Frederick Davis (Debevoise & Plimpton) recently authored a dandy piece that nicely articulates a problem in the international fight against overseas corruption and that is: “non-U.S. efforts to prosecute overseas bribery are hampered by the absence of clear, credible statements from U.S. prosecutors that they will desist from prosecuting if a local prosecutor does so in good faith.”
Before highlighting Davis’s article, as previously highlighted on these pages U.S. enforcement of the Foreign Corrupt Practices Act against foreign companies from OECD Convention countries, often based on sparse / novel jurisdictional theories, presents a host of problems. Indeed, the OECD Convention recognized this issue and 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.”
As highlighted in this post, of the 27 corporate enforcement actions from 2016, 11 (41%) were against foreign companies (based in many instances on mere listing of securities on U.S. markets and in a few instances on sparse allegations of a U.S. nexus in furtherance of an alleged bribery scheme). Even more dramatic, of the net $2.27 billion settlement amounts from 2016 corporate enforcement actions, approximately $1.44 billion (63%) resulted from enforcement actions against foreign companies.
Can it truly be said that the U.S. was the most appropriate jurisdiction to prosecute certain foreign companies for alleged interactions with non-U.S. officials? After all, those companies were from Germany, Switzerland, the Netherlands, Canada, Brazil, Israel, Belgium, and Chile – all “peer” countries with mature FCPA-like laws governing the conduct of their companies coupled with reputable legal systems to prosecute such offenses.
“Article 4.3 of the OECD Convention provides that in the event of multiple investigations of the same conduct, the countries involved should coordinate to determine “the most appropriate jurisdiction for prosecution,” clearly envisioning that such a prosecution would be single and not multiple. This has not happened, but rather two scenarios occur rather frequently. First, outcomes in one country—including negotiated ones—are sometimes followed by a “me too” prosecution in another. And second, multinationals facing multiple prosecutors often reach separate, sometimes but not always coordinated, agreements with each.
This matters because of the baleful, disruptive effect a U.S. prosecution has on efforts elsewhere. Simply put, U.S. prosecutors have powers that most of their European counterparts can only dream of: unfettered discretion, virtual absence of judicial control over investigations and negotiated outcomes,24 expansive views of their extraterritorial powers coupled with the fact that more than eighty percent of international business deals are denominated in U.S. dollars, very helpful laws on corporate criminal responsibility, the risk of huge corporate penalties and the ability to cumulate such penalties, investigations that last months rather than multiple years, powers of evidence-gathering from which corporations are virtually helpless in shielding incriminating information, virtual freedom from any double jeopardy/ne bis in idem constraints, and flexible procedures such as DPAs and NPAs—all enable them to move more quickly, and to strike far more terror into the hearts of corporate decision-makers, than can European prosecutors. As a result, my strong sense from speaking with prosecutors, defense lawyers, and corporate counsel in France is that if a company feels it faces the risk of U.S. as well as French prosecution, it will focus its efforts on dealing with the U.S. risk in the first instance, and assume that French prosecutors will fall into place later. In essence, as I have put it elsewhere, the U.S. is positioned as the “ultimate arbiter” on the sufficiency of bribery prosecutions around the world—as well as the recipient of billions of dollars of criminal and administrative fines, and other payments, made on the basis of such prosecutions.
This situation could lead to trouble. The “level playing field” that the OECD Convention envisioned was not only a world in which companies of all nationalities faced the same prohibitions and comparable risks of prosecution, but in which prosecutors would have an equal say in outcomes. Given the relative ineffectiveness of many countries’ efforts, the fact that the U.S. prosecutors have attempted to fill this gap is neither surprising nor, in itself, wrong. But there are already indications of resentment in France, perhaps in other countries as well; a recent article in two mainstream national publications29 referred to U.S. prosecutions of French companies as a “big racket” designed to make money for U.S. treasuries and to protect U.S. companies, and legislators in the National Assembly are gathering information in an apparent effort to combat this situation, including the possibility of retaliation.
Without slowing their efforts to prosecute overseas corruption, U.S. prosecutors could do more to emphasize unambiguously that they will respect non-U.S. outcomes that are resolved in good faith and on an appropriate basis, and to articulate the criteria they use to determine the appropriateness or sufficiency of those outcomes. In recent months, senior DOJ officials have emphasized their willingness to work with their counterparts abroad, and apparently believe that those efforts are fruitful. However, when asked in public conferences what criteria they use to evaluate non-U.S. outcomes, their publicly available responses are vague. The DOJ issues careful and detailed “guidelines” on many aspects of their discretionary authority to charge offenses, but no such guidelines address the weight they will give to non-U.S. outcomes, or procedures multinationals should follow in that situation.”
For a recent FCPA Flash podcast episode with David Bitkower (former Principal Deputy Assistant Attorney General for the DOJ’s Criminal Division ) regarding the same general topic, see here.
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