Recently, DOJ Foreign Corrupt Practices Act Unit Chief Daniel Kahn penned an article in the Department of Justice Journal of Federal Law and Practice titled “Responding to the Upward Trend of Multijurisdictional Cases: Problems and Solutions.”
The Journal of Federal Law and Practice is the renamed United States Attorneys’ Bulletin and compared to delivering speeches, it is nice to see our public officials write articles (complete with certain footnotes) on topics they oversee.
Kahn states in the introduction:
“This article addresses the upward trend of multijurisdictional white collar cases, identifies the issues attendant to that trend, and offers several ways of dealing with those issues. Because Foreign Corrupt Practices Act (FCPA) investigations and prosecutions, by their very nature, involve evidence from abroad in every case and often include multiple foreign authorities, such cases will be used to highlight these points.”
Several prior posts (see here and here) have highlighted that much of the largeness of recent FCPA enforcement actions (both in terms of the number of actions and overall settlement amounts) has resulted from corporate enforcement actions against foreign companies.
As highlighted in the prior posts, nearly all of the foreign companies that resolved FCPA enforcement actions were from peer OECD Convention countries and thus the question should be asked whether these FCPA enforcement actions represented a proper use of the FCPA – at least from a policy standpoint – given that Article 4 of the OECD Convention specifically states:
“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.”
Kahn’s article instructs that DOJ guidance – not just Article 4 of the OECD Convention – is also relevant. He writes:
“The Justice Manual [9-27-240] provides guidance for how prosecutors should determine whether to initiate or decline prosecution where another jurisdiction is also prosecuting. These factors include: (1) the strength of the other jurisdiction’s interest in prosecution; (2) the other jurisdiction’s ability and willingness to prosecute effectively; and (3) the probable sentence or other consequences if the person is convicted in the other jurisdiction.”
Elsewhere, Kahn writes:
“In determining how much to credit a particular jurisdiction, there are a number of factors that the FCPA Unit has found instructive, including where the illegal conduct took place, where the harm occurred, where the victims reside, the headquarters of the relevant entities and the nationality of culpable individuals, which jurisdiction initiated the investigation, and the time and resources expended by each jurisdiction.”
Applying the above factors to certain recent FCPA enforcement actions against foreign companies:
- Chile had a strong interest when a Chilean company like SQM engaged in improper conduct with Chilean officials;
- The U.K. had a strong interest when a U.K. company like Rolls-Royce engaged in improper conduct with alleged officials in Thailand, Brazil, Kazakhstan, Azerbaijan, Angola and Iraq;
- Sweden had a strong interest when a Swedish company like Telia engaged in improper conduct with Uzebekistan officials; and
- The Netherlands had a strong interest when a Dutch company like SBM Offshore engaged in improper conduct with alleged officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq?
Given that all of the above countries are indeed parties to the OECD Convention, the DOJ’s other two factors have already been answered: “the other jurisdiction’s ability and willingness to prosecute effectively; and the probable sentence or other consequences if the person is convicted in the other jurisdiction.”
These pages have long asserted that perhaps the time has come with the maturity of the OECD Convention – for U.S. enforcement agencies to adopt a policy of not bringing FCPA enforcement actions against foreign companies from peer OECD Convention countries. This policy finds support in not only Article 4 of the OECD Convention, but also as Kahn article instructs, existing DOJ policy as well.
Moreover, the DOJ can talk about not “piling” on until the cows come home, but when the DOJ brings FCPA enforcement actions against foreign companies from OECD Convention countries this is very much “piling on” even if the DOJ often credits or deducts amounts paid to foreign law enforcement based on the same core conduct from U.S. settlement amounts.
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