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Rep. Perlmutter, Once Again, Introduces FCPA Reform Bill, But This Time Goes Political

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U.S. Representative Ed Perlmutter (D-CO) is persistent.

In 2009, he introduced the “Foreign Business Bribery Prohibition Act” in the House to no avail. (See here and here for prior posts). In 2011, he again introduced the “Foreign Business Bribery Prohibition Act” in the House to no avail. (See here for the prior post). In 2016, he again introduced the “Foreign Business Bribery Prohibition Act” in the House to no avail (See here for the prior post).

Last week, Perlmutter once again introduced the “Foreign Business Bribery Prohibition Act” in the House (H.R. 1549), but this time he attempted to make a political statement.

Even though H.R. 1549 is substantively the same bill as Perlmutter introduced in 2009, 2011 and 2016, the supposed purpose of H.R. 1549, as stated in his press release, is to “help stop corruption and foreign bribery under the Trump Administration.”

The press release continues:

“This legislation is more important than ever given the lack of clarity from the new administration and the new leadership at the DOJ and SEC,” said Perlmutter. “Since it’s unclear if FCPA enforcement will remain a priority, this bill will encourage U.S. and foreign companies to play by the rules or face the consequences.”

It is common in the developing world for businesses to bribe foreign officials for access. Congress passed the FCPA in 1977 prohibiting the use of bribes to foreign officials to get or keep business, and recent presidential administrations have made FCPA enforcement a major priority. In fact, last year alone, 27 companies paid $2.48 billion to resolve FCPA cases – the biggest enforcement year in history.

President Trump has criticized the FCPA saying, “It’s a horrible law and it should be changed.” Additionally, Jay Clayton – President Trump’s nominee to head the SEC – has argued for less onerous restrictions for U.S. and foreign companies with respect to the FCPA.

Perlmutter continued, “Corruption and bribery undermine the pillars of democracy and erode trust. The potential for lack of oversight for foreign corruption is a serious concern given President Trump, his family business, and his surrogates’ questionable business ties. President Trump has failed to meaningfully divest or sever ties with the Trump Organization, and his family continues to enrich themselves by seeking business deals all over the world. This presents conflicts of interest, but also potentially violates the FCPA and the emoluments clause of the U.S. Constitution. We must hold them and other bad actors accountable.”

Like previous versions of the bill, H.R. 1549 seeks to “authorize certain private rights of action under the FCPA for violations that damage certain businesses, and for other purposes.”

First, a bit of relevant background.

The FCPA’s legislative history is clear that the House intended for the FCPA to provide for a private right of action. However, the House committee’s statement about a private right of action was not repeated in the reports of either the Senate committee considering the FCPA or the conference committee that reconciled the views of the House and Senate to produce the language of the FCPA as it was ultimately enacted.

Based on this, as well as other factors highlighted in this post, courts have rejected plaintiffs’ arguments for an FCPA private right of action.

The actual text of H.R. 1549 is not yet available, but assuming it is similar to prior versions of the bill, it would seek to amend the FCPA by providing that “any person that violates [the FCPA’s anti-bribery provisions] shall be liable to any “issuer” “domestic concern” or “other person that is a United States person” that is damaged by the violation … for damages caused to such issuer, domestic concern, or other person by the violation.”

Previous versions of the bill:

  • contained a section titled “Proof of Damages” which generally states that “the court may not find for the plaintiff in an action … unless the plaintiff alleges and proves that (A) the defendant violated the [anti-bribery provisions]; and (B) the defendant’s violation … (i) prevented the plaintiff from obtaining or retaining business for or with any person; and (ii) assisted the defendant in obtaining or retaining such business.”
  • provided that the “measure of damages”  “may be equal to the higher of the two following amounts … (i) the total amount of the contract or agreement that the defendant gained in obtaining or retaining business by means of the violation .. (ii) the total amount of the contract or agreement that the plaintiff failed to gain because of the defendant’s obtaining or retaining business by means of the violation …”.
  • provided that “the court shall enter judgment for three times the amount determined [under either scenario above], together with a reasonable attorney’s fee and costs …”.
  • explicitly preserved the FCPA’s facilitation payment exception and two affirmative defenses and contains the following statute of limitations “within 3 years after the discovery of the facts constituting the cause of action and within 6 years after the cause of action accrued.”

Regardless of Perlmutter’s empty political rhetoric, an FCPA private right of action does warrant further consideration.

At the very least, this much should be undisputed:  if there was an FCPA private right of action, there would be substantially more case law of precedent concerning the FCPA’s provisions than currently exists.

That would be a good thing.

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