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Q&A On Various Aspects Of The Current FCPA Enforcement Landscape

Monday, June 29th, 2015

Q&AThe Association of Certified Financial Crime Specialists (ACFCS) is a worldwide organization for private and public sector professionals who work in diverse financial crime disciplines.

I recently had the pleasure to engage with ACFCS’s audience in this Q&A on various aspects of the current FCPA enforcement landscape.

The substantive portions of the interview are set forth below.

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What is the biggest challenge facing FCPA enforcement?

The biggest challenge is how to enforce the FCPA consistent with commonly accepted rule of law principles.  In this so-called new era of FCPA enforcement, the DOJ and SEC largely occupy the role of prosecutor, judge and jury all at the same time given that most FCPA enforcement actions are resolved in the absence of meaningful judicial scrutiny.  In the rare instances when DOJ and SEC enforcement theories are subjected to judicial scrutiny, the enforcement agencies have an overall losing record when put to its burden of proof.  In short, in a legal system based on the rule of law, quality of enforcement matters more than quantity of enforcement, however most observers of the FCPA seemed to be focused on the later rather than the former.

Is there any low hanging fruit the government has not applied FCPA to? Who should they be going after?

Effective law enforcement requires the prosecution of culpable individuals.  The DOJ and SEC recognize this.  However, the fact remains most FCPA enforcement is corporate only.  Approximately 75% of DOJ corporate FCPA enforcement actions lack related charges against company employees and approximately 80% of SEC corporate FCPA enforcement actions lack related charges against company employees.  One response to this wide gap might be:  “why was nobody charged?”  I submit that the more appropriate response is:  do corporate enforcement actions resolved via NPAs / DPAs or administrative settlements always represent provable FCPA violations.  In my opinion the answer is no.

Why can’t they go after these cases that they should be?

If the DOJ and SEC would prosecute more individuals, enforcement agency theories would likely be subjected to greater judicial scrutiny and the enforcement agencies, as is often the case, would likely lose.  So instead of exposing its aggressive enforcement theories to judicial scrutiny and perhaps losing the leverage of the theory against business organizations, the enforcement agencies exercise their leverage against risk-averse business organizations to secure settlements.  For more information about this dynamic, see my article “The Facade of FCPA Enforcement.” This article was written in 2010 and the troubling facade has only increased since then.

Are there any other countries that the US could look to as an example of effective anti-corruption enforcement?

There are approximately 40 other nations that have FCPA-like laws.  However, comparative enforcement statistics are practically meaningless because it is like comparing apples to oranges for at least two reasons.

First, the U.S. is rare in having so-called respondent superior liability in which a business organization can face criminal or civil liability based on the conduct of any employee or agent to the extent the conduct was within the employee or agent’s scope of employment/agency and was intended, at least in part, to benefit the business organization. In contrast, most other countries with FCPA-like laws either: (i) do not recognize legal person liability; or (ii) if they do only allow such liability to the extent conduct was engaged in by so-called ‘‘controlling minds’’ of the business organization such as board members or executive officers. Against this backdrop, it is not surprising that the country with the most lenient form of business organization liability—the U.S.—has the most enforcement actions.

Second, the U.S. is rare in resolving alleged FCPA violations via NPAs, DPAs or administrative actions.  In contrast, in nearly every other country with FCPA-like laws law enforcement agencies must do something that may be considered old-fashioned by current U.S. standards—and that is prove actual legal violations to someone other than itself.

Why is it hard to prove bribery? What makes it a nebulous type of crime?

I don’t think that proving bribery is any more difficult than proving any other crime.  Indeed, a federal court judge recently blasted DOJ rhetoric about this very issue.

When the DOJ marshals the full resources of the government against a person (whether that person is a “legal person” such as a corporation or “natural person” like you and me) it should be difficult, it should not be easy.  This is what our “founding fathers” specifically contemplated as a necessary bulwark against a tyrannical government.

Attend FCPA “Summer School” (Aug. 13-14, Washington, D.C.)

Wednesday, June 24th, 2015

FCPA InstituteSummer.

A time for reflection, a time to think, and a time for professionals to elevate their FCPA knowledge and practical skills by attending the FCPA Institute – DC on August 13-14th.

Since its launch in July 2014, the FCPA Institute has elevated the FCPA knowledge and skills of lawyers, auditing and finance professionals, compliance personnel and business executives from around the world.

The FCPA Institute is next coming to Washington, D.C. on August 13-14th. (Click here for further details and to register).

The FCPA Institute is different from other FCPA conferences as information is presented in an integrated and cohesive manner by an expert instructor with FCPA practice and teaching experience.  Moreover, the FCPA Institute promotes active learning by participants through issue-spotting video exercises, skills exercises, small-group discussions, and the sharing of real-world practices and experiences.

To best facilitate the unique learning experience that the FCPA Institute represents, attendance at each FCPA Institute is capped at 30 participants.

