Assistant Attorney General
for the Criminal Division of the U.S. Department of Justice (DOJ), Lanny Breuer
gave the final day's keynote speech at the Compliance Week 2010 Conference.
Many of his remarks were directed at the ethics and compliance professionals
who attended the event. He confirmed that the Obama Administration is committed
to combating financial fraud, particularly in the area of overseas bribery and
corruption as prohibited by the Foreign Corrupt Practices Act (FCPA). He used a
quote from Attorney General Holder in emphasizing this point, that bribery "is
a scourge on civil society."
He stated that tools which
had been previously used to combat organized crime would now be employed in the
fight against white collar crime, including both wiretaps and sting operations
as were used against the gun manufacturing industry in the operations which
culminated in the arrests of 22 individuals in Las Vegas in January of this
year. He also discussed that many foreign governments had entered into
collaboration agreements to facilitate cross-border investigations and
enforcement actions.
Breuer stated that one of
the goals of the DOJ is to "charge individuals" as a strategy to deter
corporate conduct. Further, holding individuals accountable is essential and
will also deter illegal corporate conduct which results in violations of the
FCPA. One of the more startling statistics cited by Breuer was the number of
individual prosecutions pursued by the DOJ in the years 2004-2009. Since 2004,
84 individuals have been charged with FCPA violations. However 46 of those
individuals were charged in 2009 so over ½ were charged in the last year. Indeed
there have been 22 individuals charged already this year in the gun industry
sting case so the facts would seem to bear out his statements. (For prior post
on gun industry sting case, see here).
After emphasizing that the
DOJ will continue to hold individuals accountable under the FCPA, Breuer turned
to some of the things that he considered key elements of a compliance program.
He began by listing a couple of references as benchmarks and they were the US Sentencing Guidelines and the OECD
Good Practice Guidance for Anti-Bribery Compliance Programs. He then delineated
the following elements: Tone at the Top; a compliance program which not only
punishes compliance violations but also rewards good ethical behavior in a
corporation; a strong whistle-blower program (and protection) through a hotline
or other appropriate mechanism; and significant and direct reporting by the
compliance officer to the Board. He also stated that the DOJ wants to know
about not only your company, but also the companies which your may be doing
business with; both in the form of third party foreign business partners and
customers. He concluded by emphasizing that an effective compliance program is
not static but dynamic, adapting to meet new and additional compliance
challenges and subject to periodic reviews and appraisals by outside experts.
Breuer stressed the
importance of coming to the DOJ rather than the DOJ coming to you, when a
potential FCPA violation was discovered. The benefits to a company can be
significant if a company comes forward AND fully cooperates with the DOJ.
Breuer stated that if a company does so it will receive meaningful credit. He
cited two examples where the penalty assessed was significantly less than the
range suggested under the US Sentencing Guidelines. Breuer cited two examples.
First in the Siemens' case, the fine which could have been levied, based upon
the conduct was between $1.35BN to $2.75BN and final fine levied by the DOJ was
$450MM (the total fine paid to the US and German governments was $1.6BN). The
second example was the fine paid by Helmerich
and Payne, that of $1MM. This was 1/3 of the total fine which could have
been levied based upon the US Sentencing Guidelines.
Lastly Breuer noted that it
is his position that a company should come to the DOJ when it initially makes
the discovery of a potential FCPA violation, rather than doing so after it
conducts its investigation. This should be done for a couple of reasons.
Initially Breuer remarked that the DOJ can provide guidance on the issues that
it wants investigated by the company. This may prevent the company from
investigating an issue that the DOJ does not deem necessary. Conversely the DOJ
may suggest areas which it wants investigated that the company may not have
considered. More importantly, such early notification allows the company
involved to have a constructive dialogue with the DOJ and allows the DOJ to
become a partner with the company in the investigative and remediation process.
Breuer took several
questions from the audience. One of his more interesting responses was
regarding facilitation payments and whether the US was moving towards the
OECD/UK Bribery Act model of not allowing such payments. He responded that it
was a question which needed consideration as compliance standards are evolving
on a world wide basis. However as of this date, Breuer was not aware of any
proposed change in the FCPA on this issue but that it may be visited in the not
too distant future. (For a comparison of the FCPA and Bribery Act, see here).
The talk and Q&A by
Breuer was well received by the audience and provided concrete guidance in
several areas relating to FCPA compliance policies and issues.
For a copy of the text of
Breuer's remarks, click here.
Visit the FCPA Compliance
and Ethics Blog, hosted by Thomas Fox, for more commentary on FCPA compliance,
indemnities and other forms of risk management for a worldwide energy practice,
tax issues faced by multi-national US companies, insurance coverage issues and
protection of trade secrets.
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© Thomas R. Fox, 2010