The Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have jointly issued their long-anticipated A Resource Guide to the U.S. Foreign Corrupt Practices Act. The agencies’ intent in preparing the guide was to explain how the Foreign Corrupt Practices Act (FCPA) applies to various activities of business enterprises operating abroad, as well as to provide insight into DOJ and SEC enforcement practices.
This 120-page non-binding guide appears to be a thoughtful attempt by the agencies to respond to many of the concerns raised by the business community and other stakeholders about the FCPA’s impact on American business interests. While the guide provides generalized advice and insight into the agencies’ enforcement practices, it does not provide bright-line tests for the key areas of concern for those doing business in the global arena. Still, it is a reference document that should find a place on the desk of anyone with compliance responsibilities pertaining to doing business abroad, since it now represents the most comprehensive collection of government thought on the FCPA.
Because the guide cannot address every nuance or cover all potential circumstances, however, and because it is specifically not intended to be relied on to create enforceable rights in any criminal, civil or administrative proceeding, it should not be used as a substitute for the advice of legal counsel in specific contexts.
A Multi-Faceted Approach
Using hypotheticals, examples of enforcement actions and matters that were not prosecuted, as well as case law summaries and DOJ opinions, the agencies intend their guide to provide helpful information to enterprises of every size “from small businesses doing their first transactions abroad to multi-national corporations with subsidiaries around the world.”
Among other things, the guide addresses (i) who is covered by the FCPA’s anti-bribery provisions; (ii) the interpretation of terms such as “corruptly,” “willfully,” “anything of value,” and “foreign official”; (iii) the application of the two affirmative defenses provided by the FCPA—the “local law’ defense and the “reasonable and bona fide business expenditure” defense; (iv) the FCPA’s accounting provisions; (v) the application of other related U.S. laws and international treaties; (vi) the agencies’ “guiding principles of enforcement”; and (vii) the agencies’ uses of penalties, sanctions, remedies, and resolutions. The guide provides the text of the law, as well as comprehensive end notes.
Highlights include the manner in which the DOJ and SEC evaluate the effectiveness of a corporate compliance program when determining the type of action to take in the event of an alleged FCPA violation. The agencies “have no formulaic requirement regarding compliance programs,” focusing instead on whether the program is well designed, is being applied in good faith and whether it is actually working.
In the Agencies’ Own Words
On the guide’s release, DOJ’s Criminal Division Assistant Attorney General Lanny Breuer said, “The fight against corruption is a law enforcement priority of the United States. Our FCPA enforcement is critical to protection the integrity of markets for American companies doing business abroad, and we will continue to make clear that bribing foreign officials is not an acceptable shortcut.”
SEC’s Division of Enforcement Director Robert Khuzami added, “Investors must have faith that the economic performance of public companies reflects lawful consideration of markets, price and product rather than a mirage resulting from bribery and corruption. This guide will protect investors by assisting businesses in preventing such unlawful behavior, thus avoiding FCPA violations in the first place, which is in the interest of law enforcement and business alike.”
The guide is available online here.