Archive for the ‘Enforcement Agency Policy’ Category

Congress Remains Interested In FCPA Issues

Wednesday, February 26th, 2014

Foreign Corrupt Practices reform may not be the hot issue it was circa 2011 (political posturing by the DOJ in connection with the FCPA Guidance as well as certain headlines caused the issue to simmer), but Congress remains interested in FCPA issues.

For instance, in connection with a recent confirmation hearing for Leslie Caldwell to be the DOJ’s Assistant Attorney General of the Criminal Division, Senator Charles Grassley (R-IA), Ranking Member of the Senate Judiciary Committee, asked Caldwell several FCPA-related questions for the record.

Caldwell punted on every question (perhaps not surprising given that Caldwell is not currently at the DOJ), but the questions posed nevertheless highlight specific FCPA issues on the minds of certain members of Congress.

Set forth in full below are the FCPA-related questions by Senator Grassley and Caldwell’s responses.


“I recently asked Attorney General Holder these questions and have not yet received response.  As the FCPA falls within the Criminal Division, would you please respond to the following questions.

What are the Department’s current enforcement priorities under the FCPA?

Answer:  I am not in the Department; therefore, I am not in a position to address this question.  If I am confirmed as the Assistant Attorney General of the Criminal Division, I assure you that I will be vigilant in pursuing cases under the FCPA.

What particular industries, markets or practices is the Department focusing on, and why?

Answer:  I am not in the Department; therefore, I am not in a position to address this question.  As noted above, if I am confirmed as the Assistant Attorney General of the Criminal Division, I assure you that I will be vigilant in pursuing cases under the FCPA.

What proportion of the Department’s enforcement activity during 2013 involved non-U.S. companies?

Answer:  I am not in the Department; therefore, I am not in a position to address this question.  If I am confirmed as the Assistant Attorney General of the Criminal Division, I assure you that I will be vigilant in pursuing cases against U.S. and non-U.S. companies that violate the FCPA.

Has the Department seen a recent increase in whistleblower claims of FCPA violations?  If so, to what would you attribute that?  How has the Department responded?

Answer:  I am not in the Department; therefore, I am not in a position to address these questions.

Although the Department does not publicize each particular instance in which it declines prosecution despite evidence of an FCPA violation, what characterized the Department’s declinations during 2013?  Did the number increase from 2012?  What factors were most important in leading the Department to decline prosecution?

Answer:  I am not in the Department; therefore, I am not in a position to address these questions.  While I have not been privy to the internal deliberations surrounding the Department’s declination decisions, if confirmed as the Assistant Attorney General of the Criminal Division, I assure you that declination decisions will be based on the law and the evidence presented.

In November 2012, the Department and SEC issued the FCPA ”Resource Guide,” which reflected guidance from your agencies regarding the interpretation and enforcement of the FCPA.  Does the Department anticipate updating, supplementing or amending the “Resource Guide” in the foreseeable future?

Answer:  I am not in the Department; therefore, I am not in a position to address this question.

In 2013, the Department issued only one Opinion Release concerning the FCPA.  Does the Department consider the “Resource Guide” a substitute for its opinion release program?

Answer:  I am not in the Department; therefore, I am not in a position to address this question.

Further To The DOJ’s Unique Centralized FCPA Enforcement Policy

Wednesday, February 19th, 2014

One reason I have argued, as a matter of policy (see here and here for instance), for greater post-government employment restrictions on DOJ Foreign Corrupt Practices Act enforcement attorneys with supervisory and discretionary authority is due to the unique policies which guide DOJ enforcement action.

This 2013 post highlighted the DOJ’s unique centralized FCPA enforcement policy.  The post included statements from: (i) the then DOJ Deputy Chief of Staff for the Criminal Division noting that the DOJ’s centralized enforcement policy “distinguishes FCPA prosecutions from most other kinds of federal criminal cases; and (2) the former DOJ Assistant Chief for FCPA enforcement who rightly observed that “the FCPA has been recognized and treated as different by the U.S. government” in that the FCPA ”is one of just a few, select statutes to be prosecuted centrally from one DOJ office.”

