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The FCPA Guidance Turns 5

the party is over

Five years ago today, on November 14, 2012, the DOJ and SEC released the FCPA Guidance. The guidance generated a substantial amount of buzz, but the festive coverage soon subsidized as the guidance turned 1, 2, 3, 4 and now 5 years old.

Yet, on this fifth anniversary of the FCPA Guidance, it is useful to take a look back.

As highlighted in this post, the 2012 FCPA guidance was a long-time coming to say the least.

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Khuzami, A Signatory Of The 2012 FCPA Guidance, Calls For Additional FCPA Guidance or “Changing” The “Somewhat Controversial” FCPA

khuzamikirkland

You really can’t make this one up and there is a reason why, unfortunately but justifiably, many view Foreign Corrupt Practice Act enforcement with cynicism.

In 2012, Robert Khuzami was head of the SEC’s Division of Enforcement when the SEC, along with the DOJ, issued FCPA Guidance.

The Guidance was signed by two individuals: Khuzami and then Assistant Attorney General Lanny Breuer.

Just above Khuzami’s signature, the Guidance states:

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The FCPA Guidance Turns 4

the party is over

Four years ago yesterday, on November 14, 2012, the DOJ and SEC released the FCPA Guidance. The guidance generated a substantial amount of buzz, but the festive coverage soon subsidized as the guidance turned 1, 2, 3 and now 4 years old.

Yet, on this fourth anniversary of the FCPA Guidance, it is useful to take a look back.

As highlighted in this post, the 2012 FCPA guidance was a long-time coming to say the least. For instance, in the 1988 FCPA amendments Congress encouraged the DOJ to issue FCPA guidance. The DOJ refused. In 2002, the OECD encouraged the DOJ to issue FCPA guidance. The DOJ refused. In 2010, the OECD again encouraged the DOJ to issue FCPA guidance. The DOJ again refused. In the aftermath of the November 2010 Senate FCPA hearing the DOJ was again encouraged to issue FCPA guidance.  The DOJ again refused.

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The FCPA Guidance Turns 3

the party is over

Three years ago, on November 14, 2012, the DOJ and SEC released the FCPA guidance. The guidance generated a substantial amount of buzz, but the festive coverage soon subsidized as the guidance turned 1, 2, and now 3 years old.

Yet, on this third anniversary of the FCPA guidance, it is useful to take a look back, particularly because the DOJ is rumored to be considering additional FCPA guidance that no doubt, if released, will likewise generate a substantial amount of buzz and festive coverage.

As highlighted in this post, the 2012 FCPA guidance was a long-time coming to say the least.

For instance, in the 1988 FCPA amendments Congress encouraged the DOJ to issue FCPA guidance. The DOJ refused. In 2002, the OECD encouraged the DOJ to issue FCPA guidance. The DOJ refused. In 2010, the OECD again encouraged the DOJ to issue FCPA guidance. The DOJ again refused. In the aftermath of the November 2010 Senate FCPA hearing the DOJ was again encouraged to issue FCPA guidance.  The DOJ again refused.

It was only after the FCPA reform movement gained steam in 2011 that the DOJ made the political move in announcing that FCPA guidance would be forthcoming. Tellingly as to the DOJ’s political motivations, actual issuance of the guidance took over one year and occurred a few days after the 2012 elections.  For more on the above chronology of events, see the article “Grading the FCPA Guidance.”

As discussed in this November 2012 post, there was little new information in the guidance to those previously knowledgeable about the FCPA and its enforcement. Yet, to those persuaded by non-lawyer journalist coverage of FCPA topics and/or selling FCPA compliance services, the guidance was indeed “new.”

Sure, the guidance was a useful document to the extent it captured in one document the DOJ and SEC’s views on the FCPA and related topics.

But that is all the guidance did.

Criticism of the guidance was widespread, including by former high-ranking DOJ officials. (See this prior post rounding up approximately 50 law firm client alerts, etc. regarding the guidance).  For instance, Steven Tyrrell, former chief of the DOJ fraud section stated that the guidance was “more of a scrapbook of past DOJ and SEC successes than a guide book for companies who care about playing by the rules.” (See also this prior post highlighting former Deputy Attorney General Larry Thompson’s views on the guidance.)

Indeed, the guidance did not represent the “law,” but rather DOJ and SEC interpretations of the law and as highlighted in this article the guidance was not a well-balanced portrayal of the FCPA as it was replete with selective information, half-truths, and, worse information that was demonstratively false.

Even so, in the guidance, and in connection with its release, the enforcement agencies made some sensible statements (see here for the prior post) such as:

  • the enforcement agencies are “focused on bribes of consequence – ones that have a fundamentally corrosive effect on the way companies do business abroad.”
  • enforcement efforts are focused on “payments of real and substantial value that clearly represent an unambiguous intent to bribe a foreign official to obtain or retain business”
  • enforcement agencies are “interested in companies spending compliance dollars in the most sensible way” and that the guidance can help companies as to where they can “minimize investment and where they can maximize it.”

As highlighted in this prior post, one of the more useful aspects of the guidance is that it could thus be used as a measuring stick for future enforcement activity.

Since the guidance, there have been approximately 30 corporate FCPA enforcement actions.  Several of these enforcement actions such as Ralph LaurenPhillipsStryker, Allianz, Bruker, Layne Christensen, Smith & Wesson, BNY Mellon, Mead Johnson, BHP Billiton, FLIR Systems– raise the issue of whether the enforcement agencies are indeed acting consistent with their own guidance, let alone the FCPA statue itself.

In short, three years has passed since the guidance and not much has changed.

It would seem that the only thing that has changed is that the principal spokespersons / authors of the guidance are now part of FCPA Inc. making millions in the private sector advising companies against the FCPA enforcement climate they helped create.

As far back as 1982 it was recognized in the FCPA context that the United States should be a nation of laws, not a nation of men and women issuing non-binding guidance.

The 2012 FCPA guidance was just that – men and women issuing non-binding guidance.

As FCPA Inc. anticipates a new round of rumored non-binding FCPA guidance by men and women, let’s remember this.

Indeed, just as the men and women who authored the 2012 guidance soon left the government, the men and women who draft this next round of rumored FCPA guidance are likely to exit the government in the next two years.

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