How many former high-ranking Department of Justice officials and/or former DOJ FCPA enforcement attorneys does it take before the current DOJ realizes that its FCPA enforcement policies and procedures are, in certain cases, broken?
The latest to join the growing chorus (see here at pages 31-33 for others in the chorus) is William Jacobson (the former assistant chief for DOJ FCPA enforcement and current co-general counsel and chief compliance officer at Weatherford International Ltd – a company currently under FCPA scrutiny). [One of the first Q&A’s on FCPA Professor profiled Jacobson (on the Siemens enforcement action – see here) and he is already in my notable and quotable hall of fame for his 2010 statement to American Lawyer on FCPA enforcement that “[t]he government sees a profitable program, and it’s going to ride that horse until it can’t ride it anymore.”]
In a recent article published in Bloomberg’s Criminal Law Reporter (here) titled “No Legislation Necessary: A Five-Part Test to Negate Corporate Criminal Liability in FCPA Cases,” Jacobson states in summary as follows. “[T[here is no need to tinker with the [FCPA]. Instead, the Department of Justice could, and should, exercise its prosecutorial discretion and commit to not bringing FCPA-related criminal charges against companies that have done all they could to curb corruption within their midst and to cooperate with the government when corruption is discovered. Such a policy would serve both government and corporate interests by, among other things, bringing more cases to the attention of the government, facilitating more prosecutions of individuals, and deterring future violations while at the same time bringing predictability to the prosecutorial process and rewarding responsible companies.”
Jacobson’s five-part test is as follows. “(1) the company must voluntarily disclose the violation; (2) the potential breach did not include illegal conduct by senior leaders within the company; (3) the company must cooperate fully with the government, including providing evidence and information against employees, officers, directors, and agents of the company; (4) the company must agree to implement appropriate remedial measures to mitigate the chances for future violations; and (5) prior to discovering the misconduct, the company must have implemented a robust compliance program.” Jacobson states that “if a company meets each element of this test, DOJ policy should state that the company will not be charged (including by deferred or nonprosecution agreement).”
In conclusion, Jacobson states as follows. “Current FCPA enforcement policy punishes rather than rewards companies that do all they can reasonably be expected to do to deter corruption and to cooperate with the government. This had led to an FCPA legislative reform movement that has gained considerable momentum over the past 18 months. DOJ can blunt most of these efforts with a shift in its prosecution policy that rewards responsible companies while at the same time serves important government interests and continues DOJ’s fight against international corruption.”
Much of what Jacobson writes about (for instance that current FCPA enforcement policies and procedures may actually discourage voluntary disclosure, make it more difficult for the DOJ to learn about individual culpable conduct, and thus not result in deterrence achieving individual prosecutions), I agree with and have previously written about in “Revisiting a Foreign Corrupt Practices Act Compliance Defense” – here).
In addition, Jacobson has a nice discussion about the FCPA’s unique posture (for more on this topic, see pages 8-16 of my “Revisiting” article for specific reasons warranting an FCPA compliance defense). Both are good reads given that the DOJ’s current FCPA reform talking points seems to be that because certain FCPA proposals are general in nature and can be applied to other statutes, specific FCPA reform is not needed.
While agreeing with many of Jacobson’s points (points well informed from his prior DOJ FCPA position, as well as his current general counsel position), I disagree that the remedy is non-binding DOJ policies and procedures.
There are some FCPA reform issues I have advocated that can perhaps be best dealt with through DOJ policy and procedure such as abolishing NPAs and DPAs, publishing declination decisions when a company voluntarily discloses, and establishing meaningful post-employment restrictions on FCPA enforcement attorneys.
However, non-binding DOJ policy and procedure is not the best way to accomplish real and meaningful FCPA reform. As to many of the issues Jacobson discusses, the best solution is an FCPA compliance defense as I discuss here.
Jacobson’s article was reproduced with permission from Criminal Law Reporter, 91 CrL 77 (Apr. 11, 2012). Copyright 2012 by The Bureau of National Affairs, Inc. (800-372-1033) www.bna.com