Transparency in FCPA Enforcement

Michael Volkov
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We all value transparency as a general concept, especially when it comes to the government. In a real macro perspective, we fund the government and we demand that our government operate efficiently, effectively and ethically. Transparency is a fundamental requirement for all citizens to monitor and regulate our government.

When it comes to our criminal justice system, or the enforcement of our laws, we expect the same set of principles and transparency. The need for transparency, however, has to be balanced against another important right – the protection of individual rights and liberties. On a day-to-day basis, federal prosecutors usually provide no comments when closing an investigation. However, if an indictment is returned, a federal prosecutor will make public statements (and press conferences), depending on the public interest in the case.

With this legal framework in mind, and the balancing of these two competing values, we have certain rules and procedures for prosecutors to follow when conducting criminal investigations of corporations and individuals. In the traditional criminal justice system, perhaps through the 1990s, companies and individuals were either charged with criminal offenses, or they were not. There was no in between. Since the 2000s, we have seen the growth in a middle ground – deferred prosecution and non-prosecution agreements, or DPA and NPAs. The government secures fines, detailed commitments from companies, and reserves the right to renew its prosecution of the corporation if the company fails to fulfill its commitments.

We have also seen increased demands for transparency in FCPA enforcement. I am not opposed to such demands but I wonder why there is such demand for greater transparency for FCPA enforcement matters rather than other serious criminal offenses.

Some continue to pedal the idea that FCPA enforcement is unique because the statute is vague or ambiguous and therefore the government should be required to provide greater direction and definition to its enforcement program. In support of these supposed “expert” claims, commentators and legal analysts offer citations to comments made by judges about clarity of the FCPA statute. I continue to find these claims unpersuasive.

The FCPA statute is not a statute unlike others. For example, similar claims are made about other criminal statutes in other contexts, such as healthcare fraud, anti-kickback laws, criminal antitrust violations under the Sherman Act, money laundering, and the racketeering or RICO statutes. All of these laws have been challenged or criticized for vagueness or ambiguity. There is nothing so unusual about the FCPA to distinguish the FCPA from other criminal laws.

When I worked on the House Judiciary Committee, I had the task of revising and reorganizing our criminal code. It was a time consuming and fascinating project. Trust me, there are a lot of problematic criminal laws on the books, not just the FCPA.

However, the proponents of FCPA transparency make one good argument – the government’s failure to charge individual violators has created a situation where case law surrounding the FCPA is developing at a slow rate. But we have encountered this issue before – when criminal enforcement against individuals began to grow in other enforcement programs, such as AKS, antitrust, RICO and other crimes, the case law was relatively undeveloped. There is nothing unusual about such developments.

Even setting aside the failure of transparency proponents to demonstrate that FCPA enforcement is different than criminal healthcare, antitrust, money laundering and RICO laws, the proponents have been very successful in persuading the Justice Department and the SEC to provide an extraordinary amount of information concerning their  FCPA enforcement program. In November 2012, the Justice Department and the SEC issued the FCPA Guidance. In April 2016, the Justice Department provided further guidance in its FCPA Pilot Program. In addition, the Justice Department and the SEC have increased the transparency of its enforcement program by providing more information about declinations and individual enforcement actions.

In my view, the Justice Department’s release of such information surrounding the FCPA has been unprecedented in our criminal justice system. It has provided important insights and guidance for FCPA practitioners. Those who suggest otherwise either have an inherent bias or loss of perspective, or they have never served as federal prosecutors in the United States Department of Justice. Of course, the Justice Department can improve its transparency for FCPA enforcement, and it will continue to make progress on this front, but we should be mindful of where FCPA enforcement began and the progress that has been made up to this point.

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.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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