The practical realities of the DOJ’s unique centralized FCPA enforcement policy are best highlighted by the new law firm biography of the DOJ’s recently departed FCPA Unit Chief.  In pertinent part, the biography states:

“[Former Unit Chief] most recently served as a Deputy Chief in the Fraud Section in the Criminal Division of the U.S. Department of Justice, where he led the Foreign Corrupt Practices Act (FCPA) Unit and was in charge of all of the DOJ’s FCPA  investigations, prosecutions and resolutions in the United States. Internationally recognized for his leading role in developing and implementing  the government’s FCPA enforcement strategy, he was widely credited with developing the current enforcement regime and recruiting and leading a talented team of prosecutors who have brought some of the most important FCPA cases in the statute’s 36-year history.


As the head of the FCPA Unit, [former Unit Chief]  oversaw countless voluntary disclosures, decided which matters would be declined, administered DOJ’s FCPA Opinion Release Procedures and was responsible for interviewing, selecting and  reviewing the work of seventeen independent corporate monitors.


While in the Fraud Section, [former Unit Chief] led the development of a deferred prosecution agreement (DPA) template for FCPA cases, which formed the basis for a DPA template later adopted for use by the entire Criminal Division, and he also led the effort to update and restructure the enhanced compliance components of DPAs in FCPA cases.”

The DOJ’s unique centralized FCPA enforcement policy warrants another special policy.

And that is, a prohibition on DOJ (and SEC) FCPA enforcement attorneys with supervisory and discretionary authority from providing FCPA defense or compliance services for five years upon leaving government service.


See here and here for other recent posts concerning the departure of the DOJ’s FCPA Unit Chief.

SEC Official – “FCPA Law .. Is Not Well Developed”

Thursday, December 5th, 2013

“FCPA law …  is not well developed.”

It’s an obvious statement that is known and understood by many.

Yet what makes the statement noteworthy is that it was recently made by Andrew Ceresney (Co-Director of the SEC’s Division of Enforcement).

It is thus arguably the most notable - and candid – statement by an FCPA enforcement official in recent years.

This prior post highlighted the recent comments of Deputy Attorney General James Cole before an FCPA audience.  This post contains excerpts of Ceresney’s speech at the same event and also provides certain commentary.


As to the FCPA being a “fundamental part of the SEC’s mission,” Ceresney stated:

“[T]he SEC’s work in the FCPA arena over the last 35 years has been a fundamental part of the SEC’s mission. And the last 10 years have seen an even bigger increase in FCPA enforcement actions. As most of you know, three years ago, we formed a specialized Unit within the Division of Enforcement devoted to investigating potential FCPA violations. Our FCPA Unit has approximately three dozen dedicated attorneys and other professionals nationwide, including two industry experts who are forensic accountants with extensive private sector FCPA experience. Their work in marshaling expertise and developing cases has been remarkable — they and the other specialized units we created have fulfilled the promise of creating true centers of excellence within the Division that serve as resources to everyone within the Division. I always like to say that the purpose of specialized units was to expand the pie of cases in the Division, rather than just eating from the existing pie, and the FCPA unit has certainly done that.”

As to the FCPA not being a fundamental part of the SEC’s mission, see here.  As Philip Urofosky (former DOJ Assistant Chief of the Fraud Section) stated in this article, “the SEC should get out of the anti-bribery business.”  Indeed, I would call this “granting the wish” because, as noted in my article “The Story of the Foreign Corrupt Practices Act,” the SEC never wanted any part in enforcing the FCPA’s anti-bribery provisions.

As to the global fight against corruption, Ceresney stated:

“The last 10 years also have yielded a sea change in attitudes towards foreign bribery. The groundbreaking cases that we have brought have sent an unmistakable message that most companies have heard loud and clear — obey the FCPA, and ensure that your employees are sensitive to FCPA issues, or face stiff penalties and other consequences.  But despite the hard work of the SEC and our sister agencies, far too many companies and individuals still believe that paying a bribe is the best way to win business. And there are still countries where bribes are viewed as a necessary evil. In fact, when I was in private practice, I often was told by business people that bribery was simply a fact of life in certain countries; it was simply accepted as a given. So there is still work to be done to fight corruption globally and there are still messages to be sent.”

