding by putting litigators experienced in investigations work on the ground in Asia. According to a source at the firm, Debevoise & Plimpton, which conducted one of the largest internal FCPA investigations ever for Siemens AG (resulting in a $450 million fine, disgorgement of $350 million in profit, and admission that it improperly supervised employees), is close to establishing an on-the-ground disputes practice in Asia. This month, Kirkland & Ellis will transfer partner Samuel Williamson, a former Manhattan federal prosecutor, to its Shanghai office. Several other firms, including Kobre & Kim, Herbert Smith, and Gibson, Dunn & Crutcher, have recruited or relocated investigations specialists to Asia.
But while FCPA cases are grabbing headlines now, some lawyers in the region remain skeptical that white-collar criminal defense can become a marquee practice for firms in Asia, which have traditionally focused far more on corporate work.
One challenge that many newly arrived litigators may face is that client relationships in the region are generally managed by corporate partners, many of whom are accustomed to swiftly referring FCPA work to their partners in the U.S.
William Barron, the Hong Kong-based senior Asia partner for Davis Polk & Wardwell, says his firm usually gets FCPA work and similar assignments through existing client relationships with banks, corporations or investment funds. Partners in New York and Washington, D.C., take the lead on the anti-corruption work, and Barron says he right now cannot imagine having a lawyer stationed in Asia, where the firm has offices in Beijing and Tokyo along with Hong Kong, dedicated to such an "episodic" practice. Despite the current buzz, he says, investigations work in the region is still relatively infrequent; months can go by without a new matter.
"It's going to be hard to sustain that in Asia because it's not flow business that's going to pay the rent every couple of months," says Barron.
Leiming Chen, a corporate partner in Simpson Thacher & Bartlett's Hong Kong office, agrees. "I don't think we're at the point where we think that having a stand-alone FCPA practice [in Asia] would keep them busy enough," he says.
Kobre & Kim, a New York litigation boutique which launched a Hong Kong office a year ago to focus on investigations work, sees things differently. Partner William McGovern, a former Morgan Stanley compliance lawyer who also previously worked for the SEC, says the firm is handling tax and antitrust matters in addition to FCPA work. He also thinks the firm's status as a stand-alone litigation firm without a corporate practice will appeal to many clients.
"Where companies facing FCPA investigations need a truly independent law firm to assess discrete issues, often on behalf of directors or senior officers, we are a compelling option," he says.
Referrals come from other firms too; McGovern says he has received assignments from New York firms that have their own white-collar specialists back home but nonetheless find it useful to have an experienced hand locally.
British law firm Herbert Smith recruited American litigator Kyle Wombolt from the Hong Kong office of Goodwin Procter in May. The firm is aiming to serve clients facing global investigations, as it has significant resources on the ground in Asia already and can therefore handle the work more efficiently and at lower cost, says Wombolt. In some cases, this will mean working with firms in the U.S., he says. The fact that Herbert Smith, unlike several other U.K. firms, has no U.S. offices and is therefore not a direct competitor at home makes this a bit easier to achieve.
Kelly Austin, a former General Electric compliance and litigation counsel who joined Gibson Dunn to launch its Hong Kong office last August, says counsel on the ground in Asia will also be more attuned to parallel enforcement trends in Asian countries. "I used to talk about the FCPA. Over time I've shifted to the term anti-corruption," she says. "The risk is just as real of local enforcement as it is of the U.S. stepping out to enforce."
Indeed, the Beijing Municipal People's Procuratorate said in its annual report it last year investigated 418 people in 356 bribery cases, recovering $23 million. Other countries, including the U.K., have recently reduced anti-bribery measures, and many agencies are expected to "piggyback" on cases brought by the U.S. and vice versa.
When those cases come to fruition, Wombolt is confident that other international firms will want their share. But they'll be playing catch-up with the early movers, he says: "My own view is that they're going to be a ways behind."
