In the last several months, the Antitrust Division has obtained indictments of a number of Japanese executives in the auto parts investigation. This is the hallmark of an investigation that is shifting gears. For the most part, but not entirely, the Division has picked the low hanging fruit with amnesty and non-prosecution agreements. It has shaken a few trees and obtained plea agreements with individuals who received substantially reduced 5K sentences in return for their plea and cooperation. Now begins the phase where individuals are indicted, either because the Division believed they were too senior to offer 5K discounts, the Division no longer needed cooperation, or because the individual declined the invitation to come to the United States and submit to US jurisdiction. Now the investigation enters what could be likened to the “100 Years War,” depending upon the longevity of the fugitive defendant. The hostile parties keep their distance, with an occasional battle fought if there is an extradition or voluntary surrender.
Yesterday Gikou Nakajima, the highest-ranking global sales executive at Takata Corp. was indicted and charged with rigging bids for seat belts sold to various car companies. http://www.justice.gov/atr/public/press_releases/2014/306344.htm Two weeks earlier, a Japanese executive was indicted on one count of bid rigging and also for obstruction of justice in a second count. http://www.justice.gov/atr/public/press_releases/2014/306153.htm. In April, an indictment was returned against one current executive and two former executives of Bridgestone Corp. for their roles in an international conspiracy to fix prices of automotive anti-vibration rubber parts sold in the United States and elsewhere. http://www.justice.gov/atr/public/press_releases/2014/305205.htm. The return of indictments signals that the Division has secured sufficient cooperation from witnesses and reviewed and found sufficient incriminating documents to be confident enough to seek indictments. The auto parts investigation has had many facets involving many different parts. See USDOJ Chart, Auto Parts Targeted by Conspirators: http://www.justice.gov/atr/public/press_releases/2013/300969a.pdf. As each phase of this investigation wraps up, additional indictments should be forthcoming.
What Happens Next?
Usually, nothing. The Division has foreign fugitives in most of its international cartel cases dating back to ADM. In most cases the indictments, and the defendants’ identity, are public. But, in some cases the indictment of a foreign national may be under seal. (In the 1980’s, the Philadelphia office indicted an Israeli citizen under seal and he was arrested entering the US. The saga of that case is another story.) But, typically, the Division will have a foreign fugitive placed on an Interpol “Red Notice” making travel precarious for that executive for the rest of his life. In most cases, the executives preserved by the Division for indictment are the most senior members of the company involved in the conspiracy. Foreign fugitive defendants will likely retire, fire their travel agent and stay in the home country. The Division will maintain the documents and other evidence needed to try the case should Interpol actually pick up the fugitive. (One Japanese executive was arrested in India and spent some time in an Indian prison before the Indian authorities decided they would not extradite him on “dual criminality” grounds.). From time to time, Division attorneys may even get false alarms—a foreigner with the same or similar name as a fugitive–being picked up and held for questioning. The Division will maintain the file on its foreign fugitives indefinitely because unless it is notified, it has no way of knowing if the fugitive is dead or alive.
Sentencing Guidelines Are A Huge Factor
The primary measure of culpability under the US Sentencing Guidelines is volume of commerce. Not surprisingly, international cartels tend to press the outer boundaries of the maximum ten-year prison sentence under the Sherman Act. A look at the possible Sentencing Guidelines for a fugitive like Mr. Nakajima shows why there is strong incentive for him to say put in Japan. While these figures may be off slightly, if he were convicted of the charged indictment, he would be facing a possible prison sentence under the United States Sentencing Guidelines of 87- 108 months in jail:
Base Offense 2R1.1 +12
Offense involves Bid Rigging +1
Volume of Commerce +12 (based on likely commerce of more than $500,00 but less than 1 billion
Role in the Offense +4
Total Offense Level 29
Guideline Range 87 – 108 months
If a foreign fugitive voluntarily submits to US jurisdiction and pleads guilty, he would be eligible for a 3-point reduction for acceptance of responsibility with a resulting guideline range of 63-78 months. (The court would likely depart from the sentencing guidelines over the Division’s objections and impose a lesser sentence. There is, however, no guarantee that this would occur.) The longest sentence one of Mr. Nakajima’s subordinates received was 19 months. It is not likely Mr. Nakajima will ever voluntarily submit to US jurisdiction.
Yesterday, at an event in New York, Brent Snyder, Antitrust Division DAAG for Criminal Enforcement noted: “More jurisdictions are adopting criminal antitrust statutes and what that will do is that it will make extradition easier to obtain. There are going to be fewer and fewer safe havens.” Also, the Division recently obtained what it called the “first of its kind” extradition on an antitrust charge against Romano Pisciotti, an Italian national who was involved in the marine hose global conspiracy. http://www.justice.gov/atr/public/press_releases/2014/304888.htm. Once in the U.S., Pisciotti quickly agreed to plead guilty and will serve a total of two years in prison with credit for the nine months and 16 days he was held in Germany pending his extradition. The Pisciotti extradition has been widely covered. http://www.forbes.com/sites/mergermarket/2014/04/23/doj-flexing-muscle-on-price-fixers-worldwide/. It has been noted that Germany would not have extradited Pisciotti if he were a German citizen. But there are three main takeaways from his extradition journey that are worth repeating:
- Pisciotti was indicted under seal. Foreign executives involved in a cartel who do not have some kind of agreement with the Antitrust Division may never know whether they are a fugitive.
- Pisciotti spent nine and half months in a German prison awaiting word of whether Germany would extradite him. If Interpol picks up a foreign fugitive, even if not ultimately extradited, the process can be a significant penalty in itself.
- The Division has used the Pisciotti extradition as a platform to express its intention to work with competition agencies worldwide to shrink safe harbors for fugitives from cartel indictments.
- To the extent that the Division is able to secure the extradition of more foreign executives to face cartel charges, the current significant reductions in sentences that cooperating foreign executives receive in 5K downward departures will likely tick upward.
A Look Ahead
The country that leads the league in most executives as fugitives from US antitrust indictments is Japan. This is true overall and in the auto parts investigation. The US has not extradited any Japanese citizens for an antitrust violation. Because Japan also makes price-fixing and bid rigging a criminal offense, the issue of dual criminality may not be an obstacle (though there are certain differences in the statutes of the two countries). An extradition of an executive from Japan would be an enormous development. As noted above, a Japanese auto parts executive was recently indicted on both price-fixing and obstruction. Coincidently, the first successful extradition by the Antitrust Division involved an executive indicted on both Sherman Act and obstruction charges. When I was Chief of the Philadelphia office, we indicted a British executive, Ian Norris, on both a price-fixing count and three counts of obstruction. Eventually, he was extradited only on the obstruction counts. Norris was convicted on one count and sentenced to 18 months in prison. Will the Division take a page out of the same playbook here? More developments await.