This article was reprinted with permission
from FCPA Professor
At the FCPA Guidance press conference last November
Assistant Attorney General Lanny Breuer wisely noted that the Guidance was not
"complete closure" to various concerns regarding the Foreign Corrupt Practices
Act and he stated that the DOJ "welcomes" continued discussions regarding FCPA
And why should non-binding enforcement agency Guidance be
the end to FCPA reform discussions? As Breuer and then SEC
enforcement chief Robert Khuzami both acknowledged during the press conference,
the Guidance "does not represent a change in policy."
And why should Wal-Mart's potential FCPA scrutiny
(one of approximately 100 companies currently the subject of
FCPA scrutiny) which involves FCPA issues as a condiment to a bigger
corporate governance sandwich be the end to FCPA reform discussions? (See
the prior post).
As I noted in my article "Grading the
Foreign Corrupt Practices Act Guidance" while there were certain
FCPA reform measures, such as abolishing NPAs and DPAs, as I have
urged, that the enforcement agencies could have accomplished through a change
in policy in the Guidance, other FCPA reform measures, like amending the statute
to include a compliance defense, can be accomplished only through congressional
action and presidential signature.
last month detailed the Manhattan Institute's post-Guidance call for FCPA
reform, and this recent
post highlighted various post-Guidance FCPA reform scholarship from a
practitioner and an academic.
Earlier this week, the Chamber of Commerce and a broad
coalition of business groups (such as the American Bankers Association,
the American Gaming Association, the American Insurance Association, the
Generic Pharmaceutical Association, the National Association of Manufacturers,
the National Foreign Trade Council, the Financial Services Roundtable, and the
Poultry Federation) sent this letter
to the DOJ and SEC "to identify several areas of continuing concern for
businesses seeking in good faith to comply with the FCPA."
The letter addressed the following sections:
compliance programs and voluntary disclosure, foreign official /
instrumentality, parent-subsidiary liability issues, successor liability
issues, mens rea for corporate criminal liability and declinations.
As to compliance programs, the letter states, in
pertinent part, as follows.
"Even if a company had in place a state-of-the-art
compliance program that was well-designed to prevent FCPA violations and
that was aggressively enforced, it remains exposed to liability if the program
is circumvented by even one employee. The [Guidance] offers little assurance
that the company's pre-existing, strong compliance program will be given
sufficient weight in the charging decisions of the Department and the SEC. Such
assurance should be provided through legislative reform of the FCPA to add an
affirmative defense that would permit a company, if charged with an
anti-bribery violation, to rebut the imposition of criminal liability if the
individuals responsible for the violation circumvented compliance measures that
were otherwise reasonably designed to identify and prevent such violations and
implemented with appropriate vigor."
As to declinations, the letter states,in pertinent part,
"We do not share the view expressed by some in the
Department and SEC that because the agencies do not routinely provide
information on declinations in other types of cases, FCPA cases should not
be treated any differently. The FCPA is exceptional in that: (i) it is
over 30 years old, not a brand new law; (ii) it is very aggressively enforced,
in terms of the number of pending investigations initiated each year and in the
massive fines and penalties that are sometimes imposed; and (iii) it lacks a
material body of case law through which it can be interpreted by the
business community. Other statutes, including ones targeting financial fraud, antitrust
violations and money laundering, have been extensively construed by the courts.
As the Department and SEC recognize in the [Guidance] it is the courts and not
the agencies that have the final say. However, until such time as a significant
body of case law is developed, we encourage and would welcome regular
release of anonymized information on declinations."
"[A] decision not to bring a case where the evidence
of a violation simply is lacking should not be considered a
"declination." We remain concerned that the Department and the SEC may be
defining "declination" to include both circumstances. In order to provide
useful guidance and positive incentives to companies seeking to comply with the
FCPA, the Department and the SEC should continue to provide information - on an
anonymized basis - regarding matters in which the agencies found
sufficient evidence of an FCPA violation but nevertheless declined to pursue
prosecution or enforcement action on the basis of other circumstances, such as
the company's voluntary disclosure, cooperation and remedial measures."
Regarding the two issues discussed above, it is
simply wrong and closed-minded to view these issues as "Chamber"
issues when the reality is that many people for many years have been
saying the same thing. (See my "Revisiting a
Foreign Corrupt Practices Act Compliance Defense" article (which
details the pro-compliance defense positions of many former high-ranking DOJ
officials among others) and my "Grading the Foreign Corrupt Practices Act
Guidance" article for a discussion of declination issues.
As the letter this week by a broad-coalition of business
groups indicates, FCPA reform discussion is not dead, nor should it
be. A compliance defense is not a race to the bottom, it is a race to the
top. (See here
for the prior post). Abolishing NPAs and DPAs, and thereby
reconstructing a system of checks and balances to FCPA enforcement,
is consistent with the rule of law. So too is increasing transparency in
During the FCPA reform debate in the 1980′s, Senator
Alfonse D'Amato opened Senate hearings on a bill to amend the FCPA by
stating as follows. "The discussion which takes place during these
hearings is not a debate between those who oppose bribery and those who support
it. I see the major issue before us to be whether the law, including both its
antibribery and accounting provisions, is the best approach ...".
During Senate hearings, Senator John Heinz stated as
follows. "... There are many people that are extremist, and there are others who
get carried away by their enthusiasm who are going to argue that even if we
change the provisions in the present act [...], we are legalizing bribery. That
strikes me as the worst kind of demagoguery, because it implies that everything
that Congress has done in the past is perfect. And does anybody believe that?"
The FCPA Guidance issued last November was not the
result of a policy debate as to whether the current FCPA and its
enforcement is the best approach. In fact, if you analyze, in
chronological order, enforcement agency statements and positions (see pages 1-2
of my "Grading the Foreign Corrupt Practices Act Guidance" article) there is a
credible argument to be made that one of the purposes of the Guidance was to prevent
such a policy debate from going forward.
The FCPA is a fundamentally sound statute and I stated as
such in my November
2010 Senate testimony. But how many truly believe that the FCPA
is a perfect statute or that its enforcement is best accomplishing the objectives
of punishing improper payments and deterring future improper payments?
These are worthy objectives to pursue. For this
reason, it is good that FCPA reform discussions continue in the hopes that a
substantive policy debate can result.
Read more articles on the FCPA by Mike
Koehler at FCPA
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