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Once Again, The DOJ Shoots Itself In The Foot

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The Department of Justice want companies to voluntarily disclose conduct that implicates the Foreign Corrupt Practices Act. Notwithstanding the DOJ slapping a formal title on its policy goal in April 2016 (i.e. the FCPA Pilot Program), this has long been the articulated policy position of the DOJ for nearly a decade.

Why then is the DOJ shooting itself in the foot by making decisions that should result in any board member, audit committee member, or general counsel informed of current events not making the decision to voluntarily disclose?

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Deputy Attorney General Rosenstein Signals Change Is Coming To DOJ Policy Regarding Corporate Prosecutions

Change

One of the best things ever written about the FCPA was penned by Robert Primoff who stated: “The government has the option of deciding whether or not to prosecute.  For practitioners, however, the situation is intolerable.  We must be able to advise our clients as to whether their conduct violates the law, not whether this year’s crop of administrators is likely to enforce a particular alleged violation.  That would produce, in effect, a government of men and women rather than a government of law.”

As highlighted in this prior post, the above was written in 1982, but it remains true today. Indeed, one disturbing dynamic of DOJ Fraud Section policy making is that it is largely driven by individuals – individuals who stay at the DOJ relatively briefly. Most recently, it was the 2015 “Yates Memo,” before that it was the 2008 “Filip Memo,” prior to that it was the 2006 “McNulty Memo,” prior to that it was the 2003 “Thompson Memo,” and prior to that it was the 1999 “Holder Memo.”

As highlighted in this report, yesterday Deputy Attorney General Rod Rosenstein signaled that change is yet again coming to DOJ policy regarding corporation prosecutions.

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A Seeming Mismatch

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Foreign Corrupt Practices Act enforcement officials frequently invoke national security and foreign affairs when talking about FCPA enforcement

Here are just a few recent quotes:

“We stand at a critical juncture in the fight against transnational corruption.  And the importance of this fight cannot be overstated.  The impact of corruption is unambiguous.  Because of the efforts of prosecutors in countries across the globe—some of them the very definition of high risk—the curtain has been ripped back/ revealing deep-rooted and pervasive corruption up to the highest levels of governance/ and putting on display for the world to see its devastating effects:

The way that corruption undermines the rule of law and destabilizes economies; the link between corruption and terrorism and the attendant threat to global security; the erosion of the free and fair market and, with it, the public’s confidence.” (See here).

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Acting Assistant AG Blanco On Foreign Law Enforcement Cooperation

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Acting Assistant Attorney General Kenneth Blanco recently delivered this speech which focused largely on foreign law enforcement cooperation in bribery investigations. The bulk of the speech concerned U.S. – Brazil cooperation with portions also dedicated to the DOJ’s Kleptocracy Asset Recovery Initiative.

In his speech, Blanco used much of the same rhetoric as prior DOJ officials have in talking about bribery and corruption and once again the notion that the U.S. will “push[] forward hard against corruption, wherever it is” is subject to interpretation.

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In-Depth On The Second Circuit’s Recent HSBC Decision

Judicial Decision

This February 2016 post awarded an FCPA Professor Apple Award to then U.S. District Court Judge John Gleeson (E.D.N.Y.) for championing transparency and not acquiescing in secret criminal law enforcement by finding that an HSBC Monitor Report (a condition of a deferred prosecution agreement) was “a judicial record, and that the public has a First Amendment right to see the Report.”

In this recent decision a Second Circuit panel consisting of Judge Katzmann, Judge Pooler and Judge Lynch (the first two President Clinton appointees and the later a President Obama appointee), reversed and held that the “Monitor’s Report is not a judicial document because it is not now relevant to the performance of the judicial function.”

The Second Circuit opinion is troubling / interesting on many levels.

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