U.S. Pressed to Explain Why Judge Can't Reject Fokker Accord

Updated on
  • Dutch firm agreed to pay $21 million for Iran sanctions crimes
  • D.C. judge said last year that U.S. went too easy on company

Three federal appeals judges pressed lawyers for the U.S. and a Dutch aerospace company to explain why a lower-court judge shouldn’t have rejected their resolution of a criminal trade-sanctions case as too lenient.

Attorneys for the government and a unit of Fokker Technologies Holding BV appeared before the appellate panel in Washington Friday seeking to revive the $21 million settlement. The deal was meant to resolve allegations that Fokker shipped aircraft parts to Iran, Sudan and Burma in violation of U.S. law.

Fokker admitted to the wrongdoing and agreed to pay fines equivalent to what it says it made from the improper dealings. The company also entered into an 18-month deferred-prosecution agreement that didn’t require an independent monitor. Defending the propriety of the deal, Fokker attorneys have touted their client’s “voluntary self-disclosure” and cooperation in a four-year probe.

U.S. District Judge Richard Leon in February rejected the pact, calling the punishment too lenient and “grossly disproportionate to the gravity of Fokker Services’ conduct in a post-9/11 world.” 

Judge’s Authority

The company and prosecutors contend Leon exceeded his authority under the relevant statute. The appellate panel questioned the U.S. and Fokker lawyers closely, and at times sharply, to establish exactly under what conditions he would be able to reject a settlement agreement. They also quizzed an attorney appointed by the court to argue Leon’s side.

“What we are trying to do here is divine the circumstance under which the statute would apply,” U.S. Circuit Judge David Sentelle said during the hour-long arguments.

The hearing was held on the 14th anniversary of the al Qaeda-orchestrated terrorist attacks that left almost 3,000 people dead in New York, the Pentagon and Pennsylvania, and only a day after President Barack Obama’s Democratic allies won a Senate battle over Republicans’ attempt to derail an agreement that would provide Iran with sanctions relief in exchange for a decade-long delay in its development of nuclear weapons capability.

Also, the U.S. Justice Department said Thursday that it would place a greater emphasis on prosecuting people for corporate crimes. The agency had been accused of extracting large fines from the banking industry rather than holding individuals responsible for the fiscal crisis that erupted in 2008. No individuals were charged in the Fokker case.

Prosecutorial Incursion

A Justice Department attorney, Aditya Bamzai, said Friday that Leon’s rejection of the Fokker agreement infringed prosecutors’ discretion.

That drew fire from Sentelle and U.S. Circuit Judge Laurence Silberman, who said the law requires court approval of deferred-prosecution agreements. The third judge on the panel, Sri Srinivasan, asked the government lawyer for an example of where the court could reject such a deal.

Bamzai said a judge would be justified in scrapping a deal if the prosecution was being delayed for reasons other than to give the defendant an opportunity to demonstrate its good conduct.

Fokker’s lawyer, Edward O’Callaghan, reminded the court that his client conceded the allegations in the case expecting the agreement to be approved. Now the company has been left vulnerable to prosecution and any credible defense would be tough to mount, he said.

Sentelle was a 1987 appointee of Republican President Ronald Reagan. Srinivasan was named to the bench by Obama in 2013.

Judge’s Advocate

David DeBruin, a Jenner & Block LLP appellate lawyer, was appointed by the court to defend Leon’s ruling. In a brief, DeBruin cited the money Fokker made on illegal business from 2005 to 2010, when it violated U.S. sanction laws more than 1,000 times while making sales to Iran’s army, navy and air force.

Arguing DeBruin’s position before the panel, Adam Unikowski said Leon’s decision was the correct one. Silberman, a 1985 Reagan appointee, asked Unikowski whether a judge’s rejection of deferred-prosecution agreement could be challenged if that rejection was unreasonable.

“Unreasonably unreasonable,” the attorney replied.

The case is U.S. v. Fokker Services BV, 15-3016 and 15-3017, U.S. Circuit Court of Appeals for the District of Columbia (Washington).