At the Oil and Gas Supply Chain Compliance conference yesterday in Houston (see here), Todd Harrison (Chief Counsel, Oversight and Investigations, Energy and Commerce Committee, U.S. House) gave a presentation titled “The FCPA – A View from the Hill.”
Harrison provided his personal views on FCPA reform, specifically the “currents on the Hill” regarding the issue and a “sense of what Congress is thinking about in terms of changing” the law. Harrison stated that until recently, the FCPA has not been a “tremendous focus on Capitol Hill” and that even against the backdrop of recent efforts to reform the FCPA “there is not a lot of momentum on the Hill for changes to the FCPA.” However, Harrison stated that it “usually takes a lot of time to get things rolling and for legislation to come to fruition” and that changes to legislation often take place over 2-3 Congresses (each with a two year term) because there a lots of discussions with various stakeholders.”
[As a historical aside, the last period of major FCPA substantive reform occurred in the 1980’s and that process took 8 years from the time the first reform bill was introduced until President Reagan signed the Omnibus Trade and Competitiveness Act of 1988 which contained FCPA amendments at Title V, Subtitle A, Part I.]
Harrison next spoke of the “very prominent setbacks” the DOJ has recently suffered, most notably the Africa Sting cases, and that in light of these setbacks there was indeed “momentum gaining to make changes to the FCPA.” However, Harrison said that the New York Times Wal-Mart article “changed the tide and mood entirely.”
During the Q&A, I asked Harrison generally as follows – “I know that Capitol Hill is a political institution and body, but explain why the Wal-Mart investigation should impact FCPA reform, after all, Wal-Mart is now one of approximately 125 companies under FCPA scrutiny and it is debatable whether the Wal-Mart payments at issue even violate the FCPA.” (see here for the prior post).
Harrison said that as a “practical matter, public opinion matters, what happens in the real world matters” and that the atmosphere surrounding FCPA reform after the Wal-Mart article has made it “harder for different groups to advocate” for FCPA reform. Harrison acknowledged that this perception “does not have a whole lot to do with the underlying facts” of the Wal-Mart matter, but that “public perception and pressure on government institutions” matters.
As to substantive FCPA reform, Harrison focused mostly on successor liability issues, which he called the Chamber’s number one reform issue. However, Harrison said that this concern was hypothetical because as a “practical matter the DOJ has not been bringing prosecutions under this theory.” During the Q&A I asked him whether anyone on the Hill is actually reading the enforcement actions because recent DOJ or SEC enforcement actions based on successor liability theories include Alliance One, General Electric and Watts Water Technologies. In response, Harrison backtracked and said “no one has come to me about those particular cases” and that “none of these particular cases have become prominent on Capitol Hill.”
In short, Harrison’s personal view was that there is not a “wave of support or pressure to make actual legislative changes regarding successor liability.”
In response to a question, Harrison did not have any insight as to the timing of expected FCPA guidance. He stated that his “personal guess is not anytime soon.”
Professor,
Thanks for the transparent reporting of the conference. I can sympathise with Mr Harrison’s view that the Walmart allegations do have relevance for the FCPA reform debate, if only by illustrating the risks of double standards in an age of instant global media.
I would be interested to hear more on why you think that allegations of payments to induce government officials to reduce permit fees fall out with the scope of the FCPA’s anti-bribery provisions – isn’t this an “improper advantage” that would allow a company to undercut its competitors and thus win business?
After all, unfair competition remains unfair whether via bid-rigging, corruptly reduced costs or other improper advantages; a rose by any other name…
See this previous post.
http://www.fcpaprofessor.com/understanding-wal-mart
The “improper advantage” language in the FCPA does not obviate the need for the “obtain or retain business” element to be met.
Professor,
I agree that there isn’t enough attention paid to the FCPA requirement for bribery to pursue unfair advantage and not just additional profit, as pointed out in your helpful post of the Kay 5th circuit ruling. The last OECD report on the FCPA glosses over this distinction but it is becoming increasingly important given the increasing focus on using anti-bribery to level the international playing field (e.g. see the new SFO Director’s reported comments).
My question is where to put the fact pattern of bribery to secure market dominance via aggresive undercutting, artificially truncated administrative procedures and other ‘indirect’ business benefits of bribery; inside or outside of the ‘business nexus’ test?
As to the conduct in your last paragraph, such conduct potentially implicates the FCPA’s anti-bribery provisions of course only if there is a “foreign official” involved. The 5th Circuit’s analysis in Kay is fact specific and the key language as to your question would seem to be the following. “[I]f the government is correct that anytime operating costs are reduced the beneficiary of such advantage is assisted in getting or keeping business, the FCPA’s language that expresses the necessary element of assisting in obtaining or retaining business would be unnecessary, and thus surplusage – a conclusion that we are forbidden to reach.”
Fair enough – I’m no expert on US legislative interpretation or constitutional rules. But I’ll be interested to see how the DoJ deal with a fact pattern of payments that “bought zoning approvals, reductions in environmental impact fees and the allegiance of neighborhood leaders” (as per the NYT reporting of Walmart’s whistle blower allegations).