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I’m Mike Casey, counsel in Ropes & Gray’s Government Enforcement practice group. I’m joined here today in Washington D.C. with two of our partners, Colleen Conry and Alex Rene. Both Colleen and Alex are alumni of the DOJ. Colleen previously served as Senior Litigation Counsel for the Fraud Section and Alex worked as an AUSA and a trial attorney in the Fraud section.
Today’s podcast is part of a series of Capital Insight podcasts we’re hosting to examine the issues and potential regulatory and enforcement changes emanating from Washington, D.C. as we transition to a new political administration.
In this podcast we are going to discuss anti-corruption enforcement. Our conversation will be informed by publically available statements, past behavior and general trends we have observed in the anti-corruption space.
With any administration change there is some level of uncertainty and no way to perfectly predict the future. Nevertheless, today we’ll make our best predictions with the information available.
Let’s start by discussing the Foreign Corrupt Practices Act, a statute that the Bush and Obama administrations have prioritized enforcing. Colleen, how do you think Mr. Trump’s election will impact FCPA enforcement?
Colleen: You know, in general, the FCPA has not been a major focus of Trump’s campaign. So we look back to 2012, where Trump did go on the record saying he didn’t like the FCPA. While discussing the Walmart bribery investigation, Trump told CNBC that he thought the U.S. is “absolutely crazy” to prosecute FCPA violations. He called the FCPA a “horrible law” and said “it should be changed” because it puts American businesses at a “huge disadvantage.” But I really think it’s important to keep in mind, these remarks were made years ago, about the prosecution of an iconic U.S. business, before Trump was a presidential candidate.
Mike: So his historic comments are interesting, but Alex, has Mr. Trump said anything more recently about the FCPA or anti-corruption in general that could shed light on how his administration will look to enforce that law?
Alex: Trump’s 2012 FCPA remarks are consistent with his campaign’s focus on increasing the competitiveness of American businesses to restore jobs. But FCPA enforcement could actually benefit American businesses. Many of the largest FCPA penalties have been levied against foreign companies, including Siemens from Germany, Alstom, the French company and the British company BAE. So the Trump administration may actually see the FCPA as a tool to be used against foreign interests in order to level the playing field for American companies.
Mike: Let’s shift gears now and talk about Mr. Trump’s recent pick for Attorney General, Senator Jeff Sessions. Has Senator Sessions expressed any opinions about the FCPA that are noteworthy?
Alex: Sessions actually hasn’t discussed the FCPA in any depth but he has made a few comments that shed some light on what we think his thinking might be. During the 2011 Committee hearings, Sessions questioned DOJ officials on whether there had been studies on the impact of the FCPA on the competiveness of American businesses. Suggesting that Sessions may actually share Trump’s concerns that aggressive FCPA enforcement may harm American interests. He also questioned whether the use of deferred prosecution agreements, also known as DPAs, on enforcement in this area undermine the rule of law by keeping courts from considering the merits of DOJ’s arguments. That may suggest that he thinks that DOJ has stretched the FCPA too far, at least in certain cases. But it may simply reflect his dislike of DPAs in general, which he raised in other contexts.
Mike: Colleen, has Senator Sessions given any indications about how he views, or how he might view, the DOJ’s FCPA pilot program for self-reporting violations?
Colleen: So Sessions hasn’t discussed the pilot program publically, but he has indicated support in other contexts, for giving companies full credit for self-reporting which is a key component to the pilot program. So he may be open to continuing to invite self-reporting and cooperation going forward.
Mike: So apart from any specific statement Senator Sessions has said about the FCPA, do his broader views on DOJ enforcement give us any hints about how he might approach FCPA in the future?
Colleen: Sessions is an old-school law-and-order prosecutor. He has taken a tough stance on crime generally, and that includes white collar crime. Sessions has said before that he thinks sentences for white collar crimes have been too light in the past and that they should be harsher in order to deter misconduct.
Alex: And some commentators, following up on Colleen’s comments, some commentators have drawn parallels between Sessions and John Ashcroft. If you would remember, John Ashcroft was a Republican nominee and was expected to be pro-business before his tenure as the Attorney General. But Ashcroft took a hard line on white collar crime. His DOJ took the unprecedented step of indicting Arthur Anderson, a well-respected accounting firm that is no longer around. Ashcroft also ushered in an era of very aggressive FCPA enforcement. FCPA cases steadily increased under Ashcroft as well as the Bush administration and the trend continued under the Obama administration. Like Ashcroft, Sessions is deeply conservative and has generally expressed pro-business views. But that doesn’t mean he won’t be aggressive when it comes to prosecuting any bribery rules.
Mike: Colleen, when we think about Senator Sessions’ tenure as Attorney General, how could his other enforcement priorities affect the DOJ’s approach to FCPA enforcement?
Colleen: So, our thinking is that as Attorney General Sessions will likely prioritize the issues he’s talked a lot about recently, over the course of his career -- things like national security and immigration. Those issues may compete with the FCPA for resources and attention. So it will be interesting to see whether Congress and the new administration keep the 30 or so FCPA prosecutors who are brought in for two-year terms. DOJ has also assigned three squads of FBI agents who work on FCPA cases. Those agents could be reassigned as priorities shift.
Alex: On the other hand, FCPA enforcement hasn’t been a drain on the department’s budget. FCPA enforcement depends largely on self-reporting and internal investigation, which means the private sector bears most of the costs. FCPA enforcement can also be a money-maker for the government. This year set a record for the number of corporate settlements, year-to-date, DOJ has brought in approximately $1 billion dollars in FCPA settlements.
Colleen: I agree completely, Alex. With any administration change there’s likely to be a shift in emphasis but, I don’t expect any abrupt changes in enforcement levels and I think companies need to be vigilant on these issues. So, that’s especially true for companies subject to similar laws in other jurisdictions, like the UK Bribery Act, which actually is in many ways more restrictive than the FCPA and will continue to be enforced regardless of how aggressively DOJ pursues bribery cases.
Mike: That’s all the time we have. Colleen and Alex, thank you both very much for your insights here today. And thanks to everyone for listening. Please visit our newly-launched Capital Insights webpage, which can be accessed through www.ropesgray.com for additional news and analysis about other noteworthy and regulatory issues in Washington.