FCPA “Reform”: Another Shot In The Dark

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sisphyusTiming is everything.  Woody Allen said it best – 80 percent of life is just showing up.  Unless you are the Chamber of Commerce.  Talk about bad timing and sour grapes.

The Chamber just does not get the message.  After the Justice Department and the SEC issued its FCPA Resource Guide, the Chamber is still not satisfied.  Whatever you may say about the FCPA Resource Guide, it did its job – it provided the most comprehensive statement of enforcement ever provided by a prosecutor.  If you can name another criminal statute which has engendered a similar level of guidance, I am all ears.

There is no way – not this year, or for the foreseeable future, that Congress will ever amend the FCPA.  We can all argue about whether or not the statute is “clear” or “vague.”  But there is just no reason, no justification, for amending the statute.

Many of the issues have been dealt with by DOJ and the SEC.  There are a few which require further comment.

1.  Defining voluntary disclosure discounts – I have stated on numerous occasions that DOJ and the SEC should define what specific benefit a company will receive if it agrees to voluntarily disclose and cooperate.  The absence of a defined discount calls into question whether such a discount is evenly applied across cases.FCPA_Guidance_Webinar

The discount should be pre-established and differ depending on whether the government has an open investigation or does not.  The Chamber’s new letter obliquely refers to this issue.  DOJ and the SEC can define this discount tomorrow; there is no need to amend the FCPA to accomplish this change.

2.  State-Owned Enterprises – The Chamber continues to quibble over this issue, even though the Justice Department gave them as clear a definition as they could given its prior settlement history (DOJ/SEC settled with company for improper payments to a company 43 percent foreign government owned).  The government has stated that “as a practical matter, an entity is unlikely to qualify as an instrumentality if a government does not own or control a majority of its shares.”  The Chamber cannot ask for more clarity.

3.  Compliance Defense – The Chamber continues to belly-ache for a compliance defense.  As I have written before (see here), there are a number of practical problems with a compliance defense.  Even so, the FCPA Resource Guide gave as strong a statement of credit for a robust compliance program  as it could without adopting a compliance defense.

congress mandates corporate governance4.  Successor Liability – The Chamber continues to carp about the problem of successor liability for FCPA violations.  The FCPA Resource Guide did not help that much in this area, especially by reiterating Opinion Letter 08-02 (Halliburton) as a guide for due diligence and post-acquisition investigation and diligence requirements.

The Chamber is a little tone deaf and it needs to reevaluate its strategy.  After winning a number of clarifications to the FCPA through the FCPA Resource Guide, the old adage certainly applies – you need to quit when you are ahead.

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Michael Volkov
The Volkov Group Law Firm

The Volkov Group Law Firm specializes in white collar defense, corporate compliance, internal... View Profile »


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