DOJ Fraud Official Offers An Insider’s View Of The FCPA Resource Guide

by Perkins Coie

Charles Duross, deputy chief of the Department of Justice’s (DOJ) Criminal Division, Fraud Section, offered white collar crime practitioners rare insight into the DOJ’s and the Security and Exchange Commission’s (SEC) recently released Resource Guide to the U.S. Foreign Corrupt Practices Act at the American Bar Association’s (ABA) 27th Annual National Institute on White Collar Crime, held in Las Vegas from March 6 to 8, 2013.  Although making the obligatory disclaimer that the views he expressed were his own and not those of the DOJ, Duross defended the Resource Guide against criticism that it lacked depth in several key areas of vaguely defined provisions of  the U.S. Foreign Corrupt Practices Act (FCPA).   

Duross, as part of a panel of former government officials and in-house counsel, also weighed in on several key FCPA case developments from 2012 and the government’s evolving FCPA enforcement priorities moving forward.

Behind the Scenes of the FCPA Resource Guide

The Resource Guide was released on November 14, 2012, following what Duross described as a year “dominated” by the writing of the Guide.  He explained that the primary impetus for creating the Guide was the United States’ treaty obligations under the Organisation for Economic Co-Operation and Development (OECD) Convention.  The United States was explicitly called on by the OECD Working Group to consolidate and summarize publicly available information on the application of the FCPA, including recent opinion releases and enforcement actions, as part of the OECD’s report on implementation and enforcement of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.  This OECD push came amid other calls for clarity and reform from the U.S. Chamber of Commerce, certain members of Congress, the defense bar and other members of the business community.   The proposed reforms include creating a “compliance defense” to criminal liability when a company’s employees or agents circumvent compliance measures to violate the FCPA; limiting liability for prior acts of an acquired company; and requiring “willfulness” for corporate criminal liability.

Duross reported that the government had consulted with a number of outside constituencies in drafting and finalizing the Guide, including lawyers from the ABA, corporations, non-government organizations, the U.S. Chamber of Commerce and investor groups.  For example, one outgrowth of meeting with in-house counsel from various corporations was the illustrative hypotheticals contained in the Guide.  Duross also explained that the Guide was not intended to create a so-called “compliance defense”—which does not exist under the FCPA.  In fact, the Guide was designed to generally be helpful to small and medium-sized companies that do not have the internal or external resources at their disposal that large companies typically can rely on when seeking to comply with the terms of the FCPA.  Duross also stated that another goal behind the Guide was to close what he described as the gap between public perception of the government’s FCPA enforcement efforts and the reality, going so far as to say that such enforcement is not so puritanical as to prohibit businesses from having any business-related entertainment or hospitality.

When asked whether the government intends to release an updated version of the Guide on any periodic basis, Duross reported that there were currently no such plans, but that at some point the government may need to consider updating the Guide, given the number of significant cases playing out in the courts. 

Praise for and Criticism of the Resource Guide

Commentators have praised the Guide for being a valuable collection of previously dispersed information on FCPA prosecutions, SEC dispositions, and the government’s view of what makes a good anticorruption compliance program.  Companies have even started to build the Guide’s examples into their own compliance programs.  However, some conference panelists echoed the criticism of the Guide that followed its issuance, including that it failed to adequately address several core issues such as jurisdiction over foreign parties and parent liability for the acts of foreign subsidiaries.  The Guide was also criticized for including sample declinations that were premised on “pretty obvious” fact patterns that failed to meaningfully advance the FCPA dialogue.  Duross noted that the general reaction to the Guide has been “very positive,” but acknowledged that, in the face of such criticism, especially as to the Guide’s failure to shed light on several ill-defined FCPA provisions, it just “cannot please everyone.” 

“Reasonable” Promotional Expenses to Remain Undefined

Touching on one such widely vocalized criticism, Duross was questioned about the utility of the Guide’s use of examples such as a $12,000 birthday trip for a foreign official, a $20,000 automobile and $1,000 allowances of “pocket money” to illustrate what would constitute unreasonable travel and entertainment expenses—given that such lavish expenditures are unlikely to be the type over which companies have any uncertainty.  Rather, companies struggle to understand the lower limits of what constitutes a reasonable promotion expense.  For example, the Guide lists as improper “$10,000 spent on dinners, drinks and entertainment for a government official,” but does not provide details such as the period of time over which the expenses could be incurred, or how many transactions could make up the $10,000 total.  

Duross responded by indicating that, in drafting the Guide, the government did not want to “set any kind of a floor” with regard to promotional expenses, suggesting that doing so would “send the wrong signal.”  Duross also implied that the government’s 120-page effort in compiling this resource provided much more insight than is typically provided in explaining a criminal statutory scheme.  Of course, members of the defense bar would be quick to note that the FCPA, unlike other criminal offenses, has heretofore undergone little judicial scrutiny and therefore presents unique circumstances not fairly drawn as akin to other criminal offenses.  

The Morgan Stanley Declination

While not going so far as to endorse a corporate “compliance defense,” Duross pointed to the DOJ’s April 2012 declination on the Morgan Stanley case as showing its willingness to look beyond the bad conduct of a rogue employee and to not always hold the parent corporation responsible where the company had in place a strong compliance program and internal controls.   In the press release announcing the declination, the DOJ reported that Morgan Stanley had constructed and maintained a system of internal controls “which provided reasonable assurances that its employees were not bribing government officials,” and that it was thus declining to bring any enforcement action against Morgan Stanley related to the misconduct of its former managing director in China.  The press release further noted that Morgan Stanley had voluntarily disclosed the matter and had cooperated throughout the DOJ’s investigation. 

However, judging by Duross’ remarks, the limits of the DOJ’s magnanimity regarding the acts of errant employees remain decidedly murky, as Duross was skeptical as to how legitimate the “rogue employee” defense would be were a company to report upwards of seven such offenders.  Given that many multinationals now employ thousands of individuals around the world, Duross’ narrow views will likely provide small comfort that even this limited “compliance defense” holds any water with the DOJ.


The commentary offered by Deputy Chief Duross suggests that the government’s Resource Guide—rather than being an outgrowth of mounting criticism from the business community, defense bar and other legal commentators concerning the FCPA’s troubling ambiguity and opaque enforcement policies—was more a product of the government’s treaty obligations under the OECD Anti-Bribery Convention.  Duross’ remarks further indicate that the government does not have any plans to provide updates to the Resource Guide (although he did not foreclose that possibility) and that it will continue to defend the Guide sufficiently to satisfy any obligations it had to identify the guiding principles underlying FCPA enforcement.  Observers seeking a more granular and critical treatment of the FCPA’s provisions are better left to await the increasing number of FCPA cases being brought to trial, as judicial scrutiny appears to be the most promising venue for shedding light on boundaries of FCPA enforcement, compliance and defense.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Perkins Coie | Attorney Advertising

Written by:

Perkins Coie

Perkins Coie on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.