Matt Reinhard Quoted Extensively in Law360 Regarding Possible FCPA Investigation into News Corp

"'Willful Blindness' May Be News Corp.'s Legal Undoing In US"
Law360
05.01.12

Matt Reinhard discusses the U.K. parliamentary committee's recent findings that top-level executives at News Corp. willfully ignored evidence of widespread phone hacking and bribery. Reinhard said the report's findings could especially lend weight to prosecutors' FCPA probe because a lack of corporate responsibility for the actions of insubordinates and the failure to visibly promote ethical behavior are touchstones for a successful prosecution under this anti-corruption statute, according to Reinhard. "The idea that the titans of the industry can perch themselves at the top of the boardroom and willfully keep information that they don't want to know about at an arm's length — that mentality, if it ever existed, is coming to an end," Reinhard said. "One of the keys for an effective compliance program from an FCPA standpoint is to have a consistent tone at the top. Executives need to set a leadership example of not tolerating corruption and criminal activity and follow up on contrary reports."

Prosecutors are relying more on this concept of willful blindness in FCPA cases, with Reinhard pointing to the bribery conviction of Frederic Bourke, co-founder of handbag maker Dooney & Bourke, who consciously avoided learning bad facts about an oil deal in Azerbaijan. "If you don't ask because you're afraid of what the answer might be, that has proven to not be a legal defense," Reinhard said.

"I can guarantee you that News Corp. had policies against these activities, but they were just sitting there on James Murdoch's shelf," Reinhard said. "It comes down to having a strong corporate compliance program in place that's more than just a window dressing, but that is integrated as part of the culture and is consistently re-evaluated to meet business model and market changes. When there are acts of this kind that are so clearly attributable to a lack of internal policy compliance, it's because the person who has oversight for this compliance is regarded as insignificant in the corporate structure," he said.

But despite this new fodder, Reinhard believes that the U.S. prosecutors will continue to take a "wait and see" approach to their investigations. "My sense continues to be that as long as the British authorities seem to be moving forward and taking real and concrete steps, U.S. prosecutors will continue to wait on the sidelines," he said. "If the U.S. authorities uncover similar practices that occurred on U.S. soil, they may be more inclined to act, but until then they will be content allowing the U.K. investigation to run its course."

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