This article was reprinted with permission
from FCPA Professor
Many assume that my article "The Facade of
FCPA Enforcement" is all about over-enforcement of the FCPA based
on untested and dubious legal theories not subjected to judicial
scrutiny. To be sure, these topics are discussed in great detail in
However, also discussed in great detail in the article is
the opposite end of the spectrum. That being, despite seemingly clear-cut
instances of corporate bribery per the government's own allegations, a
corporate enforcement action is resolved without FCPA anti-bribery
charges. The 2010 article discussed the most pertinent cases at the
time - Siemens and BAE.
In this April
2012 post, I first commented on the egregious nature of the
BizJet corporate enforcement action and noted that when conduct giving
rise to corporate liability involves senior executive misconduct and apparent
knowing acquiescence by the Board, the entity - simply put - should
not be offered an alternative resolution vehicle. Yet, BizJet was
allowed to resolve the enforcement action via a deferred prosecution
agreement, meaning that should it abide by the terms and
conditions of the agreement, BizJet will never be required to plead guilty
The following was known in 2012 about the BizJet
Information revealed in connection with the recent
unsealing of the former BizJet executives enforcement action (see here
and here for
prior posts) adds the following relevant information.
In short, and per the DOJ allegations, BizJet was
an egregious instance of corporate bribery, broad in scope. conceived of
and executed by senior executives, with board knowledge and acquiescence.
The question ought to be asked - where was the BizJet
board and what, if anything, did it do in November 2005 upon learning that
senior executives were engaged in bribery?
Per the DOJ's allegations, this was not a situation in
which the Board of Directors needed to engage in any detailed inspection of the
company's books and records or have sophisticated knowledge to discover the
bribery scheme. Rather, the Board was specifically told by senior
executives that the company was engaged in bribery.
In a notable case in the corporate director context (Francis
v. United Jersey Bank) the court stated that "the sentinel asleep at his
post contributes nothing to the enterprise he is charged to protect [...]
Shareholders have a right to expect that directors will exercise reasonable
supervision and control over the policies and practices of a corporation.
The institutional integrity of a corporation depends upon the proper discharge
by directors of those duties."
The egregious BizJet enforcement action also raises the
question of whether corporate criminal liability means anything?
Many, including myself, believe that corporate criminal
liability principles need revisiting.
For purposes of this post however, the important
perspective is that of the DOJ which has long maintained that corporate
criminal liability is a fundamentally sound legal doctrine not in need of
If that is the DOJ position, then it must be asked - does
corporate criminal liability actually mean anything if a company like BizJet -
given the DOJ's allegations - is not actually criminally prosecuted or required
to plead guilty?
In short, the resolution vehicles the DOJ has created and
championed has again lead to a "facade of enforcement" - albeit an
instance on the opposite end of the spectrum that I normally highlight.
Read more articles on the FCPA by Mike
Koehler at FCPA
For more information about LexisNexis
products and solutions connect with us through our corporate site.