At the end of the FCPA Institute, participants can elect to have their knowledge assessed and can earn a certificate of completion upon passing a written assessment tool.  In this way, successful completion of the FCPA Institute represents a value-added credential for professional development. In addition, attorneys who complete the FCPA Institute may be eligible to receive Continuing Legal Education (“CLE”) credits.

Set forth below is a sampling of what FCPA Institute “graduates” have said about their experience.

  • “Unlike other FCPA conferences where one leaves with a spinning head and unanswered questions, I left the FCPA Institute with a firm understanding of the nuts and bolts of the FCPA, the ability to spot issues, and knowledge of where resources can be found that offer guidance in resolving an issue.  The limited class size of the FCPA Institute ensured that all questions were answered and the interactive discussion among other compliance professionals was fantastic.” (Rob Foster, In-House Counsel, Oil and Gas Company)
  • “The FCPA Institute is very different than other FCPA conferences I have attended.  It was interactive, engaging, thought-provoking and at the completion of the Institute I left feeling like I had really learned something new and useful for my job.  The FCPA Institute is a must-attend for all compliance folks (in-house or external).” (Robert Wieck, CPA, CIA, CFE – Forensic Audit Senior Manager, Oracle Corporation)
  • The FCPA Institute is a top-flight conference that offers an insightful, comprehensive review of the FCPA enforcement landscape.  Professor Koehler’s focus on developing practical skills in an intimate setting really sets it apart from other FCPA conferences.  One of the best features of the FCPA Institute is its diversity of participants and the ability to learn alongside in-house counsel, company executives and finance professionals. (Blair Albom, Associate, Debevoise & Plimpton)
  • “The FCPA Institute was a professionally enriching experience and substantially increased my understanding of the FCPA and its enforcement. Professor Koehler’s extensive insight and practical experience lends a unique view to analyzing enforcement actions and learning compliance best practices. I highly recommend the FCPA Institute to practitioners from all career stages.” (Sherbir Panag, MZM Legal, Mumbia, India)
  • “The FCPA Institute provided an in-depth look into the various forces that have shaped, and that are shaping, FCPA enforcement.  The diverse group of participants provided unique insight into how, at a practical level, various professionals evaluate risk and deal with FCPA issues on a day-to-day basis.  The small group setting, the interactive nature of the event, and the skills assessment test all set the FCPA Institute apart from other FCPA conferences or panel-based events.” (John Turlais, Senior Counsel, Foley & Lardner)

Core FCPA Beliefs

Friday, June 12th, 2015

core beliefsThis post is the 1,500th post to be published on FCPA Professor since the launch of this website in July 2009.

This recent post talked about genuine beliefs and accountability in the FCPA space.

Continuing with this theme, I use this milestone occasion to express my core FCPA beliefs and to encourage all readers to hold me accountable to these beliefs in the future.

The below core beliefs have long appeared on this website (see here) but are reprinted below.

I encourage all readers – and particularly those who frequently write about the FCPA and related issues in public forums – to set aside time to reflect on your core FCPA beliefs and to pledge accountability for those beliefs.

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My core FCPA beliefs are as follows.

  • The FCPA is a fundamentally sound statute, albeit one that could be improved upon.
  • Actual legal authority defines what the FCPA means, not non-legal sources of information such as enforcement agency guidance or resolved enforcement actions.
  • In a legal system founded on the rule of law, success is best measured when an enforcement agency is put to its burden of proof in the context of an adversarial system, not when an enforcement agency exercises its leverage to secure settlements against risk-averse business organizations through resolution vehicles not subjected to any meaningful judicial scrutiny.
  • Prosecuting individuals achieves greater deterrence than corporate-only enforcement.
  • Trade barriers and distortions are often the root causes of bribery and a reduction in bribery will not be achieved without a reduction in trade barriers and distortions.
  • The U.S. crusade against bribery suffers from several uncomfortable truths, including a double standard regarding corporate interaction with “foreign officials” under the FCPA and corporate interaction with U.S. officials under other U.S. laws.

Registration Opens For The FCPA Institute – Washington, D.C.

Tuesday, May 19th, 2015

FCPA InstituteSince its launch in July 2014, the FCPA Institute has elevated the substantive and practical skills of lawyers, accountants, compliance professionals and business executives from around the world.

After successful events in Milwaukee (July 2014), Miami (January 2015), and Houston (May 2015), the FCPA Institute is next coming to Washington, D.C. on August 13-14th. (Click here for further details and to register).

The FCPA Institute is different from other FCPA conferences as information is presented in an integrated and cohesive manner by an expert instructor with FCPA practice and teaching experience.  Moreover, the FCPA Institute promotes active learning by participants through issue-spotting video exercises, skills exercises, small-group discussions, and the sharing of real-world practices and experiences.

To best facilitate the unique learning experience that the FCPA Institute represents, attendance at each FCPA Institute is capped at 30 participants.

