In this month’s installment of the monthly feature, I reached out to academic colleagues who write in the Foreign Corrupt Practices Act space and posed the question – “what’s on your mind.” Set forth below are the responses.
Joseph Yockey (Iowa)
The current state of anti-corruption compliance calls to mind classic Dickens: it’s the best of times, it’s the worst of times.
On one hand, there continue to be exciting compliance developments in the private sector. This includes everything from the emergence of new technologies, like automated customs systems that cut out corrupt middlemen, to new corporate governance strategies, like the appointment of FCPA-specific compliance officers. I’m confident that these strategies aren’t just window dressing. They already seem to be making compliance easier and rates of bribery lower.
On the other hand, though, there’s a nagging sense that something is missing. The downside of relying on private innovation in compliance is that it is just that: private. Unlike the FCPA’s early days, when public-private collaboration was seen as vital to shaping anti-corruption policy, today the state’s focus remains largely set on enforcement. Enforcement is important, but the FCPA is ultimately meant to play a protective role. It is meant to level the global playing field and combat the social harms of corruption.
When understood in this way, it becomes clear that federal anti-corruption efforts need to go beyond enforcement to include cooperation with the many well-meaning firms that are already making important progress in the area of compliance. Part of this cooperation might include talking with market actors about the challenges they face on the ground so that enforcement efforts can evolve to fit the dynamic environments in which these firms often operate. It might also include taking a broader view of the supply and demand sides of bribery by stepping up efforts to collaborate with foreign officials and NGOs to find ways to reduce the overall frequency of bribe demands.
In any case, my research will continue to expand on my belief that federal authorities must do much more than wield a big enforcement stick. They must commit to getting their hands dirty to root out the systemic causes of corruption at home and abroad. They must commit to meaningfully help firms craft compliance programs that are responsive rather than reactionary. They must fully embrace the fact that the FCPA serves both a punitive and a protective function.
Until they do, I fear the FCPA will continue to bear the patina of a failed regulatory experiment.
Dean Paul McGreal (Dayton)
Just before writing this post, I submitted a course proposal to teach my Corporate Compliance and Ethics elective again in Spring 2014. So, naturally, my mind is occupied by thoughts of leniency or amnesty for business organizations that have an effective compliance and ethics program. Unlike the UK Bribery Act 2010, the United States Foreign Corrupt Practices Act does not provide an affirmative defense for an effective compliance and ethics program. An organization facing FCPA charges, then, can only benefit from its compliance and ethics program in other ways.
First, an organization could receive leniency, up to and including declination, for an effective compliance and ethics program. Of course, this option is a matter of prosecutorial discretion, leaving it to the government’s judgment whether the organization did everything it could to prevent the bribery, and so was the victim of a rogue employee. Making matters worse, it is difficult to determine when such leniency has occurred, what effect the organization’s compliance and ethics program had in particular cases, or what aspects of the program merited the leniency. Practitioners must sift press releases, deferred and non-prosecution agreements, and luncheon speeches to infer guidance. This murky state of affairs does not adequately arm compliance and ethics officers to do their best for their organizations.
Second, an organization could receive credit under the organizational sentencing guidelines for an effective compliance and ethics program. This only happens, however, if an organization is convicted and sentenced, and the court reduces the culpability score on that basis. This lucky organization will still be fined, and the conviction itself will likely harm the organization’s reputation and ability to do business. This route is largely academic, though, as organizations almost uniformly settle FCPA cases.
Third, creative defendants can resuscitate an argument for judicial recognition of a compliance defense. Several years ago, a litigant argued that federal criminal vicarious liability is properly interpreted to include such a defense. The Second Circuit rejected this position, and the argument has not been asserted recently.
In the end, a compliance defense must await congressional action. This issue, however, is not on the current legislative agenda, leaving organizations without that additional incentive for the foreseeable future.
Juliet Sorensen (Northwestern)
The Fifth Conference of States Parties to the United Nations Convention Against Corruption will take place in Panama City in November. With more than 150 signatories, the UNCAC aims to further anti-corruption efforts by requiring criminalization, asset forfeiture, mutual legal assistance and technical training in areas related to corruption and graft. However, the UNCAC is only as strong as its signatories. How many signatories have implemented laws required by the UNCAC? How many of those are enforcing those laws? Meaningful compliance with the provisions of the UNCAC is but one important topic that should be addressed in Panama City in November.