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You Gotta Be Kidding Me

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Reading some Foreign Corrupt Practices Act “commentary” sometimes leaves me scratching my head and thinking to myself “you gotta be kidding me.”

Case in point, Michael Volkov recently wrote in this post on his Corruption, Crime & Compliance blog as follows:

“A lot has been written on the vagueness or lack of clarity surrounding the FCPA. Those opinions are not very persuasive and ignore common sense, legal concepts and good faith. […] Drawing the lines around FCPA behavior is not as hard as many claim. Those that make such baseless claims are only justifying their own existence or engaging in a transparent marketing ploy.”

At the risk of making baseless claims, justifying my own existence or engaging in a transparent marketing ploy, let me share with you a long list of judicial decisions in which federal court judges have found various provisions of the FCPA to be vague or lacking in clarity.

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The Foreign Corrupt Practices Act Turns 39

39

Today our favorite statute, the Foreign Corrupt Practices Act, turn 39.

President Jimmy Carter’s December 20, 1977 signing statement stated in full as follows.

“I am pleased to sign into law S. 305, the Foreign Corrupt Practices Act of 1977 and the Domestic and Foreign Investment Improved Disclosure Act of 1977. During my campaign for the Presidency, I repeatedly stressed the need for tough legislation to prohibit corporate bribery. S. 305 provides that necessary sanction. I share Congress’s belief that bribery is ethically repugnant and competitively unnecessary. Corrupt practices between corporations and public officials overseas undermine the integrity and stability of governments and harm our relations with other countries. Recent revelations of widespread overseas bribery have eroded public confidence in our basic institutions.

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Lennox International – The Most Absurd FCPA Voluntary Disclosure Ever?

lennox

Lennox International is involved in the heating, air conditioning, and refrigeration markets.

The question needs to be asked: what made the company so hot as to recently disclose to the DOJ and SEC an investigation into a $475 payment in Russia to release a shipment of goods being held by customs officials?

The disclosure is arguably one of the most absurd FCPA disclosures ever.

There is of course no legal obligation to voluntarily disclose, something even the DOJ acknowledges in its April 2016 FCPA Pilot Program. But then again, returning to an issue first highlighted in this 2009, voluntary disclosure is the fuel that feeds FCPA enforcement and is extremely lucrative for FCPA Inc. Indeed, who can forget the words of the former DOJ Fraud Section Chief in this Wall Street Journal article “if you get two of these [FCPA investigations] a year as a partner, you’re pretty much set.”

Lennox’s decision to disclose was presumably a business decision made by the board of directors or audit committee based on the advise of FCPA counsel. If FCPA counsel did indeed advise company leaders to disclose, that advise needs to be seriously questioned.

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Survey Responses Indicate That The More Things Change, The More They Remain The Same

no change

The “Story of the Foreign Corrupt Practices” highlights how Congress clearly understood and appreciated the many difficult foreign business conditions facing U.S. companies.

For instance, the 1976 SEC Report on Questionable and Illegal Corporate Payments and Practices, on which Congress placed great reliance during its multi-year legislative process leading to the FCPA, documented a wide range of foreign corporate payments to a variety of recipients for a variety of reasons including payments “to persuade low-level governmental officials to perform functions or services which they are obligated to perform as part of their governmental responsibilities, but which they may refuse or delay unless compensated.”

Congress could have legislated as to the wide range of foreign corporate payments brought to its attention and certain bills introduced during the multi-year legislative process leading to the FCPA did indeed capture a wide range of payments. Yet, in passing the FCPA Congress intended to capture only a narrow range of foreign corporate payments.

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