Gabe Kapler Should Hire a Lawyer; Phillies Should Be Worried About Future of Their Skipper

The Department of Justice is conducting an extensive probe of international activities of Major League Baseball teams.  You can read one report on that probe here.  You can ready another report on the alleged activities and what has prompted DOJ (as those in the legal biz refer to the Department of Justice) to investigate heavily, this one from Sports Illustrated. 


Here are some things to think about:


1.  DOJ turns away prosecutions in 80% of the matters that it looks into. 


2.  Allegations are, just that, allegations.


3.  Shady and unethical behavior does not make it criminal.


4.  The Foreign Corrupt Practices Act came about in the late 1970's after a bunch of international scandals involving U.S.-based companies (somehow the name International Telephone and Telegraph comes to mind).  Essentially, it makes it a felony to provide anything of value to foreign governmental officials to enable your company to get business.


5.  It is unclear to me right now how the FCPA could be implicated in the signing of Latin American baseball players, unless teams offered payments to government officials to enable them to sign certain players.


6.  The information that has emerged from the Dodgers is particularly troubling.  My guess is that the Dodgers have lawyered up and are cooperating with Federal prosecutors to avoid a subpoena and to respond to whatever questions the government has at this time.  Where it will get tricky for the Dodgers is the line between good cooperation designed to gain favor with DOJ when it comes to a remedy (that is a fine, a consent decree, a corporate integrity agreement, etc.) versus asserting the attorney-client privilege and ceasing their willingness to cooperate.  That said, internal documents and e-mails that the business people created are not privileged, including the document in which someone in the Dodgers' front office assessed the ethics and compliance of various of the international operatives.  Some of what is contained in that report should have prompted those executives to elevate the problem to senior management and the team's general counsel.  (Of course, perhaps a reason for not doing so was that whoever created the report was worried that had he reported the concerns, he might have been terminated for hiring too many rogues or for not running a tight enough ship).


7.  Gabe Kapler was the head of player development for the Dodgers for a few years, and perhaps for during the years that the DOJ is looking into.  If that's the case -- or if he had anything to do with the assessment of the compliance and ethics of his colleagues -- at a minimum the DOJ will want to talk with him.  My guess is that the Dodgers will offer to pay for his counsel and indemnify him up to a point, but there could be a point where the Dodgers give him the corporate version of the Miranda warning and advise him to get his own counsel (whether the Dodgers ultimately pay for that counsel could depend on whatever written agreement they have with Kapler about such things, if any, or what their policy is about such things, if any).  All of this assumes, of course, that Kapler was in the middle of the alleged conduct.


8.  The DOJ will dig in hard on matters like this.  The more time it spends on this investigation, the greater the likelihood that it will want to come away with a settlement.  And with MLB it could be easier pickings, because if they find violations of the FCPA it strikes me that they also could find that no team has an effective compliance program when it comes to its foreign business practices.  And, if this is the case, it could be hard for MLB or its teams to try to isolate the behavior to a few rogue individuals because the teams themselves lacked policies, auditing, training, oversight.  These, again, are big assumptions; it could be that MLB teams do all of that and that a few rogues "left the reservation" and behaved badly.  But it also could be that the teams had an attitude of "get it done, beat the competition, just don't tell us how you got it done."  The documents uncovered in one of the linked articles suggest a rather loose culture.


9.  So, circling back to the focus of the investigation, or the apparent focus, the Braves and the Dodgers.  Both teams should be worried, as should the individuals who ran the operations within those teams that are under scrutiny. 


10.  And if you are the Philadelphia Phillies, trying to rebound from many years of sub-.500 performances, you want to make sure that you have a manager with a clean record and without any distractions.  Again, allegations are just that; we do not try people by newspaper on FCPA matters.  The distractions, though, are another thing.  Then there is the waiting -- the teams will turn over information to the DOJ and, mind you, this matter is far from the only one the Assistant U.S. Attorneys on the matter are involved with.  It will take them time, along with their staffs, to review information.  Then they will go back to the teams with questions and requests for more information and keep on turning over rocks until there are no more to turn over.  They will interview many people in and outside baseball, mainly without the knowledge of the teams.  And it will be a long and expensive process; it will not conclude until the DOJ is done.


At many levels this is a sad state of affairs for Major League Baseball.  Latin America historically has been like California during the beginning of the Gold Rush, lots of activity, not a lot of rules, and now MLB has a big mess on its hands, at a minimum in terms of publicity and at a maximum if teams are charged and individuals indicted.  MLB has an opportunity to clean this up and put in much more structure in this area.  Whether the owners are willing to do so remains to be seen.


As for the Phillies and Kapler, well, neither need this problem at this time.  The Phillies were about 15 over .500 on August 5 and had the worst record in baseball after that, a complete collapse that makes fans wonder whether the team can improve on a 78-win season or whether the team is a bucket of average players with a superstar pitcher atop the pecking order.  Kapler presided over the good and, at the end, the bad and the ugly.  That should be enough to worry about.


And now there is this.