On July 27, 2017, a Manhattan federal jury convicted Macau billionaire Ng Lap Seng of bribing Caribbean diplomats to the United Nations ("UN") to secure the organization's support for a multi-billion dollar convention center that Ng hoped to build in Macau. After a five-week trial, the jury took just seven hours to return a guilty verdict on all six charges: one count of conspiracy to commit bribery and to violate the Foreign Corrupt Practices Act ("FCPA"), two counts of violating the FCPA, one count of federal program bribery, one count of conspiracy to commit money laundering, and one count of money laundering. With this verdict, the Department of Justice ("DOJ") marked its first victory in six years in a contested FCPA proceeding when put to its burden of proof.
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Background and Alleged Misconduct
According to prosecutors, from 2011 to 2015, Ng paid hundreds of thousands of dollars in bribes to two high-ranking UN officials--former UN Ambassador for Antigua and Barbuda and President of the UN General Assembly, John W. Ashe, and former Deputy UN Ambassador for the Dominican Republic, Francis Lorenzo. Prosecutors said that Ng hoped the payments would secure the UN's support for his proposal to build a multi-billion dollar UNconference center in Macau, dubbed the "Geneva of Asia." Ng hoped, according to prosecutors, that the conference center would serve as a location for events associated with the UN and pave the way for hotels, luxury housing, a shopping mall, marinas, and a heliport. In particular, prosecutors alleged that Ng wanted the Macau conference center to become the permanent home of the annual "Global South-South Development Expo," which is traditionally hosted in a different city each year.
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As part of the scheme, prosecutors alleged that Ng paid the two ambassadors in a variety of forms. For example, Ng allegedly made multiple payments through a New Yorkbased media organization funded by Ng, South-South News. According to Ambassador Lorenzo, who pleaded guilty and cooperated with the government, Ng appointed Lorenzo as president of South-South News despite Lorenzo having no relevant journalism experience. Also, through South-South News, Ng allegedly made payments to Ambassador Ashe's wife, who South-South News paid as a "consultant," and to an account that Ambassador Ashe had established, purportedly to raise money for his role as president of the UN General Assembly. In addition, prosecutors claimed that Ng paid both ambassadors directly through cash and wire transfers.
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In exchange for these payments, prosecutors alleged that Ng sought support for his proposed conference center in Macau. For example, Ambassador Ashe, aided by Ambassador Lorenzo, allegedly submitted an official document to the UN Secretary General in support of the Macau conference center. Later, tn Ng's request, the ambassadors allegedly revised the document to refer to one of Ng's companies as a partner of the proposed project. Asked at trial why he helped Ng, Ambassador Lorenzo made a direct connection to the payments: "Because I was getting paid."
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At trial, Ng's attorneys argued that the payments were actually philanthropic. They said that Ng was throwing money at the plan at the recommendation of his friends, but that his friends and the UN officials were taking advantage of him.
Based on the above allegations, the government charged Ng with, among other things, two violations of the FCPA. Specifically, the government charged Ng with violating the FCPA's anti-bribery provisions (1) while in the United States, and (2) as an officer, director, employee, or agent of a domestic concern, or a stockholder acting on behalf of a domestic concern.
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In addition, the government also charged Ng with (1) paying bribes to officials of an organization (i.e. the UN) that receives over $10,000 from a federal program, (2) conspiring to commit bribery and to violate the FCPA, (3) money laundering, and (4) conspiring to commit money laundering.
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All in all, after his conviction, Ng faces up to 65 years in prison. Sentencing is currently scheduled for December 18, 2017.
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Observations and Lessons Learned
The Ng enforcement action is noteworthy for a number of reasons. Most notably, it represents only the fifth time since 2011 that the DOJ has been put to its burden of proof in a contested FCPA proceeding. The action also demonstrates the DOJ's continued commitment "to prioritize prosecutions of individuals" who have allegedly violated the FCPA. In addition, this enforcement action shows the government's willingness to bring other charges, such as conspiracy and money laundering, on top of FCPA charges.
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Finally, the Ng case will likely provide a rare opportunity for a federal appellate court to weigh in on the FCPA. Most FCPA matters never see the inside of a courtroom-- especially an appellate courtroom. But, here, Ng's attorneys have already vowed to appeal.
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Such an appeal will likely tee up multiple important FCPA issues for the U.S. Court of Appeals for the Second Circuit. For example, on the eve of trial, Ng's defense team battled with the government over the reach of the FCPA's "local law" affirmative defense--a provision that has been subject to judicial scrutiny only once before. Ng's case raises the question of whether payments, in order to qualify as "lawful under the written laws and regulations" of a country, need to be expressly permitted by local law, or simply need not be prohibited. The case also brings up questions over what qualifies as an official act under the FCPA in light of the Supreme Court's narrowing, in McDonnell v. United States, of what qualifies in the domestic context. We will continue to monitor this case as any appeal progresses.
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