DOJ “Enforcement” Has Become A Joke
Historically, the DOJ had two choices when a business organization was the subject of criminal scrutiny. The two choices — which have served as the foundation of the U.S. criminal justice system for nearly a century when corporate criminal liability was first recognized — was either charge the entity with a legal violation or not charge.
Yet as highlighted in this chronological post ending with DOJ statements last week, in recent years DOJ “enforcement” has become a joke. When reading the below chronology of events, recognize that the vast majority of them occurred long before the Trump administration.
The Difficulty of Reconciling Existing Legal Authority And Even Enforcement Agency Guidance With Certain FCPA Books And Records And Internal Controls Enforcement Actions
This recent FCPA Flash podcast episode focused on the SEC’s “unlawful” enforcement, in certain instances, of the FCPA’s books and records and internal controls provisions.
Off-the-rails SEC FCPA enforcement is a topic frequently discussed on these pages (see here among numerous other posts) and sometimes it is important to take a step back and review actual legal authority, as well as even prior enforcement agency guidance, relevant to the books and records and internal controls provisions.
Upon reviewing the below information, ask yourself whether it is possible to reconcile this legal authority and other sources of information with enforcement theories advanced in certain FCPA enforcement actions.
Friday Roundup
Funny, also funny, corruption in the anti-corruption industry, the head of the DOJ’s FCPA Unit writes, reasons for the general increase in FCPA enforcement, scrutiny alert, asset recovery, and for the reading stack. It’s all here in the Friday roundup.
Funny
This recent FCPA Blog post asked “what’s the most important FCPA case ever” and stated: “The Africa Sting showed how far the feds would go to make a splashy FCPA case. But the final lesson was that using a big sting to concoct a supposed industry-wide conspiracy was a bad idea. The judge didn’t buy it, and neither did a couple of juries.”
Funny that the post doesn’t mention that the the person at the center of this failed, manufactured case was its current Contributing Editor and training partner Richard Bistrong.
Deputy AG Rosenstein Assumes Causation In Calling The FCPA Pilot Program “Successful”
As long as there have been government programs, government officials have been inclined to proclaim the program a success.
For instance, last week in announcing the DOJ’s new “FCPA Corporate Enforcement Policy, Deputy Attorney General Rod Rosenstein stated: “The incentive system set forth in the Department’s FCPA Pilot Program motivates and rewards companies that want to do the right thing and voluntarily disclose misconduct. In the first year of the Pilot Program, the FCPA Unit received 22 voluntary disclosures, compared to 13 during the previous year. In total, during the year and a half that the Pilot Program was in effect, the FCPA Unit received 30 voluntary disclosures, compared to 18 during the previous 18‑month period.”
As highlighted in this post, Rosenstein’s statement assumes causation – in other words that the supposed increase in voluntary disclosures was the result of the April 2016 Pilot Program.
DOJ Announces A “Revised FCPA Corporate Enforcement Policy”
One of the best things ever written about the FCPA was penned nearly 35 years ago by Robert Primoff who stated: “The government has the option of deciding whether or not to prosecute. For practitioners, however, the situation is intolerable. We must be able to advise our clients as to whether their conduct violates the law, not whether this year’s crop of administrators is likely to enforce a particular alleged violation. That would produce, in effect, a government of men and women rather than a government of law.”
Earlier today, the Foreign Corrupt Practices Act space once again witnessed a government of individuals rather than law as the DOJ announced yet another non-binding FCPA enforcement policy document.
Several forthcoming posts will examine in greater detail the “revised FCPA corporate enforcement policy”, but for now set forth below are the relevant portions of Deputy Attorney General Rod Rosenstein’s speech. (See here for the actual new policy in the U.S. Attorneys’ Manual. Note: the new policy is 9-47.120, the other FCPA portions in the USAM have been there for years).