This article was reprinted with permission
from FCPA Professor
Citing to certain of my prior scholarship (here and here) and
other writings, and otherwise highlighting certain issues that have
been frequently highlighted on this site for a long time, the Manhattan
Institute for Policy Research has joined the FCPA reform conversation.
The issue brief (here) titled
"The Foreign Corrupt Practices Act: Aggressive Enforcement and Lack of
Judicial Review Create Uncertain Terrain for Businesses," and authored by Paul Enzinna (a
partner at Brown Rudnick), argues as follows. "There is a strong case for
reforming the FCPA through legislation, in order to continue to uphold the
statute's historical commitment to maintain the integrity of American
businesses' dealings abroad while limiting the ability of federal enforcement
agencies to police business conduct worldwide and gain broad, quasi-regulatory
powers over global businesses absent judicial oversight."
The issue brief then states as follows.
"Congress should take up the cause of FCPA reform,
clarifying the statute's reach in the areas in which DOJ and the SEC have
aggressively sought its expansion:
- Jurisdiction. Congress
should clarify the reach of the FCPA's "in furtherance of" jurisdiction.
Specifically, Congress should decide whether to limit the FCPA's
application against foreign businesses bribing foreign officials. The
Justice Department's broad interpretation of the FCPA, predicated upon
transactions denominated in dollars and those messages that may pass
through U.S.-based e-mail servers, potentially affects U.S. diplomacy and
finance and technology sector competitiveness.
- Foreign
official. Congress should specify the extent
to which the FCPA applies to low-level employees of state-owned
enterprises. The economic emergence of formerly Communist countries and of
the still formally Communist China has led to a proliferation of
state-owned enterprises with which American companies must do business in
order to compete globally.
- To
obtain or retain business. Congress should
clarify the "routine government actions" covered by the FCPA's express
exemption for "facilitating payments" not covered by its prohibition on
payments to officials to "obtain" or "retain" business. DOJ's broad
interpretation of this element to include payments intended to obtain
licenses or permits and other low-level bribes seems in conflict with the
statute's express preemption and has fueled the growth in FCPA enforcement
actions."
I agree with many of the issues raised in the brief such
as:
"Although the ever-widening interpretations of the
FCPA seem to go beyond a commonsense understanding of the statute and its
purpose, these interpretations are not being subjected to adequate judicial
review because the high costs associated with potential criminal conviction
have generally led targeted corporations to resolve cases without trial through
"deferred-prosecution agreements" (DPAs) or "non-prosecution agreements"
(NPAs)."
"DOJ has made it difficult for businesses to parse the
statutory term "foreign official" by issuing contradictory statements" (see here
for the prior post).
"DOJ's expansive readings of the FCPA, along with the
lack of judicial review over the department's interpretations, are problematic.
Invoking the statute to prosecute payments intended to help obtain licenses or
permits is clearly at odds with Congress's express facilitating-payments
exception." (see here for
my article detailing legislative history and judicial
scrutiny concerning non-foreign government procurement payments).
"In its current guise, the FCPA has helped generate an
essentially unaccountable DOJ bureaucracy ...".
However, my reaction to the latest reform proposals
is the same as my general reaction to certain of the Chamber's FCPA reform
proposals (see here).
While I have argued for an FCPA compliance defense (see here for
my scholarship "Revisiting an FCPA Compliance Defense"), many other
aspects of FCPA reform - and calls to amend the statute - are more pleas
for judicial scrutiny and application of black letter legal principles to FCPA
enforcement.
The remedy for enforcement of a law that largely
takes place in the absence of judicial scrutiny where enforcement is
in many cases contrary to Congressional intent and inconsistent in
certain other respects with black letter legal principles, is not to amend
the law, but to inject judicial scrutiny into the process so that
Congressional intent and black letter legal principles can be vetted and
decided upon by someone other than the enforcement agencies. For my
verbal explanation of this issue, see this
recent interview (approximately 5 to 7 minute mark) with the on-line
news site Main Justice.
My FCPA reform proposal is to couple a compliance
defense along the lines I outline in my article with abolishing NPAs and
DPAs. These alternative resolution vehicles (first introduced into
FCPA enforcement in 2004 as a matter of DOJ policy and not Congressional
authorization) have created the conditions in which the "facade of FCPA
enforcement" I have written about here continues
to flourish. Think of the judicial process as a river where issues are
allowed to flow into the proper channel. NPA and DPAs are logs in the
river blocking the flow of issues into the proper channel.
In terms of other FCPA reform measures, I have also
suggested that the enforcement agencies publish declination decisions when a
company voluntarily discloses and the establishment of meaningful
post-employment restrictions on FCPA enforcement attorneys.
Read more articles on the FCPA by Mike
Koehler at FCPA
Professor.
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