If nothing else, U.S. Representative Ed Perlmutter (D-CO) is persistent.
In 2011, he introduced the “Foreign Business Bribery Prohibition Act” in the House to no avail. (See here for the prior post).
Last week, he again introduced the “Foreign Business Bribery Prohibition Act” in the House (H.R. 5438).
What is the “Foreign Business Bribery Prohibition Act?”
Like previous versions of the bill, H.R. 5438 seeks to “authorize certain private rights of action under the FCPA for violations that damage certain businesses, and for other purposes.”
Before turning to the specifics of H.R. 5438, some relevant background.
The FCPA’s legislative history is clear that the House intended for the FCPA to provide for a private right of action. However, the House committee’s statement about a private right of action was not repeated in the reports of either the Senate committee considering the FCPA or the conference committee that reconciled the views of the House and Senate to produce the language of the FCPA as it was ultimately enacted.
Based on this, as well as other factors highlighted in this post, courts have rejected plaintiffs’ arguments for an FCPA private right of action.
Back to Rep. Perlmutter’s bill.
The bill seeks to amend the FCPA by providing that “any person that violates [the FCPA’s anti-bribery provisions] shall be liable to any “issuer” “domestic concern” or “other person that is a United States person” that is damaged by the violation … for damages caused to such issuer, domestic concern, or other person by the violation.”
Like previous versions of the bill, H.R. 5438 contains a section titled “Proof of Damages” which generally states that “the court may not find for the plaintiff in an action … unless the plaintiff alleges and proves that (A) the defendant violated the [anti-bribery provisions]; and (B) the defendant’s violation … (i) prevented the plaintiff from obtaining or retaining business for or with any person; and (ii) assisted the defendant in obtaining or retaining such business.”
Like previsions versions of the bill, the “measure of damages” in H.R. 5438 “may be equal to the higher of the two following amounts … (i) the total amount of the contract or agreement that the defendant gained in obtaining or retaining business by means of the violation .. (ii) the total amount of the contract or agreement that the plaintiff failed to gain because of the defendant’s obtaining or retaining business by means of the violation …”.
Like previous versions of the bill, H.R. 5438 provides that “the court shall enter judgment for three times the amount determined [under either scenario above], together with a reasonable attorney’s fee and costs …”.
Like previous versions of the bill, H.R. 5438 explicitly preserves the FCPA’s facilitation payment exception and two affirmative defenses and contains the following statute of limitations “within 3 years after the discovery of the facts constituting the cause of action and within 6 years after the cause of action accrued.”
This release from Rep. Perlmutter’s office states:
“Recent reports of high profile corruption, such as the Panama Papers and Unaoil, allege financial kickbacks and monetary payments to government officials in return for contracts or favors. Under current law, only the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) are allowed to bring enforcement actions under the FCPA.
“These recent examples highlight the need for greater focus on the FCPA. I applaud the DOJ and SEC for making FCPA enforcement more of a priority in recent years, but more needs to be done – especially since both agencies are relatively underfunded,” said Perlmutter. “This legislation is a way to meet this increasing demand without adding to the deficit.”
The Foreign Business Bribery Prohibition Act creates a new risk factor for companies to think twice before offering bribes or favors to foreign officials. In addition, the bill aims to instill good governance by clarifying the FCPA statutory interpretations which will help businesses compete overseas and reduce corruption in domestic business operations.
“Corruption and bribery undermine the pillars of democracy and erode trust,” continued Perlmutter. “This legislation helps encourage foreign companies to play by the rules or be brought to court. Most importantly, it is a way to level the playing field and help U.S. companies compete abroad. ”
Like previous versions of Rep. Perlmutter’s bill, H.R. 5438 is unlikely to make it “out of committee” much less be enacted.
However, it is safe to assume that if the FCPA did contain an express private right of action, there would be more judicial scrutiny of FCPA enforcement theories, and because of this, the FCPA enforcement landscape would likely look much different than it does today.