At the end of the FCPA Institute, participants can elect to have their knowledge assessed and can earn a certificate of completion upon passing a written assessment tool.  In this way, successful completion of the FCPA Institute represents a value-added credential for professional development. In addition, attorneys who complete the FCPA Institute may be eligible to receive Continuing Legal Education (“CLE”) credits.

Set forth below is a sampling of what FCPA Institute “graduates” have said about their experience.

  • “Unlike other FCPA conferences where one leaves with a spinning head and unanswered questions, I left the FCPA Institute with a firm understanding of the nuts and bolts of the FCPA, the ability to spot issues, and knowledge of where resources can be found that offer guidance in resolving an issue.  The limited class size of the FCPA Institute ensured that all questions were answered and the interactive discussion among other compliance professionals was fantastic.” (Rob Foster, In-House Counsel, Oil and Gas Company)
  • “The FCPA Institute is very different than other FCPA conferences I have attended.  It was interactive, engaging, thought-provoking and at the completion of the Institute I left feeling like I had really learned something new and useful for my job.  The FCPA Institute is a must-attend for all compliance folks (in-house or external).” (Robert Wieck, CPA, CIA, CFE – Forensic Audit Senior Manager, Oracle Corporation)
  • The FCPA Institute is a top-flight conference that offers an insightful, comprehensive review of the FCPA enforcement landscape.  Professor Koehler’s focus on developing practical skills in an intimate setting really sets it apart from other FCPA conferences.  One of the best features of the FCPA Institute is its diversity of participants and the ability to learn alongside in-house counsel, company executives and finance professionals. (Blair Albom, Associate, Debevoise & Plimpton)
  • “The FCPA Institute was a professionally enriching experience and substantially increased my understanding of the FCPA and its enforcement. Professor Koehler’s extensive insight and practical experience lends a unique view to analyzing enforcement actions and learning compliance best practices. I highly recommend the FCPA Institute to practitioners from all career stages.” (Sherbir Panag, MZM Legal, Mumbia, India)
  • “The FCPA Institute provided an in-depth look into the various forces that have shaped, and that are shaping, FCPA enforcement.  The diverse group of participants provided unique insight into how, at a practical level, various professionals evaluate risk and deal with FCPA issues on a day-to-day basis.  The small group setting, the interactive nature of the event, and the skills assessment test all set the FCPA Institute apart from other FCPA conferences or panel-based events.” (John Turlais, Senior Counsel, Foley & Lardner)

Elevate Your FCPA Knowledge And Practical Skills At The FCPA Institute – Houston

Saturday, April 18th, 2015

FCPA InstituteLearning a new topic or elevating your knowledge and practical skills in a topic is not just for formal students in formal educational settings. Professionals in the workplace can benefit from back to “school” moments as well.  For professionals in the FCPA space – or wishing to join the FCPA space – the FCPA Institute serves this objective.

You can elevate your Foreign Corrupt Practices Act knowledge and practical skills in Houston, Texas at the FCPA Institute on May 4th – 5th.  The FCPA Institute – Houston also provides participants the opportunity to earn CLE credit as well as a value-added professional credential.

The FCPA Institute is different than a typical FCPA conference.  At the FCPA Institute, information is presented in an integrated and cohesive manner by an expert instructor with FCPA practice and teaching experience.

Moreover, the FCPA Institute promotes active learning by participants through issue-spotting video exercises, skills exercises, small-group discussions and the sharing of real-world practices and experiences. To best facilitate the unique learning experience that the FCPA Institute represents, attendance at each FCPA Institute is capped at 30 participants.

In short, the FCPA Institute elevates the FCPA learning experience for a diverse group of professionals and is offered as a refreshing and cost-effective alternative to a typical FCPA conference. The goal of the FCPA Institute is simple: to develop and enhance fundamental skills relevant to the FCPA, FCPA enforcement, and FCPA compliance best practices in a stimulating and professional environment with a focus on learning.

The FCPA Institute presents the FCPA not merely as a legal issue, but also as a business, finance, accounting, and auditing issue. The FCPA Institute is thus ideal for a diverse group of professionals such as in-house and outside counsel; compliance professionals; finance, accounting, and auditing professionals; and others seeking sophisticated knowledge and enhanced skills relevant to the FCPA.

Click here to see what these diverse professionals are saying about the FCPA Institute.

FCPA Institute participants not only gain knowledge, practical skills and peer insight, but can also elect to have their knowledge assessed and can earn a certificate of completion upon passing a written assessment tool. In this way, successful completion of the FCPA Institute represents a value-added credential for professional development.  In addition, attorneys who complete the FCPA Institute are also eligible to receive Continuing Legal Education (“CLE”) credits.

Join other firm lawyers, in-house counsel, accounting and auditing professionals and others who have already registered for the FCPA Institute – Houston.

You can register for the FCPA Institute – Houston by clicking here.