As to how the SEC has contributed to a ”culture of compliance,” Ceresney stated:

“The extent of the impact that we have had on the culture of FCPA compliance over the last 10 years cannot be overstated. I did a fair amount of FCPA work at Debevoise. Ten years ago, when I first went into private practice, the FCPA was an area in which few lawyers specialized; it certainly was not viewed as a practice area that could employ numerous lawyers. Companies did not have many compliance officers focused on the area; training of employees was minimal; the FCPA was rarely discussed during contract negotiations or focused on with agents or vendors; audits were not focused on FCPA compliance; and due diligence in connection with transactions rarely focused on FCPA issues. There was simply little recognition that such conduct needed attention.  Fast forward 10 years and there has been a sea change in focus on these issues. Most companies now have some form of an FCPA compliance program, often with professionals who spend a good chunk of their jobs focused on the FCPA. FCPA training is now a common requirement among multinational companies. Much time is now spent on ensuring that contracts have appropriate provisions on FCPA compliance. FCPA diligence is often done on agents and vendors in advance of retention, and many companies have sophisticated systems for assessing risk to determine the level of diligence that will be done. Issues relating to gifts and other events involving government officials are often escalated. I also have noticed a growing trend of companies hiring separate firms to do compliance due diligence in connection with transactions — a development that signals the importance placed on the FCPA, and the need for specialized counsel to focus on these issues.”

Would it not be sensible to more adequately reward these good faith commitments to FCPA compliance and allow good corporate citizens a better return on their compliance investments?  Yes it would, see here for my article “Revisiting an FCPA Compliance Defense.”

As to the difference between FCPA legal authority and non-legal sources of  FCPA information, Ceresney stated:

“[L]awyers now heavily scrutinize our FCPA actions to glean any information about our interpretation of the law. Each aspect of our actions is closely scrutinized to extract kernels of guidance and hopefully helps companies identify problems and comply in the future.”


In addition, this intense interest from companies and defense counsel about our FCPA efforts created a growing need to provide clear, meaningful guidance on how the government interprets and applies the FCPA — a need that culminated in the DOJ/SEC FCPA Resource Guide issued last year. As someone who was in the private sector at the time it was issued, I can attest firsthand that the Guide did a great job of providing a concrete sense of the government’s views. And building off of that success, it is important that we continue to find ways to educate and inform the industry about the limits of permissible conduct — whether it be through more guidance or through enforcement actions — because strong compliance programs that incorporate a company’s internal audit and financial controls at the outset enable companies to catch problems early and remediate quickly.”


“FCPA law … is not well developed.  Companies typically enter settlements in FCPA cases, leading to a paucity of case law.”

As to “international trends,” Ceresney stated:

“Another important trend in the last 10 years has been the immense growth in focus and legislation on corruption issues around the globe, and the tremendous increase in cooperation that we have received from other governments. Although the SEC and DOJ are at the forefront of this global fight against corruption, we cannot do it alone. There are capable and committed law enforcement partners worldwide, and their numbers are steadily growing. Over the past five years, we have experienced a transformation in our ability to get meaningful and timely assistance from our international partners. And through our collaborative efforts, the world is becoming a smaller place for corrupt actors.


As other countries begin to step up their efforts to combat corruption, it makes our job easier. Countries with strong anti-corruption laws are often great partners to us in combatting corruption. Scrutiny from the local government, in addition to us, will often be a strong deterrent to bribery. More and more, our investigations are conducted in parallel with a foreign government.

Obviously, evidence in many FCPA cases resides in foreign countries and in many instances, it is only with the assistance of local authorities that we are able to obtain evidence necessary for us to prove FCPA violations. We are having greater success working with the international community to receive documents and other types of foreign assistance.


[E]arlier this year, the SEC, in conjunction with the DOJ and FBI, hosted the first-ever Foreign Bribery and Corruption Training Conference for international law enforcement, which included representatives from over 50 law enforcement and regulatory agencies from 30 different countries. The Conference strengthened relationships among regulators and informed international officials about the latest developments in investigative techniques and multilateral requests for assistance. The more we can foster this sort of international cooperation, the more we can be successful in prosecuting FCPA cases.

I am encouraged by such close collaboration and fully expect the pace and extent of our cooperation with foreign agencies to grow over the coming years. Indeed, only recently, I have been involved in a case in which we are receiving cooperation from a country that has never before provided any meaningful assistance. This sort of progress gives me confidence that the future is even brighter.”

