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AG Barr’s Recent Speech Is FCPA Relevant

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Last week Attorney General William Barr delivered this Constitution Day speech.

The Foreign Corrupt Practices Act was never mentioned.

However, as highlighted below several of the topics discussed were FCPA relevant.

Barr stated: “The rule of law is the lynchpin of American freedom.  And the critical guarantee of the rule of law comes from the Constitution’s structure of separated powers.  The Framers recognized that by dividing the legislative, executive, and judicial powers— each significant, but each limited—they would minimize the risk of any form of tyranny.”

In the minds of some, how the DOJ generally resolves corporate FCPA enforcement actions implicates separation of power issues.

As stated by the Manhattan Institute for Policy Research:

“Prosecutors’ virtually unchecked powers under DPAs and NPAs threaten our constitutional framework. To be sure, prosecutors are acting upon duly enacted laws, but federal criminal provisions are often vague or ambiguous, and the fact that prosecutors and large corporations alike feel obliged to reach agreement, rather than follow an orderly regulatory process and litigate disagreements in court, denies the judiciary an opportunity to clarify the boundaries of such laws. Instead, the laws come to mean what the prosecutors say they mean—and companies do what the prosecutors say they must. Federal prosecutors are thus assuming the role of judge (interpreting the law) and of legislature (setting broad policy choices about industry conduct), substantially eroding the separation of powers.”

Attorney General Barr continued:

“I want to focus today on the power that the Constitution allocates to the Executive, particularly in the area of criminal justice.  The Supreme Court has correctly held that, under Article II of the Constitution, the Executive has virtually unchecked discretion to decide whether to prosecute individuals for suspected federal crimes.

[…]

The key question, then, is how the Executive should exercise its prosecutorial discretion.  Eighty years ago this spring, one of my predecessors in this job —then-Attorney General Robert Jackson — gave a famous speech to a conference of United States Attorneys in which he described the proper role and qualities of federal prosecutors.

[…]

Much has changed in the eight decades since Justice Jackson’s remarks.  But he was a man of uncommon wisdom, and it is appropriate to consider his views in the modern era.

The criminal process is a juggernaut.  That was true then and it is true today.  Once the criminal process starts rolling, it is very difficult to slow it down or knock it off course.  And that means federal prosecutors possess tremendous power — power that is necessary to enforce our laws and punish wrongdoing, but power that, like any power, carries inherent potential for abuse or misuse.

Justice Jackson recognized this.  As he put it, “The prosecutor has more control over life, liberty, and reputation than any other person in America.”  Prosecutors have the power to investigate people and interview their friends, and they can do so on the basis of mere suspicion of general wrongdoing.  People facing federal investigations incur ruinous legal costs and often see their lives reduced to rubble before a charge is even filed.  Justice Jackson was not exaggerating when he said that “While the prosecutor at his best is one of the most beneficent forces in our society, when he acts from malice or other base motives, he is one of the worst.”

The power to, as he called it, “strike at citizens, not with mere individual strength, but with all the force of government itself” must be carefully calibrated and closely supervised.  Left unchecked, it has the potential to inflict far more harm than it prevents.”

See here and here for FCPA enforcement actions that are largely viewed as inflicting more harm than they sought to prevent.

In the words of a federal court judge in one matter:

“So it is with deep regret that this Court is compelled to find that the Government team allowed a key FBI agent to testify untruthfully before the grand jury, inserted material falsehoods into affidavits submitted to magistrate judges in support of applications for search warrants and seizure warrants, improperly reviewed e-mail communications between one Defendant and her lawyer, recklessly failed to comply with its discovery obligations, posed questions to certain witnesses in violation of the Court’s rulings, engaged in questionable behavior during closing argument and even made misrepresentations to the Court.”

In the words of another federal judge in a separate matter:

“This appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement.

[…]

I for one hope this very long, and I’m sure very expensive, ordeal will be a true learning experience for both the Department and the FBI as they regroup to investigate and prosecute FCPA cases against individuals in the future.

Two years ago, at the very outset of this case I expressed more than my fair share of concerns on the record regarding the way this case has been charged and was being prosecuted.  Later, during the two trials that I presided over I specifically commented again on the record regarding the government’s very, very aggressive conspiracy theory that was pushing its already generous elasticity to its outer limits.  Of course, in the second trial that elastic snapped in the absence of the necessary evidence to sustain it.

