One can predict with a high degree of certainty what high-ranking DOJ officials will say about the Foreign Corrupt Practices Act before even hearing or reading the speech (and I say that based on highlighting on these pages over 100 FCPA enforcement agency speeches since 2009).
The script goes like this: the DOJ places a high-priority on FCPA enforcement as well as transparent enforcement; the DOJ is committed not just to corporate enforcement, but holding individuals accountable as well; and companies benefit from voluntary disclosure and cooperation.
New DOJ Deputy Assistant Attorney General Trevor McFadden delivered the script recently in this speech. However, if you want to know how McFadden really feels about DOJ enforcement of the FCPA you might want to review his recent writings on the topic highlighted in this recent post.
“Th[e] boost in FCPA enforcement has been driven by a number of factors. Among them, the FCPA Unit, which was formally created within the Fraud Section in 2005, has grown. In the past year and a half, 10 prosecutors were added to create the current team of 31 attorneys, including attorneys with significant litigation experience from other DOJ components and elite private firms. The FBI has also established three new squads of special agents devoted to FCPA investigations and prosecutions.
Additionally, there has been a notable increase in international cooperation between our international partners and the Fraud Section, the Office of International Affairs, and Department of Justice and FBI attachés around the world over the last two decades. Cooperation on such an international scale is of utmost importance because as cooperation increases, there is an inevitable reduction in the ability to hide or conceal assets and evidence, or to otherwise evade the jurisdiction of the United States. This cooperation in recent years is helping address concerns that U.S.-regulated companies and individuals are held to one standard while other businesses and individuals can thumb their noses at the rule of law.”
Another reason for the general increase for FCPA enforcement is what McFadden and his co-author previously stated in this 2015 article and highlighted in the prior post.
“[T]he FCPA practice has primarily evolved through a series of corporate settlement agreements, over which courts have little to no supervision and in which the burden of proof for evidentiary purposes has less impact. The relative absence of case law in the field has meant that the Justice Department has been able to advance expansive views regarding the scope and applicability of the FCPA, largely unhindered by skeptical juries and contrary case law.”
In his recent speech, McFadden stated as follows regarding individual accountability.
“[T]here has been a growing emphasis on the importance of holding not just companies, but individual actors responsible for corporate misconduct. Naturally, corporations can only act through individuals, and to change the attitudes and conduct of corporations, we must change the attitudes and conduct of their employees, particularly those in leadership roles.
Attorney General Sessions also noted the importance of individual accountability. The Criminal Division will continue to prioritize prosecutions of individuals who have willfully and corruptly violated the FCPA. We work closely with our law enforcement partners, both in United States and abroad, to bring these individuals to justice. Indeed, our partnerships with foreign authorities are increasingly allowing us to ensure that even individuals living abroad are held accountable for their actions. Of course, we continue to take seriously our burden of proof under the law, as well as our obligation to form a meticulous understanding the facts.”
Fact check time.
In 2016 the DOJ resolved 13 corporate FCPA enforcement actions and not one involved related DOJ charges against company employees. Indeed, in the past decade over 75% of DOJ corporate enforcement actions have lacked related DOJ charges against company employees. McFadden knows this statistic, indeed it appeared in his 2015 article titled “Why DOJ Struggles to Convict Individuals in FCPA Cases.”
In his recent speech, McFadden stated as follows regarding transparency.
“The Department has also been making efforts to increase transparency regarding how we operate, as well as how we approach prosecutions and resolutions. Not long ago, in 2012, as part of the effort to increase transparency, the Department and the Securities & Exchange Commission published a “Resource Guide to the U.S. Foreign Corrupt Practices Act,” in an effort to educate companies and individuals about the FCPA’s requirements.
Then, less than a year ago, as another step in the Department’s long-standing efforts to increase transparency and guidance to regulated parties and to encourage corporate self-disclosures and cooperation, the Fraud Section established a one-year Pilot Program, which delineates specified mitigation credit a company can receive if it acts in accordance with standards of self-disclosure, cooperation, and remediation. Each of these concepts – self-disclosure, cooperation, and remediation – were defined as part of the roll out of the program. This Pilot Program will be up for review this spring. At that time, we will carefully review the results of the Program and consider what, if any, modifications should be made to encourage companies and individuals to comply voluntarily with the FCPA’s requirements.”
In his 2015 article, McFadden stated:
“[L]aws were never meant to be interpreted solely by the executive branch. Allowing courts to opine on the metes and bounds of the FCPA, after hearing arguments from opposing counsel and with the potential for appellate review thereafter, is in everyone’s interests. Corporations and their employees, FCPA practitioners, and prosecutors deserve more clarity than the Justice Department alone can provide, and contested trials will allow this to occur.”
In his recent speech, McFadden stated as follows regarding the DOJ’s FCPA commitment:
“[T]he FCPA has been and remains an important tool in this country’s fight against corruption. As Attorney General Sessions recently emphasized in his confirmation hearing and written responses, the Department of Justice does not make the law, but it is responsible for enforcing the law, and we will continue to do so. Attorney General Sessions explicitly noted his commitment to enforcing the FCPA, and to prosecuting fraud and corruption more generally. The fight against official corruption is a solemn duty of the Justice Department, each generation of Department leaders and line prosecutors takes up this mantel from their predecessors, regardless of party affiliation.”
In his recent speech, McFadden stated as follows regarding voluntary disclosure and cooperation:
“[S]uccessive Deputy Attorneys General under both Republican and Democratic Administrations have directed Department prosecutors to consider business organizations’ voluntary self-disclosures, cooperation, and remedial efforts when making charging decisions. The U.S. Sentencing Guidelines also provide for substantial penalty reductions for companies that self-disclose, cooperate, and accept responsibility for their misconduct. These principles continue to guide our prosecutorial discretion determinations, and they further our ultimate goal of compliance with the law.”
What McFadden’s speech (when viewed against the backdrop of his prior FCPA writings) once again highlights is whether anyone at the DOJ is expressing genuine beliefs about the FCPA and willing to be held accountable for what they previously said and wrote about. (See here for the 2015 post titled “In the FCPA Space, Who Speaks for Whom?”).
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