Ever wonder why the DOJ and SEC released the original FCPA Guidance in 2012?
This post tells the story beginning in 1998.
As part of the FCPA’s 1988 amendments, Congress encouraged the DOJ to issue FCPA Guidance. For instance, a relevant House report stated, ‘‘In order to enhance compliance with the provisions of the FCPA [the FCPA amendment] establishes a procedure for the [DOJ] to issue guidance describing examples of activities that would or would not conform with the [DOJ’s] present enforcement policy regarding FCPA violations.’’ (House Report 100-40, Part 2 (April 6, 1987).
The U.S. Court of Appeals for the Sixth Circuit noted that the 1988 amendments ‘‘clearly evince[d] a preference for compliance in lieu of prosecution.’’(Lamb v. Phillip Morris Inc., 915 F.2d 1024, 1029 (6th Cir. 1990).
However, in spite of Congress’s suggestion, DOJ determined in 1990 that ‘‘no guidelines are necessary.’’ (55 Fed. Reg. 28,694 (July 12, 1990).
In its 2002 Phase 2 report of U.S. enforcement efforts of the OECD Anti-Bribery Convention, the Organisation for Economic Cooperation and Development encouraged the United States to issue FCPA Guidance guidance. In pertinent part, the OECD report stated:
“Despite the abundance of articles and commentaries on [the FCPA], there is only limited amount of authoritative or official guidance available on compliance with the twenty five-year old statute. . . . Much of the authority or guidance regarding the Act comes from speeches from DOJ and SEC officials, DOJ opinions, DOJ and SEC complaints, settlements that have been filed, and informal discussions of issues between companies’ counsel and the DOJ or the SEC. . . . The status of these various sources of information is however not always clear: there could be merit in regrouping and consolidating them in a single guidance document.”
The OECD Phase 2 report concluded on this issue as follows:
“In the view of the lead examiners, the time has come to explore the need for further forms of guidance, mainly to assist new players . . . on the international scene, and to provide a valuable risk management tool to guide companies through some of the pitfalls which might arise in structuring international transactions involving potential exposures.”
Nevertheless, no FCPA Guidance.
In 2010, the OECD – this time in its Phase 3 Report on the United States – stated as follows:
‘‘The evaluators recommend that the United States consider consolidating and summarizing [all relevant sources of FCPA information] to ensure easy accessibility, especially for [companies] which face limited resources.’’
Nevertheless, no FCPA Guidance.
In the aftermath of the Senate’s Nov. 30, 2010 FCPA hearing Senate, Sen. Amy Klobuchar (D-Minn.) asked DOJ, ‘‘Do you believe companies could comply with more certainty with the FCPA if they were provided with more generally applicable guidance from the Department in regards to situations covered by the FCPA that are not clear cut or fall into gray areas?’’
DOJ’s response was that it ‘‘believes it provides clear guidance with respect to FCPA enforcement through a variety of means,’’ and it then listed the same general categories of information the OECD identified in 2002 as being deficient.
In other words, no FCPA Guidance.
Against this backdrop, the DOJ/SEC’s likely motivation in issuing the original FCPA Guidance was to forestall introduction of an actual FCPA reform bill – a focus of the Senate’s November 2010 FCPA hearing and a follow-up hearing in the House in June 2011.
The House hearing evidenced bipartisan support for certain aspects of FCPA reform, and then committee Chair James Sensenbrenner (R-Wis.) stated at the conclusion of the hearing that ‘‘we will be drafting [an FCPA reform] bill.’’
Against this backdrop, in November 2011, then Assistant Attorney General Lanny Breuer announced that in 2012 DOJ intended to issue FCPA guidance.
Those on Capitol Hill who were inclined to introduce an FCPA reform bill said they would await DOJ’s FCPA guidance before introducing such a bill.
Despite the DOJ and SEC both having an FCPA Unit, actual issuance of the FCPA Guidance took over one year and was released soon after the November 2012 presidential election and during a lame duck Congress.
The chronology of events leading to the original 2012 FCPA Guidance may be “neither here nor there” in 2020 as the DOJ/SEC released the Second Edition of the FCPA.
Yet it is an interesting backstory nevertheless.
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