As to the “focus on individuals,” Ceresney stated:

“Another area of focus, and recent progress, has been our efforts to bring FCPA cases against individuals. To better root out corruption, we have ramped up our pursuit not just of companies, but of the individuals responsible for the corporate malfeasance.

A core principle of any strong enforcement program is to pursue culpable individuals wherever possible. After all, companies can only act through their people. Cases against individuals have great deterrent value, as they drive home to individuals the real consequences to them personally that their acts can have. In every case against a company, we ask ourselves whether an action against an individual is appropriate.

FCPA cases against individuals pose unique challenges. For example, we sometimes are unable to reach defendants who are in foreign jurisdictions, and the remedies we can obtain against such individuals are often quite limited, particularly when we cannot enforce judgments in those jurisdictions. Also, even when we can reach defendants, we often have difficulties obtaining foreign evidence and gaining access to overseas witnesses, particularly under circumstances that would allow us to use their testimony at trial. The length of time it takes to investigate these cases, particularly given the frequent need to collect foreign evidence, sometimes presents a statute of limitations issue. These are challenging cases, particularly in proving the culpability of individuals we can reach.

But we are overcoming these challenges through a variety of steps, including expanding the availability and use of Memoranda of Understanding with international financial regulators to obtain bank records, other documents, and testimony; using border watches and other methods of obtaining information from foreign nationals; subpoenaing U.S.-based affiliates of foreign companies; and more aggressively seeking videotaped depositions that we can use at trial if we cannot secure live testimony.

We have been successful in recent years in increasing the number of FCPA actions against individuals. Many of you are familiar with our pending litigation against various executives of Magyar Telekom, Siemens, and Noble. Litigation is ongoing against individuals in all three matters, and these cases have sent an unambiguous message that we will vigorously pursue cases to hold individual accountable for FCPA violations — including executives at the highest rungs of the corporate ladder. In fact, this April, we obtained the second highest penalty ever assessed against an individual in an FCPA case, when one of the Siemens executives agreed to pay $275,000.


And so despite the investigative headwinds that we often face in FCPA matters, we intend to be more creative and aggressive in pursuing such actions against companies and individuals. I expect that in the coming months, we will be filing more actions against individuals in FCPA cases.”


Between 2008 to 2012, 79% of corporate SEC FCPA enforcement actions have not (at least yet) resulted in any SEC charges against company employees.  Thus far in 2013 there have been 7 corporate SEC FCPA enforcement actions and none have resulted (at least yet) in any SEC charges against company employees.

As to Ceresney’s statement that “FCPA cases against individuals pose unique challenges,” this is true.  Individuals are more likely than issuers to put the SEC to its burden of proof in FCPA enforcement actions and this recent post highlighted the SEC’s track record in such instances.

As to the “importance of cooperation,” Ceresney stated:

“[W]e have been very successful in the FCPA arena in fostering self-reporting and cooperation by companies with our investigations. Institutions and individuals are uniquely positioned to help us and help themselves by aggressively policing their own conduct.

Since launching our Cooperation Program in 2010, the Commission has made it clear that it will reward companies or individuals who cooperate, despite the fact that a violation has occurred. But receiving credit requires timely self-reporting, candor, thoroughness, prompt remediation and a serious commitment to act lawfully in the future.

Some lawyers sometimes ask me what is the incentive to notify us promptly about wrongdoing that you uncover? The answer is simple — if we find the violations on our own, the consequences will surely be worse than if you had self-reported the conduct. Companies must keep in mind that the risk of not coming forward grows by the day as our whistleblower program continues to pick up steam. We are increasingly sourcing our own cases through whistleblower tips — which have come from individuals in nearly 70 different countries — and just last month, we made our largest-ever whistleblower award: over $14 million. Given the high-dollar value of FCPA monetary relief—often in the tens or hundreds of millions of dollars—we expect FCPA violations to become an increasingly fertile ground for Dodd-Frank whistleblowing. In fact, during the last fiscal year we received 149 whistleblower tips related to the FCPA. All of which reinforces the value of reporting misconduct directly to the SEC in the first instance, and then demonstrating extraordinary levels of cooperation thereafter.

We have a wide range of tools available to us to facilitate and reward meaningful cooperation — from reduced charges and penalties, to taking no action at all. We have tried through our actions to be clear about the benefits that companies obtain through cooperation. Two recent examples highlight the importance of and benefits from cooperation.

