Speeches by Foreign Corrupt Practices Act enforcement officials have long included over-the-top rhetoric. (See this article for a general summary).
This recent post highlighted a speech by DOJ Deputy Assistant Attorney General Matthew Miner. In the speech, Miner stated that when a company voluntarily discloses FCPA issues and engages in remedial actions, this frees up DOJ resources and “these resources can then be directed to other cases, not only in the FCPA context, but also to other areas such as opioid enforcement, human trafficking, and crimes impacting vulnerable victims, like children and the elderly.”
The DOJ’s latest FCPA rhetoric does not even pass the smell test and set forth below are various reactions to this portion of Miner’s speech from FCPA practitioners.
For starters, the DOJ has a specific FCPA Unit and the DOJ has described this unit in the following way:
“The FCPA Unit investigates and prosecutes cases under the FCPA and related statutes. Given the global nature of our economy, corruption abroad poses a serious threat to American citizens and companies that are trying to compete in a fair and transparent marketplace. Transnational corruption also empowers corrupt regimes and leads to destabilization of foreign governments, which can lead to significant threats to America’s national security. Our prosecutors coordinate with international law enforcement partners to fight foreign bribery by both American and foreign individuals and companies. The FCPA Unit has 32 prosecutors.”
Thus, it doesn’t even pass the smell test that making the FCPA Unit’s job easier is going to result in increased resources being devoted to opioid enforcement, human trafficking and crimes impacting children and the elderly because – well – the FCPA Unit does not even focus on those issues.
More broadly, the DOJ’s latest FCPA rhetoric represents implicit shaming. In other words, the inference seems to be that if a company does not voluntarily disclose FCPA issues, then somehow the business organization and its leaders are enablers or facilitators of drug use, human trafficking or crimes against children and the elderly. Never mind that the DOJ on numerous occasions, including its April 2016 FCPA Pilot Program correctly acknowledged that: “nothing in the Guidance is intended to suggest that the government can require business organizations to voluntarily self-disclose, cooperate, or remediate.”
I was curious to see what others thought of the DOJ’s latest FCPA rhetoric and set forth below are observations from various FCPA practitioners (including several former DOJ or SEC prosecutors).
“His statement represents the DOJ’s attempted deputization of America. And its pathetic. Responsible, experienced practitioners should reject the DOJ’s invitation to act as surrogate prosecutors who serve the DOJ’s interest and instead remain committed to act in their client’s best interest.”
“I don’t think you could print what I think about that argument. ‘Disingenuous’ is perhaps the only printable adjective…”
“[I]t seems odd for the DOJ even to be asking private companies to help it better allocate its investigative and prosecutorial resources. If the DOJ wants more resources directed toward those other types of cases, it ought to allocate more prosecutors and other resources to those types of cases. Plus, the request seems highly ineffectual. Although FCPA cases take up some time from some US Attorneys’ Offices, most of the work is done by the FCPA Unit in the Fraud Section, and, as you know, the prosecutors in the FCPA unit aren’t going to handle those other types of cases unless they are moved to other units or task forces in the Fraud Section (or even to other sections within the Criminal Division; I don’t think the Fraud Section handles human trafficking matters, but maybe I’m wrong about that).”
“Last time I checked, the FCPA unit wasn’t bringing anything but FCPA cases. When a company cooperates, the FCPA unit can conduct more FCPA investigations and bring more FCPA cases.”
“[P]erhaps he’s trying to signal a shift in enforcement priorities. The Fraud Section could, after all, dismantle the unit. I don’t see how opioids, human trafficking, or crimes against vulnerable victims (unless the crime is fraud) fits within the Fraud Section’s purview.”
“I found the comment to be a ridiculous false equivalent regarding the types of crimes listed, especially after the lead in regarding the scourge of corruption. That said, I think this continues the approach of offering carrots and encouraging self-reporting. I hope that the Department will reallocate resources, but I doubt it will happen. There is too much inertia and FCPA Inc. is too ingrained in the system to truly steer that ship in a different direction.”
“I found the comments to be really encouraging although I doubt this reassignment will ever happen. FCPA enforcement is a better “money maker”, meaning it generates funds for the administration, while the other cases/examples don’t.”
“I think that is generally true, but less true when the DOJ has a dedicated unit that only does FCPA cases. So, unless dedicated FCPA prosecutors are assigned to handle opioid cases, etc., the statement doesn’t work. Those FCPA prosecutors get to go home early becomes the more likely reality.”
“Certainly the first part of the statement makes sense. If companies do the work for the FCPA Unit, they can do more cases. The rest of that sentence makes no sense – I’m not aware of the FCPA Unit getting involved in opioid enforcement (though to be fair the Fraud Section’s HCF Unit does get involved in that in a tangential way, I guess). Don’t understand the human trafficking reference. Elderly and children – same thing, thought the Securities and Financial Fraud Unit does a lot of fraud cases involving elder victims – Costa Rican telemarketing, etc. And I don’t think that the resources the FCPA Unit has will be rededicated to these other things. From why I can tell, they are incredibly busy right now. Not sure how that frees up resources to do those other things, unless you mean Fraud Section resources shifting among the units. Seems like someone put that in there to mention opioids. Not sure how that is supposed to motivate companies to cooperate. Not sure how asking one company to cooperate in order to free up resources to prosecute other companies is a motivating factor for cooperation. Pretty sure when deciding how to handle a DOJ investigation, most Boards and corporate officers are motivated by their own and their company’s interest, not the greater good. But call me a cynic.”
“[I]t is clearly an interesting quote the likes of which I have not seen before; In some ways it echoes the ‘gatekeeper’ theory the SEC applies to market professionals in calling on them to assist in rooting out fraud and unethical conduct but it is much more blatant since that approach is based on ethics not patriotism. DOJ may have done better to follow the SEC approach (as they have with much of their FCPA enforcement and corporate settlements which really trace back to Stanley Sporkin). It also seems to recognize the fact that it is difficult at best for the government to find these cases absent some cooperation or a whistleblower; likewise it is very difficult to investigate them without cooperation; this is particularly true as you know for the SEC given the 5 year statute of limitations that applies to them.”
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