In addition, in that same trial, I expressed on a number of occasions my concerns regarding the way this case had been investigated and was conducted especially vis-a-vis the handling of Mr. Bistrong.  I even had an occasion, sadly, to chastise the government in a situation where the government’s handling of the discovery process constituted sharp practices that have no place in a federal courtroom.”

Attorney General Barr continued:

“The essence of the rule of law is that whatever rule you apply in one case must be the same rule you would apply to similar cases.  Treating each person equally before the law includes how the Department enforces the law.

We should not prosecute someone for wire fraud in Manhattan using a legal theory we would not equally pursue in Madison or in Montgomery, or allow prosecutors in one division to bring charges using a theory that a group of prosecutors in the division down the hall would not deploy against someone who engaged in indistinguishable conduct.

We must strive for consistency.”

In the minds of some, FCPA enforcement is defined by inconsistency. In the FCPA’s modern era, certain companies that sell certain products to certain customers (i.e. important U.S. defense contractors) seem immune from FCPA scrutiny. (See here for instance).

Barr continued:

“We want our prosecutors to be aggressive and tenacious in their pursuit of justice, but we also want to ensure that justice is ultimately administered dispassionately.

We are all human.  Like any person, a prosecutor can become overly invested in a particular goal.  Prosecutors who devote months or years of their lives to investigating a particular target may become deeply invested in their case and assured of the rightness of their cause.

When a prosecution becomes “your prosecution”—particularly if the investigation is highly public, or has been acrimonious, or if you are confident early on that the target committed serious crimes—there is always a temptation to will a prosecution into existence even when the facts, the law, or the fair-handed administration of justice do not support bringing charges.

[…]

Even the most well-meaning people can do great damage if they lose perspective.  The road to hell is paved with good intentions, as they say.

That is yet another reason that having layers of supervision is so important.  Individual prosecutors can sometimes become headhunters, consumed with taking down their target.”

Here it is interesting to note that when a FCPA prosecutor leaves the DOJ/SEC for private practice (as frequently happens) the metric by which they seem to judge themselves is how many enforcement actions they brought and how much settlement money they collected. (See here).

Barr continued:

“In exercising our prosecutorial discretion, one area in which I think the Department of Justice has some work to do is recalibrating how we interpret criminal statutes.

In recent years, the Justice Department has sometimes acted more like a trade association for federal prosecutors than the administrator of a fair system of justice based on clear and sensible legal rules.  In case after case, we have advanced and defended hyper-aggressive extensions of the criminal law.  This is wrong and we must stop doing it.

The rule of law requires that the law be clear, that it be communicated to the public, and that we respect its limits.  We are the Department of Justice, not the Department of Prosecution.

We should want a fair system with clear rules that the people can understand.  It does not serve the ends of justice to advocate for fuzzy and manipulable criminal prohibitions that maximize our options as prosecutors.  Preventing that sort of pro-prosecutor uncertainty is what the ancient rule of lenity is all about.  That rule should likewise inform how we at the Justice Department think about the criminal law.

Advocating for clear and defined prohibitions will sometimes mean we cannot bring charges against someone whom we believe engaged in questionable conduct.  But that is what it means to have a government of laws and not of men.  We cannot let our desire to prosecute “bad” people turn us into the functional equivalent of the mad Emperor Caligula, who inscribed criminal laws in tiny script atop a tall pillar where nobody could see them.

To be clear, what I am describing is not the Al Capone situation — where you have someone who committed countless crimes and you decide to prosecute him for only the clearest violation that carries a sufficient penalty.  I am talking about taking vague statutory language and then applying it to a criminal target in a novel way that is, at a minimum, hardly the clear consequence of the statutory text.

This is inherently unfair because criminal prosecutions are backward-looking.  We charge people with crimes based on past conduct.  If it was unknown or even unclear that the conduct was illegal when the person engaged in it, that raises real questions about whether it is fair to prosecute the person criminally for it.”

Because of how the DOJ has generally chosen to enforce the FCPA (i.e. through resolution vehicles that generally bypass meaningful judicial scrutiny) many of the DOJ’s aggressive legal theories have not been tested in courts. Yet when they have been (all in individual enforcement actions), a common thread is judges often finding relevant portions of the FCPA vague and ambiguous. (See here).

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