In April, we entered into a Non-Prosecution Agreement with Ralph Lauren Corporation arising out of FCPA violations — our first-ever NPA in an FCPA case under our Cooperation Program. In that case, Ralph Lauren’s Argentine subsidiary bribed officials to secure the importation of its products in Argentina. Ultimately, we decided an NPA was appropriate due to Ralph Lauren’s prompt reporting of violations on its own initiative; voluntary and expeditious production and translation of documents and production of witnesses; thorough and real-time cooperation with the investigation; and significant remedial measures.

But our cooperation program is not limited to corporations. Just last week, we entered into our first-ever deferred prosecution agreement with an individual. We decided a DPA was appropriate in the matter because the individual contacted government authorities about the misconduct, which involved a hedge fund manager misappropriating investor assets, and provided immediate and complete cooperation with the SEC during our investigation. As a result of the individual’s assistance, we were able to file an emergency action and freeze over $6 million in assets.

As these examples make clear, the benefits of responding appropriately to violations and cooperating fully with the SEC can be substantial. And it is incumbent on us to clearly, and loudly, communicate these rewards because cooperation helps us as well. It enhances our ability to detect misconduct and increases the efficiency and effectiveness of our investigations.

Ultimately, it is important to keep in mind that greater cooperation benefits all market participants. Faster detection helps us minimize investor harm in the short run, while the implementation of preventive measures from cooperation agreements improves the transparency and fluidity of our markets in the long run.”

In conclusion, Ceresney stated:

“[L]et me assure you that we will remain the vigilant cop on the beat when it comes to the FCPA. I am confident that we will remain aggressive and proactive in enforcing the FCPA. And through strong enforcement, we will continue to level the playing field for U.S. companies doing business abroad and hold corrupt actors accountable when they fail to play by the rules. We also recognize, however, that successful enforcement is assisted by cooperation from others.  Through rigorous compliance programs and internal controls, companies can identify and eliminate corruption before it takes root.  Through greater international collaboration and enforcement, we can gather evidence more easily and expand our reach.  And through greater cooperation from companies and individuals in our investigations, we can bring cases faster and ensure fair, transparent, and efficient markets. The U.S. has been a leader in the world’s anticorruption efforts since the passage of the FCPA and with your help we will continue to lead the charge.”

Friday Leftovers

Friday, November 29th, 2013

Scrutiny alerts, corruption in China, quotable, and for the reading stack.  It’s all here in the Friday leftover version of the roundup.

Scrutiny Alerts

Caribbean News Now reports here as follows.

“A complaint has been filed with the Department of Justice (DOJ) in the United States under the Foreign Corrupt Practices Act (FCPA) in relation to a contract purporting to grant oil exploration rights over some eight million acres of Saint Lucia’s maritime territory.  The 46-page complaint, which Caribbean News Now has seen, names Saint Lucia’s prime minister, Dr Kenny Anthony, and RSM Production Company (RSM), a Texas company, along with its president Jack J. Grynberg. Caribbean News Now has also seen a written notification confirming receipt of the document by the DOJ.


Specifically, the complaint notes that, in or about February 2000, Anthony, as then minister of finance, planning and sustainable development, signed a contract with RSM that purported to grant the company an “Exploration License” in respect of territorial maritime resources belonging to Saint Lucia amounting to 8,726,263 acres.  However, under Saint Lucia’s Minerals Vesting Act, all minerals in, on or under any land in Saint Lucia are vested in and controlled by the Crown and only the governor general may grant a licence to prospect for and/or mine such minerals.  Further, although the contract provides that RSM shall pay a royalty to “the Government” (as required by section 5 of the Minerals Vesting Act), it goes on to state that the liability of RSM in this respect shall be discharged by paying such royalty to the minister and not the government.”

Reuters reports here as follows.

“The U.S. Justice Department is probing Morgan Stanley for its hiring practices in China as part of an industry-wide investigation by the government into whether banks’ employment of politically connected Chinese breached U.S. bribery laws, according to people familiar with the matter.  As part of the industry sweep, the U.S. Securities and Exchange Commission sent letters to Morgan Stanley and other banks, including Goldman Sachs and Citigroup, seeking information about their hiring practices, according to several people familiar with the matter.  The SEC has asked the financial services firms to provide information about their hiring of the relatives of government officials in China …”.

