The DOJ has declared this to be a “new era” of FCPA enforcement that is characterized by an aggressive application of the statutes by enforcement officials, increasing amounts being paid to settle by business organizations, increasing amounts being paid by business organizations to cooperate with enforcement officials, blue collar tactics employed against individuals and more trials. In the wake of all this a number of foreign based multinationals have delisted their securities. While the OCED has praised U.S. enforcement efforts, business groups are increasing claiming that the Act is making it more difficult for business.
Congress is hearing testimony on reforming the FCPA. This week hearings were held before the House Committee on the Judiciary, Subcommittee on Crime, Terrorism and Homeland Security. The Committee heard testimony from the Department of Justice, the U.S. Chamber Institute for Legal Reform, The National Association of Criminal Defense Lawyers and former Attorney General George Terwilliger.
Greg Anders, Acting Deputy Assistant Attorney General, Criminal Division, testified on behalf of the Department of Justice. In his remarks, Mr. Anders began by reviewing the impact of corruption and then turned to current enforcement efforts. DOJ charging decisions are maked in accord with the Principles of Federal Prosecution Of Business Organizations the Committee was told. No single factor is dispositive. Cooperation however does have a significant impact. In this regard resolving actions through the use of non-prosecution and deferred prosecution agreements represents an “important middle ground between declining prosecution and obtaining the conviction of a corporation.” This is particularly true where the collateral consequences of a conviction could be significant.
Mr. Anders also reviewed a number of significant, recent FCPA settlements and the FCPA related treaty obligations of the U.S. under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. He concluded his remarks by discussing DOJ’s opinion process.
Former Attorney General and District Court Judge Michael Mukasey testified on behalf of the U.S. Chamber. Consistent with earlier positions taken by the Chamber, Mr. Mukasey recommended that six amendments be made to the FCPA: 1) A compliance defense be added; 2) The definition of foreign official be clarified; 3) Procedures be improved for advisory opinions from DOJ; 4)The criminal liability of a company for prior actions of an acquired entity be limited; 5) A “willfulness” requirement for criminal corporate liability be added; and 6) The liability of a parent company for unknown acts of a subsidiary be limited.
Shana-Tara Regon, the Director of While Collar Crime Policy testified on behalf of the National Association of Criminal Defense Lawyers. In her brief remarks the Director pointed out that the “FCPA is emblematic of the serious problem of overcriminalization.” This results in part from the vague and expansive standards under the statute. Despite spending millions of dollars on compliance and trying to act in good faith business organizations and their employees are unreasonably at risk of criminal prosecution.
Mr. Terwilliger also emphasized the vagueness of portions of the FCPA. He recommended four key reforms: 1) No criminal liability for an acquiring company. A post closing period of repose should be established for acquisitions while the necessary FCPA review is completed. If violations are discovered they would be reported to the government and remediated. The acquiring company would be given immunity. 2) A safe harbor for self-reporting. Under this approach a self-reporting company would not be criminally prosecuted although it would be subject to fines and penalties using an approach which would afford the company more certainty. 3) Foreign official. The definition of foreign official should be clarified. 4) Facilitation payments. Finally, the standards regarding facilitation payments should be clarified.