Ever since non-prosecution agreements and deferred prosecution agreements have become a prominent feature of the Foreign Corrupt Practices Act landscape, I’ve noted that such alternative resolution vehicles are troubling for two distinct, yet equally problematic public policy issues.
In short, alternative resolution vehicles allow “under-prosecution” of egregious instance of corporate bribery, while at the same time facilitate the “over-prosecution” of business conduct. (See here for the 2010 article “The Facade of FCPA Enforcement,” here for a prior post among others, and here for the 2015 article “Measuring the Impact of NPAs and DPAs on FCPA Enforcement).
As to the former, kudos to Judge Theodore Chuang (D.Md.) for recognizing this as well.
As highlighted in this prior post, in March Transport Logistics International agreed to resolve an FCPA enforcement action via a DPA in which it agreed to pay $2 million in settlement (reduced from $21.4 million based on inability to pay).
The DPA was placed on Judge Chuang’s docket as the parties jointly moved for the exclusion of time from the period during which trial must occur under the Speedy Trial Act. In this order, Judge Chuang stated:
“The Court notes that a deferred prosecution agreement confers a substantial benefit on a company for which there is probable cause to charge it with a crime. It should be reserved for companies that have engaged in extraordinary cooperation and have entirely rid themselves of all remnants of the prior criminal activity. Here, the Government has represented that TLI fully cooperated in the investigation, that the Government has filed charges against the two principal executives of the company, and that one of those executives has already been convicted. At the same time, the corporation did not self-report the violations, and there remain members of the Board of Directors who oversaw, or failed to oversee, the company during the time period of the fraud. Particularly when a very high percentage of the company’s business consists of the same type of uranium transportation work that was secured through fraudulent means, and the DPA calls for TLI to pay a criminal penalty that is less than 10 percent of the amount contemplated by the Sentencing Guidelines, there is a risk that a DPA under these circumstances will provide insufficient deterrence to companies which otherwise would permit fraud, or fail to prevent fraud, by its senior officials in the future.”
Even though Judge Chuang was right to note that the DPA allowed “under-prosecution” of egregious instance of corporate bribery, he felt powerless to act.
Judge Chuang stated:
“However, the Court’s authority to take action other than approval of the DPA appears to be very limited. Although the United States Court of Appeals for the Fourth Circuit has not interpreted the requirement for “approval of the court” under 18 U.S.C. S 3161(h)(2), the United States Court of Appeals for the District of Columbia Circuit has held that the district court may not “impose its own views about the adequacy of the underlying criminal charges” and may only fail to approve a DPA if it is not “geared to enabling the defendant to demonstrate compliance with the law” and is instead “a pretext intended merely to evade the Speedy Trial Act’s time constraints.” United States v. Fokker Servs. B. V, 818 F.3d 733, 744 (D.C. Cir. 2016). Under this standard, the Court must approve the DPA and grant the motion.”
See this previous post regarding the D.C. Circuit’s decision in Fokker Services which reduces federal trial court judges to potted plants.
For more on Judge Chuang’s decision, see here from the Debevoise & Plimpton FCPA Update.
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