Marc Weinstein Discusses Unusual Declination Issued to Telekom Malaysia with Global Investigations Review

Marc Weinstein broke down the impacts of the Southern District of New York’s first public declination – issued under its voluntary self-disclosure policy, in an alleged fraud scheme by three Telekom Malaysia employees – with Global Investigations Review.

The conditional declination followed Telekom Malaysia’s self-reporting of an alleged $20 million fraud scheme by three employees at its U.S. subsidiary. While prosecutors declined to charge the company, Weinstein noted the outcome raises questions, particularly given the company’s apparent status as a victim.

“Either there’s more to the story than is being told, or it's just an odd use of a declination letter when none is needed,” Weinstein said.

Weinstein further explained that declinations typically are issued where a company faces potential criminal exposure but receives credit for cooperation, a framework that does not appear to fit Telekom Malaysia’s status.

“A declination letter represents that there was the potential that the company could be exposed, but because the company came in quickly and cooperated, the prosecutors, in their discretion, have chosen to decline to prosecute,” he said. “That just doesn't seem to apply to these facts.”

Prosecutors alleged the employees carried out a “multifaceted” scheme involving overbilling, impersonation and false reimbursement requests, none of which indicate the company benefited from the scheme.

“They had a bunch of employees who stole money out of their bank account,” Weinstein said. “Why would a company need a declination letter for that? It doesn’t quite make sense.”

However, Weinstein noted that nonpublic information about Telekom Malaysia’s alleged involvement could explain the outcome.

“It’s possible that the company investigated and gave the U.S. attorney’s office even more than what’s listed, so as a result, maybe there is some other conduct that the company would be on the hook for,” Weinstein said.

The declination serves as the first public example of SDNY’s Corporate Self-Reporting and Cooperation Program, which offers companies declinations for coming forward with alleged misconduct. However, according to Weinstein, this example likely will not encourage companies with more complex potential criminal liability to self-report.

“They’re trying to incentivize companies to come in quickly and be cooperative, but it’s kind of a freebie,” he said. “It doesn’t really fit, in my mind.”

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