Earlier this week, former U.S. Attorney General John Ashcroft (2001-2005) delivered a keynote address at a corporate governance symposium hosted by the Notre Dame Journal of Law, Ethics & Public Policy. See here  for the event brochure. The title of Ashcroft’s address was “The Recent and Unusual Evolution of the FCPA.”
In this guest post, Brendan Geary (a 3L at Notre Dame, Managing Editor of the Notre Dame Journal of International & Comparative Law and Research Assistant to Professor Roger Alford) provides a summary of Ashcroft’s remarks.
Related to this, Ashcroft noted that there is another issue as to scope in that transnational business for corporations involves not just direct employees of a company, but also contractors, subcontractors, and “indirect employees” that are more difficult to exert direct control over. Because corporations are “increasingly held accountable for their actions by indirect employees,” he explained, this additional risk factor also requires corporate governance attention in exerting as much “control as possible” over all employees, especially those at the periphery.
Ashcroft also highlighted the legal requirement of knowledge as being an additional risk factor in that as the law has developed what has been found to be required is not just knowledge of an individual, but “congregate” knowledge, whereby if it can be proven that there is institutional knowledge throughout the corporation as to wrong-doing, then this would be sufficient to satisfy this element of the crime. Additionally, Ashcroft mentioned that corporations must acknowledge and integrate into their cultures the idea that ignorance is not a defense to FCPA liability. Together, these risk factors present opportunities for corporations to improve their corporate governance as it relates to confronting corruption.
Ashcroft concluded his comments with a discussion of principles of which corporations should be considering when it comes to effective corporate governance as related to fighting corruption. Specifically, compliance with the FCPA should take on a model of anticipatory, sustainable, and profitable compliance. In other words, corporate governance must look to where the law is heading and be a step ahead of what is required. Compliance should also help sustain a company’s operations over time, as well as provide avenues of working within the boundaries of the law, but overlap with strategies that provide for a corporation’s profitability so it can compete in the global economy. Moving towards such a model of corporate governance by taking the above risk factors into consideration will require certain structures within a corporate culture that aim to train employees, provide detection systems for anomalous behavior, and institute strategies for remedying wrong-doing. It is in the corporation’s interest for compliance to be a regular part of the corporate culture, but also that fair enforcement of the FCPA help guide corporations in the right direction so that the US can maintain its position as an economy that continues to be the “best allocator of capital” in the world.
Although Ashcroft’s remarks were not as provocative as the title of his speech might have suggested, his discussion of the intersection of corporate governance and the FCPA is a valuable message for companies doing business in global markets. Ashcroft is currently chairman of the Ashcroft Group (see here ) which specializes in strategic consulting for corporations worldwide in the areas of national security, corporate governance, litigation strategy, crisis management, regulatory advice and entrepreneurial ventures.