This is not a surprising development following the New York Times August story regarding JPMorgan (see here for the prior post).

Corruption in China

The Congressional-Executive Commission on China recently held a roundtable on “Corruption in China Today: Consequences for Governance, Human Rights, and Commercial Rule of Law.”  As stated on the Commission’s website:

“Corruption takes many forms in China, from corrupt officials at all levels using their public office for private gain and seizing land for development to corrupt state-owned enterprises gaming the system to their advantage. Corruption also continues to be among the root causes of rights abuses against Chinese citizens. Senior leaders acknowledge that corruption threatens the legitimacy of the Communist Party and contributes to citizen dissatisfaction, and President Xi Jinping has stated that fighting corruption is a high priority. But Chinese authorities continue to crack down on independent and citizen-led efforts to combat corruption. Panelists will discuss corruption among Chinese high-level officials and recent anti-corruption efforts, and explore corruption’s role in human rights violations. Panelists also will examine corruption linked to state-owned and other enterprises and explore the implications for commercial rule of law.”

Among the panelists were Professor Daniel Chow (Ohio State) (see here for his statement).  In 2012,  I was pleased to play a role, along with   Professor Chow and the staff of the Ohio State Law Journal, in organizing “The FCPA at Thirty-Five and Its Impact on Global Business,” a full-day symposium at The Ohio State University Moritz College of Law.  (See here).


On his Corruption, Crime & Compliance site, Michael Volkov states:

“The idea of legal ‘marketing’ has been diluted in the last few years.  As businesses become smarter consumers of legal services, in-house counsel and Chief Compliance Officers are much better at deciphering legal mumbo jumbo.  Perhaps the best example of legal marketing as an oxymoron, was the roll-out of the UK Bribery Act.  Legal marketing was premised on one idea –fear and fear alone.  Client alert after client alert warned companies about the impending doom, the effective date of the UK Bribery Act.  Not to pat myself on the back (assuming my arm is long enough), but I wrote that the UK Bribery Act was a real non-event in the world anti-corruption compliance and that it was unlikely to have any real impact.  To this day, those words still ring true.  After writing the ‘truth’ about the UK Bribery Act, I received a call from the firm’s London partners and was chastised for undermining their entire ‘marketing’ program.  (In stark contrast, many clients wrote me and thanked me for my ‘honesty.’”


Nearly three years ago, I wrote:

“The U.K. Bribery Act … has been the subject of much discussion and much over-hype in my opinion.  It has been called the FCPA ‘on steroids’ (here) and if one subscribes to the industry marketing material, you might be left with the impression that the end of the world is near.  [...]   In sum, I don’t see how companies already subject to the FCPA and already thinking about compliance in a pro-active manner, have much to worry about when it comes to the U.K. Bribery Act because of the adequate procedures defense.  I will be surprised if U.K. enforcement of the Bribery Act reaches the level of U.S. enforcement of the FCPA …”.

See here for my post the day the U.K. Bribery Act went live in July 2011.

See here for my post “Marketing The FCPA … The FCPA Risks Of … Well, Just About Everything.”

For the Reading Stack

The most recent issue of the always-informative FCPA Update from Debevoise & Plimpton is here.  Among other things, the issue summarizes recent remarks of DOJ and SEC officials regarding the FCPA and FCPA enforcement.


A good weekend to all.

“The Tide Of History Has Turned And Is Now On Our Side”

Wednesday, November 20th, 2013

Employing much of the same lofty rhetoric former Assistant Attorney General Lanny Breuer frequently used to describe the DOJ’s Foreign Corrupt Practices Act enforcement efforts (see here for my prior article), Deputy Attorney General James Cole delivered this speech yesterday before an FCPA audience.

This post contains excerpts of Cole’s speech as well as certain commentary.


