Recently Charles Duross (former DOJ FCPA Unit Chief) and Karen Brockmeyer (former SEC FCPA Unit Chief) penned this article in Law360 titled “The Untold Story of the FCPA Guidance.”
What is untold in the article though are numerous facts and circumstances relevant to how and when the FCPA Guidance was issued in 2012. These facts and circumstances are highlighted below.
The authors are clearly proud of the FCPA Guidance and that is their right. As stated in the article it was written:
“to honor the hard work of a dedicated group of public servants working under time pressure with limited resources to research, write and issue the guide while at the same time doing their day jobs of investigating and prosecuting FCPA violations.”
But being proud should not be a license to gloss over certain material facts and circumstances relevant to how and when the FCPA Guidance was issued in 2012.
Consider the following (citations for the below information are included in the article “Grading the FCPA Guidance“).
In 1988, as part of the FCPA’s 1988 amendments, Congress encouraged the DOJ to issue FCPA guidance. For instance, a relevant House report stated:
‘‘In order to enhance compliance with the provisions of the FCPA [the FCPA amendment] establishes a procedure for the [DOJ] to issue guidance describing examples of activities that would or would not conform with the [DOJ’s] present enforcement policy regarding FCPA violations.”
The U.S. Court of Appeals for the Sixth Circuit noted that the 1988 amendments ‘‘clearly evince[d] a preference for compliance in lieu of prosecution.’’
However, in spite of Congress’s suggestion, the DOJ determined in 1990 that ‘‘no guidelines are necessary.’’
In 2002, the OECD issued its Phase 2 report of U.S. enforcement efforts of the OECD Anti-Bribery Convention and encouraged the United States to issue FCPA guidance. In pertinent part, the OECD report stated:
“Despite the abundance of articles and commentaries on [the FCPA], there is only limited amount of authoritative or official guidance available on compliance with the twenty five-year old statute. . . . Much of the authority or guidance regarding the Act comes from speeches from DOJ and SEC officials, DOJ opinions, DOJ and SEC complaints, settlements that have been filed, and informal discussions of issues between companies’ counsel and the DOJ or the SEC. . . . The status of these various sources of information is however not always clear: there could be merit in regrouping and consolidating them in a single guidance document.”
The OECD Phase 2 report concluded on this issue as follows:
“In the view of the lead examiners, the time has come to explore the need for further forms of guidance, mainly to assist new players . . . on the international scene, and to provide a valuable risk management tool to guide companies through some of the pitfalls which might arise in structuring international transactions involving potential exposures.”
In October 2010, this time in its Phase 3 Report on the United States, the OECD again encouraged the U.S. to issue FCPA guidance. The OECD stated:
‘‘The evaluators recommend that the United States consider consolidating and summarizing [all relevant sources of FCPA information] to ensure easy accessibility, especially for [companies] which face limited resources.’’
Despite Congress suggesting FCPA guidance in 1988, and repeated OECD recommendations for guidance in 2002 and 2010, the DOJ refused.
For instance, in the aftermath of a Nov. 30, 2010, Senate FCPA hearing, Sen. Amy Klobuchar (D-Minn.) asked the DOJ representative at the hearing:
‘‘Do you believe companies could comply with more certainty with the FCPA if they were provided with more generally applicable guidance from the Department in regards to situations covered by the FCPA that are not clear cut or fall into gray areas?’’
The DOJ representative stated that the DOJ ‘‘believes it provides clear guidance with respect to FCPA enforcement through a variety of means,’’ and it then listed the same general categories of information the OECD identified in 2002 as being deficient.
Although the DOJ/SEC state in the 2012 FCPA Guidance that its issuance was ‘‘in part, a response to [the OECD’s] Phase 3 recommendations,’’ the DOJ’s above response after the OECD Phase 3 recommendations calls into question the genuineness of this motivation.
Another likely motive for issuing the 2012 FCPA Guidance was the desire of the enforcement agencies to forestall introduction of an actual FCPA reform bill. As to this issue, the following background is relevant.
After the November 2010 Senate hearing, FCPA reform gained steam heading into a June 2011 House Judiciary Committee hearing. The House hearing evidenced bipartisan support for certain aspects of FCPA reform, and then committee Chair James Sensenbrenner (R-Wis.) stated at the conclusion of the hearing that ‘‘we will be drafting [an FCPA reform] bill.’’
Against this backdrop, in November 2011, Assistant Attorney General Lanny Breuer announced that in 2012 the DOJ intended to issue FCPA guidance.
Those on Capitol Hill who were inclined to introduce an FCPA reform bill said they would await the DOJ’s FCPA guidance before introducing such a bill.
That the 2012 FCPA Guidance was issued very soon after the November 2012 presidential election and during a lame duck Congress would seem to advance, in addition to the above information, the notion that issuance and the timing of the Guidance was in part political.
And that, as they say, is the rest of the story.
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