Long-time DOJ attorney John “Jack” Keeney recently died. See here for the Washington Post article.
Keeney (as Deputy Attorney General, Criminal Division) testified during Congressional FCPA reform hearings in the mid-1980′s. For instance, on June 10, 1986, Keeney testified at a Joint Hearing Before the Subcommittee on International Finance and Monetary Policy and the Subcommittee on Banking, Housing, and Urban Affairs. The hearing focused on S. 430, a bill to amend and clarify the FCPA. (An interesting aside, so toxic was the political environment to amend a law called the “Foreign Corrupt Practices Act” that several reform bills sought to change the name of the FCPA - S. 430 was titled the “Business Accounting and Foreign Trade Simplification Act”).
In his prepared statement, Keeney presented the “views of the Department of Justice” on S. 430. Kenney stated as follows. “The Department supports S. 430 and its objective of removing unnecessary impediments to foreign trade …”. As noted in this previous post, one of the major items of reform in the 1980′s was revising the FCPA’s third-party provision which, as enacted, was triggered by a broad “while knowing or having to reason to know” standard.
Keeney supported removal of the “reason to know” standard. He stated as follows. “The Justice Department is sensitive to the unnecessary problems that the American business community has encountered in its attempts to interpret and apply the ‘reason to know’ standard. We also know it is difficult to define exactly what constitutes ‘reason to know.’ For that reason, the policy of the Department has been to prosecute only those cases where the evidence of awareness – whether direct or circumstantial – was so clear as to constitute actual knowledge of the bribe scheme. This policy would not be changed by abolishing the ‘reason to know’ standard in favor of a more objective standard and would improve the clarity of the Act.”
One provision of S. 430 would have required the DOJ to issue binding opinions with respect to the criminal provisions of the FCPA. Keeney did not support such a provision “since its general purpose is presently being met by the existing Foreign Corrupt Practices Act Review Procedure.”
As to the provision in S. 430 that gave the Attorney General authority to issue guidelines “concerning both the type of conduct which constitutes compliance with the criminal provisions of the Act as well as general precautionary procedures which businesses may voluntarily use to ensure compliance,” Keeney stated as follows. “From a commercial as well as an enforcement point of view, the Department does not believe that issuing guidelines or precautionary procedures would be advisable. Accordingly, we do not feel that this provision is necessary. The Department has determined that such guidelines are impractical for several reasons. No matter how carefully crafted, guidelines would have the effect of unnecessarily restricting business transactions and possibly placing American businesses at a disadvantage with their foreign competitors. Moreover, the Department cannot place simple dollar limits on bribe or gratuties and then apply these limits uniformly. Reasonable business practices differ significantly from industry to industry as well as from country to country. As a matter of policy, the Department cannot publicly ignore a small but otherwise corrupt transaction any more than it can place dollar limitations on the actions prosecutable under the mail or wire fraud statutes. If the Department promulgates guidelines, due process requires that these guidelines govern any position the Department later takes in any criminal action. While arguably helpful to businesses, such guidelines are not really necessary. Under the FCPA Review Procedure , a specific factual situation may be resolved without binding the Department in a case involving a somewhat different factual situation. The Department believes the [Review Procedure] is the least restrictive and most useful process for resolving any instance of perceived ambiguity in the interpretation of the FCPA and should be used in place of guidelines.”
When the FCPA was amended in 1988, Congress did indeed request that the Attorney General issue guidelines, however as noted in this prior post, the DOJ decided not to issue such guidelines.
Following the hearing, Senator D’Amato asked Keeney various questions for the record as to DOJ’s FCPA Review Procedure – such as “has it been used very frequently, how many times since the procedure was put in place?” In pertinent part, Keeney responded as follows. “The Review Procedure has resulted in 18 Department opinions since its inception. On various other occasions, applications for review have been submitted but subsequently withdrawn. [See here for a prior post regarding the FCPA “Mulligan Rule”]. In addition, the Criminal Division of the Department has received frequent telephone inquiries about the Procedure which are not followed by any written request.”
John Keeney may no longer be with us, but the issues he discussed in 1986 (DOJ FCPA guidance and questions surrounding the DOJ’s FCPA Opinion Procedure Program) remain issues today.