As to the DOJ’s general fight against corruption, Cole stated:

“[C]orruption is no less harmful when it is perpetrated abroad.  In many ways, the consequences of public corruption can be even more severe in developing countries.  In the U.S., we have a long history of democratic and economic stability.  In nascent democracies, however, public corruption can undermine the very existence of the types of democratic institutions that we take for granted.  The fruits of corruption can help prop up autocratic and oppressive rulers.  In emerging economies, corruption can stifle the economic development that would lift people out of poverty, improve infrastructure, and better people’s lives.  And as the beneficiaries of the blessings of a stable democracy and a robust economy, we, as Americans, have an obligation to ensure that our corporations– and their officers, directors, and employees– are not undermining the promise of democracy and economic development in other parts of the world by paying bribes.  But make no mistake, fighting public corruption abroad is also good for the U.S. at home.  Just because we do not feel the repercussions of foreign corruption– the hospitals left unbuilt, the roads still unpaved, the medicine undelivered– as personally or as immediately as the citizens of those countries, it does not mean that corruption abroad does not affect us in real and tangible ways.  In today’s global economy, the negative effects of corruption inevitably flow back to the United States.  Corruption contributes to economic crises that destabilize the global financial system, opens borders for terrorists to cross, it raises the price of the goods we buy, and costs American jobs because American companies are denied the ability to compete in an open and fair marketplace.  We all eventually suffer the negative impact of transnational corruption.  Given that the stakes are so high, it should be no surprise that the Department of Justice is every bit as committed to fighting corruption abroad as it is to fighting corruption at home. [...] [Using the FCPA, the Department helps ensure that U.S. companies and individuals, as well as foreign companies and individuals where appropriate, are held accountable when they pay bribes to foreign government officials in order to get business."

As to the FCPA's legislative history, Cole stated:

"[L]et us take a moment to consider the origins of the FCPA.  The FCPA has its roots in one of the most notorious domestic corruption events in recent times: the Watergate scandal.  Obviously,Watergate had a tremendous impact on our domestic politics and governmental institutions.  But Congress realized that the problems uncovered during the Watergate investigation did not stop at our borders.  Indeed, in the aftermath of Watergate, our colleagues at the SEC discovered that more than 400 U.S. companies had paid hundreds of millions of dollars in bribes to foreign government officials to secure business overseas.  In enacting the FCPA, Congress recognized the harm that foreign bribery causes to both our domestic interests and foreign interests.  Congress recognized that foreign bribery had tarnished the image of U.S. businesses, impaired public confidence in the financial integrity of U.S. companies, and had hampered the functioning of markets, resulting in market inefficiencies, market instability, sub-standard products and services, and an unfair playing field.  Clearly, outlawing foreign bribery was the right thing to do.  But that does not mean it was the easy thing to do.  From the beginning, there was a vocal chorus of critics who claimed that taking a stand against foreign bribery would harm American businesses, put U.S. companies at a competitive disadvantage, and cost American jobs, because foreign bribery was “just how business is done overseas.”  But that didn’t make paying bribes right, and it didn’t mean that we should tolerate it. As Americans, we have a long history of taking the right path, not the expedient one.  And we expect more from ourselves–and our institutions– than pursuing the path of least resistance.  And, frankly, throughout our history, that philosophy has proven to be right.”

For a more complete – and accurate – description of the FCPA’s legislative history, see “The Story of the Foreign Corrupt Practices Act.”

As to the “current fight against foreign bribery,” Cole stated:

“In the nearly 36 years since the passage of the FCPA, the modern world has begun to embrace our fight against foreign bribery and to follow our lead.  From the 1999 OECD Anti-Bribery Convention to the 2005 UN Convention Against Corruption, from the Council of Europe’s Group of States Against Corruption to the Organization of American States’ Inter-American Convention Against Corruption,a common legal standard has emerged over the last 36 years that rejects the notion that bribery in international business transactions is lawful, much less inevitable.  It is true that this common standard has emerged slowly, and that at times it has faced challenges, but the tide of history has turned and is now on our side.”

U.S. federal court judges of course live in the “modern world” and when the DOJ’s FCPA enforcement efforts have been subjected to judicial scrutiny, “embrace” is not one word that immediately comes to mind.  See here for the article “What Percentage of DOJ FCPA Losses Is Acceptable?“  The short version is as follows.

  • “This appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement.”
  • The instances of misconduct were so varied and occurred over such a long period of time “that they add up to an unusual and extreme picture of a prosecution gone badly awry.”
  • ‘‘The problem here is that the principal witness against [the FCPA defendant]  . . . knows almost nothing.”  [...] [The DOJ] shouldn’t
    indict people on stuff [they] can’t prove.”

