Top Menu

A Downtime FCPA Reading Package

Required Reading

The practice of law – as well as other corporate positions in the FCPA space – occasionally result in certain periods of downtime.

The next few days likely represent downtime. If you have substantive work great (or perhaps not), but if not substantive work probably will not hit your desk until the New Year.

However, this downtime can be used effectively to elevate your Foreign Corrupt Practices Act knowledge and sophistication.

This post provides a downtime reading package designed to do just this.

FCPA – Statute

A good place to start, and to better understand how we got here in the first place, is to read the “Story of the Foreign Corrupt Practices Act.” The article weaves together information and events scattered in the FCPA’s voluminous legislative record to tell the FCPA’s story through original voices of actual participants who shaped the law. The FCPA’s story remains important and relevant to government agencies charged with enforcing the law, those subject to the law, and policy makers contemplating reform.

Next, read the actual FCPA statute. It can be found here (in 50 different languages). When reading the FCPA realize that the law appears much more dense than it actually is.  The FCPA’s anti-bribery provisions are divided into three separate prongs (dd-1, dd-2, and dd-3 for “issuers,” “domestic concerns,” and persons other than issuers or domestic concerns).  While each prong contains certain differences – particularly as to jurisdictional issues – the key substantive provisions are essentially repeated three times.

FCPA Enforcement

To start, it is important to recognize that the FCPA is enforced two different ways.

The first (traditional) way is for the enforcement agencies (the DOJ or SEC) to allege FCPA violations and to prove those violations to a judge or jury in the context of an adversarial proceeding.

The second more common approach over the past decade is for the enforcement agencies to utilize leverage over risk-averse business organizations and to resolve alleged FCPA violations through alternative resolution vehicles – such as a non-prosecution agreement or deferred prosecution agreement – in the absence of any meaningful judicial scrutiny.

As to the first way, you should read every substantive FCPA judicial decision – after all there are not that many despite the FCPA being around for 38 years.  At a minimum, read the following cases: U.S. v. Liebo, U.S. v. Esquenazi, U.S. v. Carson, U.S. v. Lindsey Manufacturing, SEC v. Straub, SEC v. Steffen, U.S. v. Kay, SEC v. Mattson, U.S. v. Bourke, SEC v. Jackson, U.S. v. Castle, and SEC v. World-Wide Coin.

As to the second more common way of resolving alleged instances of FCPA violations, you may want to check out this article titled “The Facade of FCPA Enforcement.” In addition,  this article titled “Measuring the Impact of NPAs and DPAs on FCPA Enforcement,” highlights how alternative resolution vehicles have become the dominant way the DOJ resolves corporate FCPA scrutiny and serve as an obvious reason for the general increase in FCPA enforcement over the past decade. To the many cheerleaders of increased FCPA enforcement, NPAs and DPAs are thus worthy of applause. Yet in a legal system based on the rule of law, quality of enforcement is more important than quantity of enforcement. Through empirical data and various case studies, the article measures the impact NPAs and DPAs have on the quality of FCPA enforcement and concludes that NPAs and DPAs — while resulting in higher quantity of FCPA enforcement — result in lower quality of FCPA enforcement.

Despite the prevalence of NPAs and DPAs in FCPA enforcement, on occasion the DOJ or SEC are still put to their burden of proof, and more often than not, the end result is a defense win.  This article asks the question – “What Percentage of DOJ FCPA Enforcement Losses is Acceptable?”

Regardless of how an alleged FCPA violation is resolved, it is important to understand various FCPA enforcement theories by reading actual FCPA enforcement actions. All DOJ FCPA enforcement actions (minus a few exceptions) can be found here and all SEC FCPA enforcement actions (minus a few exceptions) can be found here. For a more in-depth review of every FCPA enforcement action since July 2009 (and most “old” FCPA enforcement actions), visit the FCPA Professor search page and look for the subject-matter tag “(year) enforcement actions.”

