Citing to certain of my prior scholarship (here and here) and other writings, and otherwise highlighting certain issues that have been frequently highlighted on this site for a long time, the Manhattan Institute for Policy Research has joined the FCPA reform conversation.
The issue brief (here) titled “The Foreign Corrupt Practices Act: Aggressive Enforcement and Lack of Judicial Review Create Uncertain Terrain for Businesses,” and authored by Paul Enzinna (a partner at Brown Rudnick), argues as follows. “There is a strong case for reforming the FCPA through legislation, in order to continue to uphold the statute’s historical commitment to maintain the integrity of American businesses’ dealings abroad while limiting the ability of federal enforcement agencies to police business conduct worldwide and gain broad, quasi-regulatory powers over global businesses absent judicial oversight.”
The issue brief then states as follows.
“Congress should take up the cause of FCPA reform, clarifying the statute’s reach in the areas in which DOJ and the SEC have aggressively sought its expansion:
- Jurisdiction. Congress should clarify the reach of the FCPA’s “in furtherance of” jurisdiction. Specifically, Congress should decide whether to limit the FCPA’s application against foreign businesses bribing foreign officials. The Justice Department’s broad interpretation of the FCPA, predicated upon transactions denominated in dollars and those messages that may pass through U.S.-based e-mail servers, potentially affects U.S. diplomacy and finance and technology sector competitiveness.
- Foreign official. Congress should specify the extent to which the FCPA applies to low-level employees of state-owned enterprises. The economic emergence of formerly Communist countries and of the still formally Communist China has led to a proliferation of state-owned enterprises with which American companies must do business in order to compete globally.
- To obtain or retain business. Congress should clarify the “routine government actions” covered by the FCPA’s express exemption for “facilitating payments” not covered by its prohibition on payments to officials to “obtain” or “retain” business. DOJ’s broad interpretation of this element to include payments intended to obtain licenses or permits and other low-level bribes seems in conflict with the statute’s express preemption and has fueled the growth in FCPA enforcement actions.”
I agree with many of the issues raised in the brief such as:
“Although the ever-widening interpretations of the FCPA seem to go beyond a commonsense understanding of the statute and its purpose, these interpretations are not being subjected to adequate judicial review because the high costs associated with potential criminal conviction have generally led targeted corporations to resolve cases without trial through “deferred-prosecution agreements” (DPAs) or “non-prosecution agreements” (NPAs).”
“DOJ has made it difficult for businesses to parse the statutory term “foreign official” by issuing contradictory statements” (see here for the prior post).
“DOJ’s expansive readings of the FCPA, along with the lack of judicial review over the department’s interpretations, are problematic. Invoking the statute to prosecute payments intended to help obtain licenses or permits is clearly at odds with Congress’s express facilitating-payments exception.” (see here for my article detailing legislative history and judicial scrutiny concerning non-foreign government procurement payments).
“In its current guise, the FCPA has helped generate an essentially unaccountable DOJ bureaucracy …”.
However, my reaction to the latest reform proposals is the same as my general reaction to certain of the Chamber’s FCPA reform proposals (see here).
While I have argued for an FCPA compliance defense (see here for my scholarship “Revisiting an FCPA Compliance Defense”), many other aspects of FCPA reform – and calls to amend the statute – are more pleas for judicial scrutiny and application of black letter legal principles to FCPA enforcement.
The remedy for enforcement of a law that largely takes place in the absence of judicial scrutiny where enforcement is in many cases contrary to Congressional intent and inconsistent in certain other respects with black letter legal principles, is not to amend the law, but to inject judicial scrutiny into the process so that Congressional intent and black letter legal principles can be vetted and decided upon by someone other than the enforcement agencies. For my verbal explanation of this issue, see this recent interview (approximately 5 to 7 minute mark) with the on-line news site Main Justice.
My FCPA reform proposal is to couple a compliance defense along the lines I outline in my article with abolishing NPAs and DPAs. These alternative resolution vehicles (first introduced into FCPA enforcement in 2004 as a matter of DOJ policy and not Congressional authorization) have created the conditions in which the “facade of FCPA enforcement” I have written about here continues to flourish. Think of the judicial process as a river where issues are allowed to flow into the proper channel. NPA and DPAs are logs in the river blocking the flow of issues into the proper channel.
In terms of other FCPA reform measures, I have also suggested that the enforcement agencies publish declination decisions when a company voluntarily discloses and the establishment of meaningful post-employment restrictions on FCPA enforcement attorneys.