As to enforcement statistics and resources, Cole stated:

“I am proud to say that the United States, and DOJ in particular, has played a leadership role in this global effort to combat transnational bribery.  I have seen this firsthand in my nearly three years as Deputy Attorney General.  Since I took office in January 2011, the Department has reached 27 corporate resolutions and publicly announced that 28 individuals have been charged with FCPA and FCPA-related violations.  This is a remarkable record.  Those corporate cases resulted in penalties of $785 million and there is more to come. These results are the product of the skill, hard work, and determination of our talented prosecutors in the Criminal Division’s FCPA Unit, working in tandem with federal prosecutors across the country at many of the 94 U.S. Attorney’s Offices.  Working with our partners like the FBI, the Department of Homeland Security, the Department of Commerce, the SEC, and IRS-Criminal Investigations, we have made enforcement of the FCPA a priority.  Together, we are pursuing more cases than ever before, and we are using allof the investigative tools available to us from subpoenas to search warrants, from body wires to wiretaps.”

As to the FCPA Guidance, Cole stated:

“Now, despite this impressive enforcement record, there is always room for improvement. Many thoughtful people — from the OECD lead examiners who conducted our Phase 3 examination, to the media, to many of you in this room — have provided valuable feedback on our efforts.  Based on that feedback, we have made adjustments and come up with some new innovations.  For example, at this very conference one year ago, we announced the publication of the Resource Guide to the U.S. Foreign Corrupt Practices Act.  The Guide had its origins in suggestions made during the OECD Phase 3 examination.  The lead examiners determined that the U.S. could do a better job in explaining the way that we understood the FCPA and our enforcement policies, and we, along with our SEC colleagues, committed to doing that.  Along the way, we made sure to listen to and take into account your comments and concerns.  We reached out to the business community, to civil society, to compliance professionals, and to the legal community.  We heard your concerns, took to heart your suggestions, and incorporated many of them into the Guide.  And, if the public reaction to the Guide is any indication, I think we did so fairly successfully.”

See here for what is believed to be the most extensive collection of commentary concerning the FCPA Guidance.

As to compliance, voluntary disclosure, and cooperation, Cole stated:

“But the Guide was not the end.  We continue to engage with the business and legal communities, and  continue to find ways to communicate with them about how we interpret the FCPA, what they can do to prevent violations, and what they should do if they discover that a violation has occurred. Believe me when I say that FCPA enforcement is not a game of “gotcha.”  We prefer prevention to prosecution and we want companies to successfully recognize and resist demands for bribes and to comply with the law.  But we understand that even the best compliance program will not prevent every violation of the FCPA.  So when a violation does occur, we frankly expect you to tell us about it and cooperate in investigating it.  And one of the questions we’ve repeatedly heard over the years is:  “What is the benefit of voluntary disclosure and cooperation?”  We fully understand that companies will act in their own best interest.  So we have sought to incentivize companies with tangible benefits for their voluntary disclosure and cooperation– beyond the reductions already built into the Sentencing Guidelines.  Such benefits have taken the form of declinations like that in the Morgan Stanley case [see here for the post "Stop Drinking the Kool-Aid" regarding Morgan Stanley's so-called declination], resolutions short of a guilty plea like deferred prosecution agreements and non-prosecution agreements, and allowing companies to self-report their remediation efforts instead of being subject to the oversight of a corporate monitor.  We have also, in appropriate cases, supported reduced penalties below those suggested by the Sentencing Guidelines.   Because your role in the enforcement of the FCPA is vital to its success, I want to assure you that we are committed to demonstrating the benefits of your working cooperatively with us.  But, this does not mean that we will blindly accept the conclusions of internal investigations.  To the contrary, we will continue to actively pursue our own investigations in order to pressure test the results of your internal investigations and be able to identify those companies that are truly cooperating.  It also does not mean that companies that claim to be cooperating, but that are, in fact, engaging in gamesmanship, will reap such benefits.  Indeed, just as it is important to reward true voluntary disclosures and actual cooperation, it is critical that we hold companies accountable when they choose to conceal misconduct, obstruct investigations, and attempt to mislead investigators.  For those companies, there will be serious consequences. Put simply, we want to work with you, and we will continue our efforts to provide tangible benefits to reward you for doing so.  But we will also be unrelenting in holding you accountable if you choose not to do so.  This is a two-way street, and you can be sure that your choices regarding cooperation, either way, will have real consequences.”