For years, I have tried to engage with Foreign Corrupt Practices Act enforcement officials and the consistent response has been no – even though such officials routinely speak at FCPA conferences (usually paid events runs by for profit companies) and routinely grant interview requests.
After listening to this recent podcast in which DOJ FCPA Unit Chief Daniel Kahn speaks about a variety of FCPA issues, I invited Mr. Kahn to be a guest on the FCPA Flash podcast and was invited to submit questions. I submitted the below questions – mostly fact-based and statistically driven – yet the response I received from the DOJ press office was “Dan Kahn respectfully declines interview.”
Set forth below are the questions Kahn declined to answer.
The DOJ has been talking about the importance of individual FCPA prosecutions since the FCPA become law in 1977. Between 1977 until 2004, approximately 90% of criminal FCPA enforcement actions against business organizations resulted in related DOJ FCPA charges against company employees. Yet from 2006 to the present, this number has substantially flipped and approximately 80% of criminal FCPA enforcement actions against business organizations have not resulted in any DOJ FCPA charges against company employees. Why the change and why, over the past decade, has approximately 80% of criminal FCPA enforcement actions against business organizations lacked any related criminal charges against company employees?
Related to DOJ individual FCPA enforcement is what I will call a strange public-private divide. In other words, approximately 75% of individuals charged by the DOJ with criminal offenses since 2006 were employees or otherwise associated with private business organizations even though in the same time span approximately 75% of corporate DOJ FCPA enforcement actions were against issuers (publicly traded companies). What accounts for this divide?
Further related to individual FCPA enforcement by the DOJ, since 2004 approximately 30 corporate enforcement actions (DOJ or SEC) have been based, in whole or in part, on just two enforcement theories: (1) the notion that individuals associated with certain foreign healthcare systems are “foreign officials” and (2) the notion that providing an internship or job opportunity to a family member of an alleged foreign official violates the FCPA’s anti-bribery provisions. Yet, in these approximate 30 corporate enforcement actions based on these two theories, not a single human being has been charged. Why not?
The DOJ has been preaching about the virtues of voluntarily disclosure for the last approximate 15 years. What is your response to the following observation? The 2012 FCPA Guidance which further sought to entice business organizations to disclose, the 2016 FCPA Pilot Program which further sought to entice business organizations to disclose, the 2017 DOJ FCPA Corporate Enforcement Policy which further sought to entice business organizations to disclose, and indeed the DOJ’s recent “piling on” policy which further sought to entice business organizations to disclose are evidence that the DOJ’s long-standing efforts on this issue have largely failed?
Going back to at least 2005, high-ranking DOJ officials have talked about “real-time enforcement” and stated that “speed matters in corporate fraud investigations . The days of five-year investigations, of agreement after agreement tolling the statute of limitations-while ill-gotten gains are frittered away and investor confidence sinks-are increasingly a thing of the past.” Consistent with this rhetoric, in Spring 2017 the Acting Principal Deputy Assistant Attorney General stated that the DOJ’s “intent is for our FCPA investigations to be measured in months, not years.” Yet, FCPA scrutiny lasts on average over 4 years and instances of business organizations being under scrutiny for 5, 6, 7 years or more are not uncommon. Do these long periods of scrutiny impact the effectiveness and credibility of FCPA enforcement?
The DOJ recently announced a non-binding policy discouraging “piling on.” However, nearly all enforcement actions against foreign companies are those headquartered in OECD Convention countries. Has the time come for the DOJ/SEC to simply take a pass on these enforcement actions in lieu of the foreign enforcement action? After all, Article 4 of OECD Convention states that “when more than one Party has jurisdiction over an alleged offence described in this Convention, the Parties involved shall, at the request of one of them, consult with a view to determining the most appropriate jurisdiction for prosecution.” Is the U.S. truly the “most appropriate jurisdiction for prosecution” when say a French company allegedly bribes Libyan officials?
In this the FCPA’s 40th year, is the FCPA being successful in achieving its objectives? What is the best definition of success?