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An unnamed merchant bank in New York must provide documents to a grand jury probing the bribery of top officials of a foreign nation, a U.S. District judge in the Southern District of New York has ruled. Deciding a case of first impression, Judge Denny Chin said the grand jury is entitled to documents from all three of the corporation’s offices, including those in the unnamed country where the purported bribery took place. “A foreign government that is alleged to be the recipient of bribes from an American corporation cannot be permitted to bring a grand jury investigation to a halt,” Chin said In re Grand Jury Subpoena, M 11-189. The judge said the issue was whether the documents sought by subpoena may be obtained when the subject nation claims executive privilege and are “located, in part, abroad where production is prohibited — not just by local law, but by specific opinions rendered by high legal officials of the foreign country.” Chin found that the U.S. government had overcome the asserted privilege, and that “the interest of the United States in enforcing its criminal laws outweighs any difficulties that the Corporation may face in complying with the subpoena in contravention of Republic law.” The ruling came in a 2-year-old grand jury investigation centering on the president and principal owner of the corporation, referred to only as “John Doe” in the opinion. The investigation is being conducted under the Foreign Corrupt Practices Act (FCPA), as amended by the International Anti-Bribery and Fair Competition Act of 1998, which criminalizes the bribery of foreign officials to obtain or direct business to another person. Doe, Chin said, is a close adviser to senior officials in the nation, which has “vast natural resources.” The adviser has been named as a special consultant by the country on commercial and economic affairs, the judge said. The grand jury convened by Southern District prosecutors sought in August 2000 virtually all the bank’s business records dating back to 1991, as well as documents from major American companies and officials from the republic. Doe and his bank responded by obtaining legal opinions from the republic’s Ministry of Justice warning that the documents must not be removed from the country, and that criminal disclosures of state secrets are punishable by prison terms of up to three years. And the republic launched its own high-level lobbying campaign to stop the investigation, appealing to the U.S. Department of State and other agencies in the executive branch. The nation also sought and obtained permission from Chin to appear at a June hearing on the subpoena. The republic argued against the subpoena on several grounds. It first asserted that the documents are shielded by the act of state doctrine, which arises when the outcome of a case turns on an official action by a foreign sovereign. Chin disagreed. “Here, the act of state doctrine does not apply because this court is not required to decide the validity of an official act of a foreign sovereign taken on its own soil,” he said. “Instead, here, the sovereign nation has intervened in an American grand jury proceeding targeting an American citizen and an American corporation, seeking to prevent access to records in New York and in the New York corporation’s offices in the Republic.” And to the extent that the investigation might embarrass the executive branch “presumably because it risks angering an ever more important strategic ally over mere allegations [of] bribery — it is not for this Court to prevent it,” he said. The judge found that it was U.S. law, and not the law of the republic that governed the case. “I also reject the notion that international comity allows the Corporation to invoke an absolute privilege as defined by Republic law,” he said. “Comity requires no greater protection for exchanges between Doe and Republic officials than for those of high-level advisers — even legal advisers — to the President of the United States.” STATE SECRET PRIVILEGE Chin went on to find the republic cannot block the release of the documents by claiming the state secret privilege. “Assuming the privilege is theoretically available and properly invoked, I am not persuaded that it applies,” he said, adding that the bank provided “no case law to support its position that these matters rise to the level of national security concerns.” Addressing the republic’s claim that the documents can be withheld because they reveal the deliberative process of high public officials, Chin said that prosecutors had “provided ample support for overcoming the privilege.” In the end, Chin balanced the conflicting interests and hardships involved in the dispute and concluded that the interest of the United States in combating international bribery, outweighs the republic’s “strong” interest in protecting governmental confidentiality. Assistant U.S. Attorney Peter G. Neiman and U.S. Department of Justice Senior Trial Attorney Philip Urofsky represented the U.S. government. James E. D’Auguste, Mark J. MacDougall and Heather J. Pellegrino of Akin, Gump, Strauss, Hauer & Feld represented the corporation. Reid H. Weingarten and Brian M. Heberlig of Steptoe & Johnson in Washington, D.C., represented the republic.

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