This article was reprinted with permission
from FCPA Professor
Earlier this week on the FCPA Blog (see here),
Marc Alain Bohn (Miller & Chevalier) responded to my recent post "The
Need for a Consensus Declination Definition." In that post, I offered
my definition of a declination as being - an instance in which an enforcement
agency has concluded that it could bring a case, consistent with its burden of
proof as to all necessary elements, yet decides not to pursue the action.
I then concluded the post by stating that anything less ought not be termed
a declination, but rather what the law commands.
Bohn called my arguments "strong" and in the
"abstract" he agreed with my declination definition.
Yet, Bohn also stated as follows. "As a practical
matter, however, [my proposed] definition runs into difficulties,
primarily because of the dearth of information surrounding decisions by the DOJ
and SEC to conclude investigations without pursuing enforcement actions"
and that "it is nearly impossible for those not directly involved in a
matter to conclude why the agencies have decided not to pursue an enforcement
action-even those directly involved may not have a full understanding."
Bohn, of course, is spot-on as to his observations
regarding the lack of transparency in FCPA enforcement and it is
meaningful to read an FCPA practitioner write that "even those
directly involved" in an FCPA matter "may not have a full understanding" of how
the enforcement agencies decided to resolve a manner.
Bohn then writes as follows.
"Without more transparency from the agencies on the
rationale behind their enforcement decisions, I think it is appropriate to
apply the short-hand label "declination" more broadly to each instance where
the DOJ or SEC has notified a company that it does not intend to bring an
enforcement action. Including all such agency decisions is really the only way
to consistently and systematically track possible declinations writ large.
Moreover, there is value in adopting this broader
definition, particularly in instances where the issues involved were serious
enough that a company opted to self-report the matter to the government and the
agencies, in turn, followed-up with requests for additional information. In the
wake of such self-reports, decisions by the agencies not to take the next step
and pursue enforcement actions are significant and worth recognizing."
My response relates to Bohn's statement concerning
"instances where the issues involved were serious enough that a company opted
to self-report the matter to the government and the agencies, in turn,
followed-up with requests for additional information. In the wake of such
self-reports, decisions by the agencies not to take the next step and pursue
enforcement actions are significant and worth recognizing."
My response is the same as in this August 2011 post
regarding an excellent article Bohn co-authored regarding declinations.
Based on my FCPA practice experience and
my more recent conversations with FCPA practitioners concerning this
issue, I am not willing to assume that an issue is "serious
enough" from an FCPA liability risk perspective simply because
a company voluntarily disclosed to the enforcement agencies.
In short, and as explained in the prior post, different
FCPA practitioners as well as the companies they represent, have different
trigger thresholds for voluntary disclosures.
In other words, not all voluntarily discloses are created
equal. Some voluntary disclosures are a reactionary, risk averse decision
and occur before even the company knows the full facts. Other
voluntary disclosure decisions (and here, to be clear, I am not speaking of
Bohn or his firm) occur in the context of significant conflicts of
interest for FCPA lawyers - see here for
a 2009 post titled "Voluntary Disclosure and the Role of
FCPA Counsel" which discusses how voluntary disclosures lead to the
"where else" question, which leads to, well, a few years of billable
work. Indeed, as an FCPA practitioner (and a notable one at that)
commented to the Wall Street Journal in connection with its FCPA Inc.: Business
of Bribery articles this past October (see here for the prior
post), "if you get two of these [FCPA investigations] a year as a partner,
you're pretty much set."
It is precisely because of the lack of transparency that
Bohn cites, that I proposed beginning in August 2010 (see here),
that in instances where a company voluntarily discloses potential FCPA issues
to the DOJ and SEC, and when the enforcement agencies decline enforcement, that
the DOJ or SEC publicly state, in a thorough and transparent manner, the facts
the company disclosed to the agencies and why the agencies declined enforcement
on those facts.
I noted then, and repeat now, that this proposal would
not only increase transparency (recall that Lanny Breuer stated at
the Guidance press conference - here - that
the DOJ strives to be "transparent" as to its FCPA enforcement program),
but also inject some much-needed discipline into the voluntary disclosure
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