Art of the States
26 May 2008
31 January 2014
25 October 2013
Expansion of antitrust enforcement continues with extradition — foreign executive to face US antitrust charges
22 April 2014
23 September 2013
20 August 2014
What ;have the FBI, the Unabomber and ;the biggest litigation case of the 1990s got in common? Her name is Lisa Osofsky, a New York-born lawyer who has spent years in US government departments, but who now works in the UK, using her knowledge of transatlantic legislation to advise individuals and companies on how to avoid the long arm of US law.
Her diverse CV includes a term at the US Department of Justice's (DoJ) Office of International Affairs and four years at the FBI as deputy general counsel during the Clinton era, where she oversaw 70 lawyers and drafted legislation on espionage and extraordinary rendition.
It was her time spent at those famous authorities that saw her represent US interests during the BCCI scandal and draw up the search warrant for the Unabomber's one-room shack in Montana.
Now, after moving to England and passing the UK bar exams, Osofsky works at London-based Control Risks as director of anti-money laundering, performing investigations for the financial services industry. And she is not short of work. The market for information gathering has intensified in recent times as US legislation post 9-11 gets to grips with the boom in emerging markets, with the DoJ taking a keen interest in all cross-border deals.
"The regulatory climate is pretty intense - there's a huge raft of regulation requiring certain standards to be met, and that, in combination with price sensitivity and increased sophistication in terms of what you can learn about business partners, has led to a lot of interest in the corporate investigations area," explains Osofsky.
Currently causing the most headaches in the business community in the UK is the US Foreign Corrupt Practices Act (FCPA). Over the past five years enforcement of the FCPA's regulations have been beefed up and the DoJ has not been shy in flexing its muscles, as two BAE Systems executives found out recently after being detained in New Jersey by DoJ officers. The executives were held as part of an ongoing DoJ investigation into alleged illegal payments surrounding BAE's now infamous $43bn (£21.86bn) arms deal with Saudi Arabia. Far from dropping the case like its Anglo counterpart the Serious Fraud Office, the DoJ has continued its investigation and appears intent on proving a point.
"There's been a huge focus on money laundering and a big push on corruption," says Osofsky. "A lot of what I do is raising awareness within companies that might not think the US authorities would be interested in the work they're doing. Some businesses are thrilled that more enforcement is creating a level playing field."
The danger to law firms, says Osofsky, is from ill-advising clients on global transactions. Companies can find themselves sleepwalking into business practices deemed illegal by the US and falling foul of a whole host of US rules, such as the Patriot Act and Sarbanes-Oxley, all of which can make dealing in emerging markets a minefield.
Osofsky says her clients can sometimes be surprised to find that the 'traditional' ways of doing business, through strategic payments to officials, have now become 'illegal', or more accurately they are more likely to be found out and punished. Sometimes severely. The Securities and Exchange Commission, the government body that enforces anti-fraud in the US, recently fined Baker Hughes, a Texas-based global provider of oil field products and services, a total of $33m (£16.78m) for violations of the FCPA over alleged bribes to secure deals in far-off subsidiaries.
These prosecutions can be seen as a shot across the bows of companies in the global business community. "While some of the biggest enforcement actions are coming out of the US, 'foreign' companies - particularly those wanting to do business in emerging markets like China, India, Eastern Europe and Africa - are becoming aware that they need to get their house in order," says Osofsky. "Aside from fines, the penalties of non-compliance can include prison sentences and barring from US markets, apart from the obvious reputational damage."
There is no doubt that this is a growth area and one that shows no signs of abating. Osofsky points to the routine press conference following any FCPA prosecution, where the DoJ threat of 'if you want to operate in US capital markets, then you're going to have to play by our rules' is becoming something of a theme tune - and one that law firms would do well to learn off by heart.