Additional Reading on Enforcement and Related Issues

While FCPA enforcement actions by the DOJ or SEC are worthy of attention, a sophisticated understanding of the FCPA is to recognize that settlement amounts in an actual FCPA enforcement action are often only a relatively minor component of the overall financial consequences that can result from FCPA scrutiny or enforcement.  By coining a new term of art – the “three buckets” of FCPA financial exposure – and through various case studies and examples, this article titled “FCPA Ripples” demonstrates how FCPA scrutiny and enforcement can impact a company’s business operations and strategy in a variety of ways from: pre and post-enforcement action professional fees and expenses; to market capitalization; to cost of capital; to merger and acquisition activity; to impeding or distracting a company from achieving other business objectives; to private shareholder litigation; to offensive use of the FCPA by a competitor or adversary to achieve a business objective or to further advance a litigating position.

The below links contain extensive year-in-review articles regarding FCPA enforcement, enforcement agency policy, and related issues. Combine the below articles and you will have an extensive collection of FCPA enforcement statistics, trends, and other information over time.

  • For 2014, see here.
  • For 2013, see here.
  • For 2012, see here.
  • For 2011, see here.
  • For 2010, see here.
  • For 2009, see here.

For a general overview of the FCPA and its enforcement in a Q&A format, see here for the “FCPA 101” page of FCPA Professor.

Although much tends to be written about the FCPA and its enforcement, there are certain FCPA facts that are seldom discussed. Yet such facts, covering the entire span of the FCPA — from the statute’s enactment, to its statutory provisions, to FCPA enforcement, to FCPA reform, to the FCPA industry itself — occasionally bear repeating.  This article, highlights ten seldom discussed FCPA facts that you need to know.

Guidance / Compliance

It is also worth your time to review other information and sources of guidance relevant to the FCPA.

This include: the SEC’s 1981 guidance concerning the FCPA’s books and records and internal controls provisions (here); the DOJ’s and SEC’s 2012 FCPA Guidance (here); and DOJ FCPA Opinion Procedure Releases (here). For an article titled “Grading the FCPA Guidance” see here.

An FCPA expert should also be well-versed on compliance best practices and benchmarking metrics that can be found in the following documents: the DOJ’s Principles of Prosecution of Business Organizations; the U.S. Sentencing Guidelines; and the OECD Good Practice Guidance on Internal Controls, Ethics, and Compliance.

Looking for a fun way to benchmark FCPA compliance.  See here for the article titled “How a Successful Football Organization Can Inform FCPA Compliance in a Business Organization.”

FCPA Reform

Just because the FCPA may be a fundamentally sound statute does not mean that the FCPA (or its enforcement) could not be improved.

In November 2010, the Senate held an FCPA hearing (see this post for the full hearing transcript and vide0).  In June 2011, the House followed with its own FCPA hearing and here is the transcript.

Much of the discussion in both hearings focused on an FCPA compliance defense. To better understand how an FCPA compliance defense can better accomplish the goals of the FCPA as well as other policy objective see here for the article titled “Revisiting an FCPA Compliance Defense.”

And Finally …

The FCPA is not the only statute in the federal criminal code concerning bribery. Rather, the FCPA was modeled in large part after the U.S. domestic bribery statute, and when speaking of its FCPA enforcement program, the government has recognized that it “could not be effective abroad if we did not lead by example here at home.” Indeed, the policy reasons motivating Congress to enact the FCPA — that corporate payments were subverting the democratic process, undermining the integrity and stability of government, and eroding public confidence in basic institutions — apply with equal force to domestic bribery.

Against this backdrop, this article titled “The Uncomfortable Truths and Double Standards of Bribery Enforcement” explores through various case studies and examples whether the United State’s crusade against bribery suffers from uncomfortable truths and double standards. Through these case studies and examples you can decide for themselves whether the U.S. government “practices what it preaches” when it comes to the enforcement of bribery laws and whether the United States is indeed “in a unique position to spread the gospel of anti-corruption.”

Powered by WordPress. Designed by WooThemes