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INSTANT VIEWS ? U.S. DOJ, SEC publishes guidance on foreign bribery law

Source: Thomson Reuters Foundation - Wed, 14 Nov 2012 18:32 GMT
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(Corrects Koehler title)

LONDON (TrustLaw) – The U.S.  Justice Department and the U.S. Securities and Exchange Commission released a 120-page resource guide on the Foreign Corrupt Practices Act (FCPA) on Thursday.

Enforcement of the 1977 law, which bars U.S.-linked firms from bribing officials of foreign governments, has spiked in the last decade, causing companies to spend significantly on revamping their anti-bribery compliance procedures.

Business groups have long urged the department to release information about those cases involving FCPA violations it decides not to charge, a step prosecutors have resisted doing in the past.

Following are views from lawyers and other FCPA experts:

MARK MENDELSOHN, partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP

DOJ and the SEC have issued a thoughtful and thorough guidance document. The agencies have taken guidance previously issued to individual companies, examples from prior prosecutions, and some FCPA "lore" and made them available to a wider audience.  While it breaks little new ground, it will nonetheless be a valuable resource for many companies and even some practitioners.

Particularly welcome are some of the practical scenarios and hypotheticals, including regarding cases where prosecution was declined.  It is also noteworthy that both DOJ and the SEC have reiterated their commitment to the use of DPAs (Deferred Prosecution Agreements), NPAs (Non Prosecution Agreements) and compliance monitors in appropriate FCPA cases.

MATTESON ELLIS, founding partner of Matteson Ellis Law PLLC

No one knew what exactly to expect with this guidance. Few thought it would be so detailed, comprehensive, and instructive. It is now clear - boardrooms, executives, general counsels, and chief compliance officers will be pleased. Certainty and predictability are key in business, and in the uncertain world of foreign corruption and compliance, these 120 pages get us closer to knowing expectations.

Most helpful are the highly specific scenarios provided throughout. These create benchmarks for companies looking to pursue business opportunities aggressively, and to do so in a compliant way. Enforcement is very clear on how the standard for compliance is not one of "perfection" and how they understand that programs "evolve." These statements are a welcome relief to those on the front lines grappling with complication issues every day. 

ALEXANDRA WRAGE, President, TRACE International

The guidance is more substantive and detailed than most compliance experts expected. While it is impossible to provide guidance that applies equally to companies of all sizes, in all industries and operating across different regions, there is a great deal in this document to reassure companies working hard to get this right and a fair amount that will those companies still slow to take this issue seriously will find unsettling.

MIKE KOEHLER, Assistant Professor, Southern Illinois University School of Law

As expected, there is little new information in the guidance to those previously knowledgeable about the FCPA and its enforcement. It is important for people reading the guidance to understand that it does not represent the "law," but rather DOJ and SEC interpretations of the FCPA and its enforcement policies and procedures. In many ways, the guidance is an advocacy piece, and in certain instances - such as jurisdictional issues, the business nexus element and others - what the enforcement agencies say in the guidance has been rejected, in whole or in part, by courts. Although the guidance is a long document at approximately120 pages, the most important words appear in the footnote, which states that the guidance is non-binding and does not in any way limit the enforcement intentions or litigating positions of the DOJ or SEC.

What FCPA enforcement needs at this critical juncture is not non-binding enforcement agency guidance, but limited structural reforms such as a compliance defense and abolition of non-prosecution and deferred prosecution agreements.


According to Sarah Pray, Senior Policy Analyst at the Open Society Foundations, “The guidance seems like a fair balance between business's desire for clarity and civil society's concern that the government avoid hamstringing its own ability to prosecute an offense as complex as international bribery.”

Recent high-profile corruption cases have brought to the forefront the importance of maintaining a robust FCPA. “Bribery takes many forms but is encouraged by a corporate culture of willful ignorance,” said Stefanie Ostfeld, Policy Advisor with Global Witness. “Details have been revealed about how Wal-Mart's executives allegedly tried to insulate its top management from its subsidiaries' daily decisions, which allowed it to consolidate its market share through corrupt payments in Mexico and elsewhere.”

Civil society groups contend that the new Guidance renders moot calls from the U.S. Chamber of Commerce's Institute for Legal Reform, for broad amendments to the FCPA that would weaken key anti-bribery applications.  “The Guidance thoroughly addresses aspects of the law that the U.S. Chamber has described as vague and difficult to translate into everyday business practice,” said Heather Lowe, Legal Counsel & Director of Government Affairs at Global Financial Integrity.  “In light of the content of the Guidance, we can't see any basis for the Chamber's attacks on the FCPA to continue.”

(Released by Global Financial Integrity, International Corporate Accountability Roundtable, Global Witness, Open Society Foundations, Earth Rights International)

LISA RICKARD, president of the U.S. Chamber of Commerce's Institute for Legal Reform

While it will take some time to fully digest the guidance, it addresses several areas of concern outlined by ILR and more than 30 trade and business associations earlier this year. Particularly, the guidance includes helpful hypothetical scenarios, case studies, and policy statements covering de minimis thresholds, the meaning of an ‘instrumentality’ as a defined component of a foreign official, the mens rea standard for corporate criminal liability, and the extent of liability for parent and successor companies. It also includes a number of examples of cases the enforcement agencies have declined to pursue to date.

While guidance by definition can never provide the same certainty as an affirmative statute, we’re hopeful that this document will help companies seeking to comply with the law in good faith and prosecutors charged with enforcing it. The business community will continue to engage with the DOJ and the SEC as they enforce the statute consistent with today’s guidance.

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