We thought he knew and he definitely should have known.  He’s an investor.  It’s his job to know.  We thought the tape was damning.

Jury foreman David Murphy discussing the conviction of Frederic Bourke Jr. (the co-founder of handbag maker Dooney & Bourke Inc.) of conspiracy to violate the Foreign Corrupt Practice Act in connection with the alleged privatization of the state-owned oil company, Socar, in Azerbaijan as reported through Law.com.

The tape the jury foreman was referring to was a taped phone conversation between Bourke, another investor in the venture, and their lawyer.  The conversation centered on how to structure the deal and the subject of bribery came up.  Bourke’s defense contended that he was merely asking questions about it as part of the due diligence – to verifying the legitimacy of the deal. 

Some of the jurors interpreted it as Bourke knowing about the bribes from the beginning and participating in the creation of dummy companies in an effort to shield himself and the other investors from liability.

The case is expected to be appealed.  But regardless of the outcome, a few lessons are clear:

• Alleged violations of the Foreign Corrupt Practices Act are serious business, and under the new administration more serious than ever.
• Due diligence and legal literacy go hand in hand. Jurors expect investors and managers to be informed. It’s their job.
• What turns a business communication, such as a tape recording, into a smoking gun document is multiple interpretations. It therefore pays to follow smoking gun rule #7 and strive for clarity and accuracy.

Navigating cultural differences is one of the biggest challenges of doing business abroad, particularly since they mask latent legal issues.  If you’ve ever wondered about how to avoid such pitfalls with respect to doing business in greater China, please click here to learn more about my complimentary teleseminar next week with Nicholas V. Chen, a partner with the Pamir Law Group.

©Corporate M.O., LLC 2009

The case has been around for almost a decade.  Jasmine Networks claims that rival Marvell Semiconductor stole its trade secrets and engaged in an unfair trade practice by hiring away Jasmine’s engineering group.

Sounds like a classic lawsuit except that part of what has kept this case alive for so long involves a phone call made by Marvell’s then general counsel, Matthew Gloss, to Jasmine’s in house counsel, Virginia Wei.  Ms. Wei was not available to pick up the phone so it rolled over to her voice mail.  Gloss thought he ended the phone call to Wei, but Wei’s phone must have been pumped up with Duracell batteries because the recording device kept going and going and going.    

The conversation it captured on tape wasn’t pretty.  Sitting with Gloss at the time were Marvell’s patent counsel and their VP of engineering.   The three of them “openly discussed theft of Jasmine’s trade secrets and the unlawful hiring of [Jasmine's] engineering group, as well as the potential consequence of jail for [this] conduct.”  Can you imagine the look on Ms Wei’s face when she heard that?

It just goes to show you that you can never be too careful about checking your surroundings to make sure your confidential conversations stay “confidential.”  (See How to Avoid Smoking Guns Rule #4.)

In the years that followed Marvell has been unsuccessful in suppressing the incriminating voice mail from evidence and is now claiming the tape was edited.  How embarrassing is that?

Sounds like its too late for an apology now, but I can’t help wonder whether it would have made a difference before the fur started flying. 

If you’re interested in learning about what makes one apology better than another you won’t want to miss my interview next week with best selling business author John Kador when we discuss his new book Effective Apology: Mending Fences, Building Bridges, and Restoring Trust (Bk Business).  Click here for more information about this free teleseminar.

Today I was reminded of a bad date I went on many years ago in the pre-cell phone age.  We were supposed to meet in front of a Greek restaurant for dinner.  We were both on time and we both thought we were at the front entrance.  Mine was on the pedestrian mall side.  His was facing the street.  The error wasn’t discovered until much later that evening when he accused me of standing him up.  Needless to say, it was all down hill from there.

Today’s reminder of the non-date from hell came courtesy of Monica Hesse’s fun article in today’s Washington Post about how communication styles can sabotage relationships.  Some people prefer text messaging to e-mail.   Others prefer Twitter or a phone call.  If, for example, they ignore their voice mail while waiting for a text message they might as well be standing at the wrong restaurant entrance. There is more opportunity than ever before to get it wrong.

Now imagine if that were to happen in a business context. 

Misunderstandings can easily arise due to terse text messages or lengthy e-mails that lack the intonations of a human voice and body language.  For customers who have little patience, those misunderstandings can quickly escalate from dissatisfaction to conflict to litigation.   

The lesson for businesses interested in controlling their legal risk is to choose their business communication channels wisely (rule #3).  To avoid creating a smoking gun document you’ll want to strive for clarity and accuracy (rule #7); but, to be “heard” and maintain a strong customer relationship you need to be in synch with your customer’s communications preferences.   The best legal risk management strategy marries the two concepts and strengthens the business relationship in the process. 

It’s a win-win.

“Too much information,” said my husband. 

We’d just passed a college coed who needed a fashion police Miranda warning.   I sighed in agreement – seems that some folks will pay a high price to be cool.   

In a slightly different venue, Officer Vaughan Ettienne also paid a high price to be cool, only his fashion statement was one of manly bravado.   (more…)