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“Rigged Facts”

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Recently Senator Elizabeth Warren (D-MA) and Congresswomen Pramila Jayapal (D-WA) released this document titled “Rigged Justice 2.0 – Government of the Billionaires, by the Billionaires and for the Billionaires.”

The document is by no means Foreign Corrupt Practices Act specific, but the FCPA is mentioned in the document in a way that I suggest another title for the document should be: “Rigged Facts and Selectively Omitted Information.”

The document begins as follows:

“Our country is supposed to operate on the principle of Equality under the Law. People or corporations that break the law should be held accountable – regardless of how wealthy, powerful, or well-connected they are.

But just having laws on the books does not guarantee equal justice for all. Laws aren’t effective if they aren’t enforced strictly and consistently – or if they aren’t enforced at all.

Our justice system’s soft touch with huge corporations and billionaires is not a new phenomenon. But under President Trump, it is far worse than it has ever been. The Trump administration has treated their billionaire buddies and corporate campaign contributors like the old friends they are: handing them the keys to government regulatory decisions and neutering the federal government’s enforcement tools to address and prevent corporate crime.

And this is no accident. This administration has become a government run by corporate billionaires to benefit corporate billionaires. It has worked tirelessly to put personnel and policies in place that undermine government enforcement efforts at the expense of workers, consumers, taxpayers, public health, and the environment.”

Relevant to the FCPA, the document states under the heading “Self-Reporting” Safe Harbors Create Massive Loopholes” as follows:

“In November 2017, the DOJ announced a new enforcement policy for the Foreign Corrupt Practices Act (FCPA) that allows corporations to avoid criminal prosecution for illegally bribing foreign officials as long as they self-report their crimes after the fact. This encourages corporations to look the other way when their employees may be breaking the law by bribing overseas officials, safe with the knowledge that they can seek forgiveness down the road. It incentivizes a culture of “don’t ask, don’t tell” at huge companies, and ultimately, treats corporate wrongdoers with kid gloves.”

For starters, the DOJ has been actively encouraging voluntary disclosure by holding out the “carrot” of leniency for approximately 15 years. (See here for a prior post highlighting DOJ speeches on the topic going back to 2005). In April 2016 the Obama administration created an FCPA Pilot Program (see prior posts here and here) “intended to encourage companies to disclose FCPA misconduct.” If a business organization acted consistent with the FCPA Pilot Program and voluntarily disclosed, fully cooperated in the DOJ’s inquiry and timely and appropriately remediated, the Pilot Program said that the DOJ would consider a declination of prosecution and if a criminal resolution was warranted a reduction in fine amounts.

In short, Warren and Jayapal’s suggestion that the November 2017 FCPA Corporate Enforcement Policy (“CEP”) was somehow new omits nearly 15 years of prior relevant history spanning multiple administrations.

As to the November 2017 CEP, the suggestion by Warren and Jayapal that it “allows corporations to avoid criminal prosecution for illegally bribing foreign officials as long as they self-report their crimes after the fact” is flat out false.

Here is what the CEP actually says:

“When a company has voluntarily self-disclosed misconduct in an FCPA matter, fully cooperated, and timely and appropriately remediated … there will be a presumption that the company will receive a declination absent aggravating circumstances involving the seriousness of the offense or the nature of the offender.  Aggravating circumstances that may warrant a criminal resolution include, but are not limited to, involvement by executive management of the company in the misconduct; a significant profit to the company from the misconduct; pervasiveness of the misconduct within the company; and criminal recidivism.

If a criminal resolution is warranted for a company that has voluntarily self-disclosed, fully cooperated, and timely and appropriately remediated, the Fraud Section:

  • will accord, or recommend to a sentencing court, a 50% reduction off of the low end of the U.S. Sentencing Guidelines (U.S.S.G.) fine range, except in the case of a criminal recidivist; and
  • generally will not require appointment of a monitor if a company has, at the time of resolution, implemented an effective compliance program.

To qualify for the FCPA Corporate Enforcement Policy, the company is required to pay all disgorgement, forfeiture, and/or restitution resulting from the misconduct at issue. […] The requirement that a company pay all disgorgement, forfeiture, and/or restitution resulting from the misconduct at issue may be satisfied by a parallel resolution with a relevant regulator (e.g., the United States Securities and Exchange Commission).”

Was it really that difficult for Warren (a lawyer and former law professor) to read and comprehend the above language?

Under the heading “Massive Declines in Enforcement Activity,” the “Rigged Justice” document states: “the number of white collar enforcement actions hit a 20-year low under President Trump’s administration.”

Not mentioned are the following facts.

FCPA enforcement is a top priority white collar law that the DOJ and SEC enforce.

As highlighted in this prior post, 2018 was the third most active year for enforcement in the FCPA’s 40 plus year history measured in terms of the number of core corporate actions. Moreover, with many months left in 2019, FCPA enforcement thus far this year is the 5th largest in FCPA history measured in terms of settlement amounts.

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