Kudos to C-SPAN for broadcasting Assistant Attorney General Leslie Caldwell’s recent Foreign Corrupt Practices Act speech and related Q&A. (See here and here for prior posts). The broadcast represents a valuable public service to the FCPA community compared to the norm where DOJ/SEC FCPA officials appear at private events in which the public has to pay to hear their public officials speak about important topics (see here and here for prior posts criticizing this practice) and in which tidbits of information get reported largely through the filters of FCPA Inc. participants.
This post further advances the public interest by clipping Assistant AG Caldwell’s speech into discrete topics such as: (i) how “it’s impossible for a big global company to make sure that all of its employees are following the law all of the time,” (ii) thresholds for voluntary disclosure including how the DOJ does not “need to hear” or “want to hear” about certain potential FCPA violations; (iii) how some companies have engaged in “way too broad” FCPA investigations, and (iv) what a so-called “declination” means.
These clips represent must see video for corporate managers wrestling with FCPA issues and others in the FCPA community.
Certain FCPA commentators deny the existence of rogue employees. (See here the “myth of the rogue employee is more than a simple myth, it is also a dangerous myth”; see here “don’t buy the rogue employee myth”; see here “the doctrine of the ‘rogue’ employee has been an artificial concept promoted by white-collar defense lawyers to minimize corporate client responsibilities.”).
However, in this clip, Caldwell states:
“We recognize that any big company can’t control all of its employees all of the time, we recognize that. If you are a company operating in certain geographies you are going to be paying possibly small, but you will be paying some kind of inappropriate payment, we recognize that. We recognize that companies have rogue employees who don’t follow company policy so even when there is a strong company policy it may still be the case that somebody in the company does something that is off the reservation, that happens all the time … it’s impossible for a big global company to make sure that all of its employees are following the law all of the time”
Incidentally, Caldwell’s statement is also a nice advancement of one of the policy positions in favor of an FCPA compliance defense. (See here for the article “Rethinking an FCPA Compliance Defense.”
Voluntary Disclosure Issues
In this clip, Caldwell rightly notes that “very few companies have a legal obligation to report” FCPA issues to the DOJ. This same basic point was discussed in the actual FCPA Pilot Program document.
In this clip, Caldwell said that there is no “threshold” for voluntary disclosure but she stated that questions companies should ask in deciding whether to disclose include: “whether anyone in the U.S. was involved” and “was someone high in the company involved.”
Caldwell also stated:
“We don’t want to hear about the bribe paid on the dock in Argentina to get your package to leapfrog the other package”
“We don’t want to hear about the gift to the Chinese government official that he was given a big box of cigars on Chinese New year. […] [W]e don’t need to hear about those things, we don’t want to hear about those things”
“We also don’t want to hear about things when you don’t have a sense of exactly what happened … Alot of these [internal] allegations turns out to be unfounded or something else, not what someone thought happened.”
These video clips represent must sees for corporate managers wrestling with potential FCPA issues. For example, see this prior post regarding Lennox International absurd FCPA disclosure about a $475 payment in Russia to release a shipment of goods being held by customs officials.
Voluntary Disclosures Under the Pilot Program
In her prepared remarks, Caldwell stated: “what we’re seeing is that the pilot program is having an effect. Although I can’t share precise figures, anecdotally we’ve seen an uptick in the number of companies coming in to voluntarily disclose potential FCPA violations.” Certain media sources then ran headlines such “Caldwell Says FCPA Pilot Program Leading to Uptick in Voluntary Disclosures.”
However, Caldwell’s delivered remarks (as opposed to her prepared remarks) significantly walked-back this comment. In this clip, Caldwell states that: “it is too soon to say whether [the uptick in voluntary disclosures] is attributable to the Pilot Program or whether that is what is happening this year as opposed to next year or last year.”
This was precisely the point made in the article “Grading the DOJ’s FCPA Pilot Program.”
“[G]oing forward there no doubt will be companies (perhaps persuaded by FCPA counsel eying lucrative billings that flow from voluntary disclosures) that choose to voluntarily disclose FCPA issues in the hopes of being ‘‘rewarded’’ under the pilot program. Certain commentators are likely to then proclaim the pilot program a success. However, this line of reasoning completely misses the point that business organizations were often voluntarily disclosing prior to the pilot program. Rather, the key issue to track is whether the pilot program is motivating voluntary disclosure of potential FCPA violations that did not occur prior to the pilot program. It will be impossible to empirically measure this issue.”
Breadth of Internal Investigations
In this clip, Caldwell also states: “I’ve seen over the years, alot of companies that did way too broad of investigation and in my experience that was not the result of what DOJ told them to do.” (For previous posts regarding Caldwell’s comments about companies not having to “boil the ocean” see here and here).
This video clip also represents a must see for corporate managers interacting with FCPA counsel who might be inclined (for reasons of self-interest) to suggest broad internal investigations.
This recent post highlighted why the meaning of “declination” is a big, muddy mess. Among the reasons discussed is the DOJ’s vague, imprecise, and strange definitions of “declination.”
In this clip Caldwell uses the term “declination” to refer to instances in which the DOJ “can’t prove our case,” instance in which the DOJ “lacks jurisdiction,” and instances in which the DOJ “can’t prove a bribe at the end of the day.”
As previously stated, such instances do not represent declinations, such instances represent WHAT THE RULE OF LAW DEMANDS.