The recently issued FCPA Guidance contains much discussion (see Chapter 5 of the Guidance) of how the enforcement agencies purport to reward pre-existing FCPA compliance policies and procedures when making internal charging and other discretionary decisions.
However, noticeably missing from the Guidance is any acknowledgment that the enforcement agencies current position as to FCPA compliance policies and procedures is working or that it creates the best incentives for FCPA compliance.
In fact, the Guidance surprisingly acknowledges that the enforcement agencies current position is not working as the Guidance cites survey data that “64% of general counsel whose companies are subject to the FCPA say there is room for improvement in their FCPA training and compliance programs.” This statistic is in accord with numerous other statistics (see here at pg. 655 for several examples, and here for Howard Sklar’s recent discussion of survey data at a recent FCPA conference) that all point to the same conclusion: despite the general increase in FCPA enforcement, despite the incentives currently in place, a meaningful percentage of business organizations are not doing what the enforcement agencies want them to do.
The DOJ and SEC recognize in the Guidance that “positive incentives” can drive compliant behavior. The enforcement agencies current incentive – that such compliance policies and procedures can only lessen the impact of legal exposure – is not the right positive incentive.
An FCPA compliance defense, along the lines I’ve outlined in the below-linked article, is the best positive incentive to more robust corporate compliance and it can help reduce improper conduct and best advance the FCPA’s objective of reducing bribery. However, instead of addressing a potential compliance defense with even a modicum of sophistication, the enforcement agencies dismiss it with simple sound-bites. In the latest example, at the Guidance press conference (see here for the prior post), Assistant Attorney General Lanny Breuer repeated the DOJ’s opposition to such a defense calling it “dangerous” and a “race to the bottom.”
The DOJ’s opposition to a compliance defense stands in contrast to several former Attorney Generals and other former high-ranking DOJ officials who have publicly supported a compliance defense. The DOJ’s opposition is further contrasted with the fact that several countries, like the U.S., that are signatories to the OECD Anti-Bribery Convention have compliance-like defense in their domestic FCPA-like laws.
A compliance defense is not a “race to the bottom” but a “race to the top” and such a defense can, among other things, allow the enforcement agencies to better allocate limited prosecutorial resources to cases involving corrupt business organizations and the individuals who actually engaged in the improper conduct thereby increasing the deterrent effect of FCPA enforcement actions.
For additional reading, see my recent scholarship “Revisiting a Foreign Corrupt Practices Act Compliance Defense.”