“Shifting Gears On Bribes Abroad”
The year was 1981, the FCPA was a mere infant, and the beginnings of a vibrant FCPA reform debate were taking hold as to the new law. Bill Brock was the U.S. Special Trade Representative and he took to the pages of the New York Times with the following Op-Ed published on August 16, 1981.
Before turning to Brock’s piece, a bit of historical context.
The FCPA was passed in 1977. As noted in this prior post (which highlights historical articles in Time Magazine) almost as soon as the FCPA was passed, concerns were raised that the law was imprecise and ambiguous and thus harmful to U.S. business. There was much activity on this issue in the early 1980′s. Among other things: (i) the Carter administration (Carter signed the FCPA into law in December 1977) sent a hefty 250-page report to Congress on the various ways the U.S. discourages exporters – one example – “the provisions of the 1977 Foreign Corrupt Practices Act, which have never been clearly spelled out by the Justice Department.” (ii) the GAO released a report in 1981 (see here for a prior post) detailing how the FCPA “is riddled with complicating ambiguities and shortcomings” including the key “foreign official” element; and (iii) the Reagan administration recommended decriminalization of bribery.
The FCPA reform debate on the 1980’s was met with many of the same anti-reform rhetoric heard in the past year. See this prior post for a sampling of statements from that era.
As to the SEC issue Brock raised in his article, it is sort of ironic to note (in this era when the SEC has a specific FCPA Unit) that the SEC initially wanted no part in enforcing the FCPA’s anti-bribery provisions. Despite being a reluctant actor, the SEC’s role in helping uncover the foreign corporate payments problem and the expertise it gained in doing so was highly valued by congressional leaders, particularly Senator Proxmire who stated that the SEC was “the only agency in the Government that hasn’t gone to sleep on this issue, and [that it did] a good job under the circumstances.” That the SEC was also an independent agency, unlike the DOJ, was also highly valued by Senator Proxmire as indicated by the following statement Senator Proxmire made during a hearing. “If we learned anything in the Watergate affair, we learned that the Department of Justice is not a department we can always rely on, especially when you have top influential corporate officials that are involved. They have a good record in some areas. They prosecute the hoodlums. They haven’t got such a good record on white-collar crime.” The following statement by Senator Proxmire to SEC Chairman Hills during a hearing best captures the SEC’s reluctant role in the foreign payments problem. “[The SEC was] responsible for about the only action we have taken with respect to foreign bribery and your agreements, your work, with various corporations to persuade them to cleanse their operation have been a fine example of how an agency can work to get this job done even without legislation. Because of that, you see, we would like to have you involved at least on the investigative disclosure basis. And perhaps we can work something out that would protect you from not pushing you into something you think you wouldn’t want to do.” Thus, the dual jurisdiction of the SEC and DOJ on FCPA matters is mostly a historical accident and one of the reform issues in the 1980’s was to strip the SEC of its FCPA anti-bribery enforcement powers, something the SEC itself did not object to.
Back to Brock’s Op-Ed piece which is set forth in full below.
Shifting Gears on Bribes Abroad – Bill Brock – New York Times (Aug. 16, 1981)
“Just because the Foreign Corrupt Practices Act spotlights a sensitive subject – corporate bribery abroad – some people turn a blind eye to its shortcomings rather than risk being accused of being soft on bribery.
That is too easy a way out. Retreating from controversy will not cure the law’s deficiencies. Congress is addressing a complex, tough issue in a reasoned manner and deserves our attention and admiration.
As the Senate moves toward final consideration of changes in the act, this is a good time to discuss the modifications, which have been proposed in a legitimate effort to clarify the act’s ambiguous language.
Here are several common misunderstandings and questions about the changes and some straight answers:
1. In modifying the act, Congress condones corporate bribery of foreign officials.
Wrong. Any corporation found guilty of ‘paying, giving, offering or promising anything of value to a foreign official for the purpose of obtaining business,’ under the revised act, would be subject to a million-dollar fine. Individuals would face a $10,000 fine or five years in jail or both.
2. American businesses are crying wolf. The act has not discouraged exports. In fact, American international trade has increased since its enactment.
Not exactly. True, our trade has increased since 1977. But much of that increase disappears when adjusted for inflation. No one contends that the act is solely responsible for the last five consecutive years of trade deficits totaling $100 billion. However, a General Accounting Office study, the President’s Export Council and extensive testimony by businesses have cited the act as a significant export deterrent because of its vague and unpredictable application.
3. Without the act’s provisions requiring businesses to establish new accounting systems, bribery of foreign officials will go undetected because the Government will not have a ‘paper trail’ to monitor.
False. There are two misconceptions in this statement. First, under this law the Government can not ‘monitor the paper trail’ to track down bribers. Instead, the act sets accounting and recordkeeping standards that all companies – whether or not they conduct international business – must follow. Second, the proposed changes would make a felony of falsifying books and records for the purpose of concealing illegal payments to foreign officials. It makes more sense to penalize the few who falsify their books to conceal a bribe than to impose a broad and expensive standard of recordkeeping on every publicly owned corporation.
4. If questionable payments are a way of life with some of our trading partners, what is so bad about conforming to accepted business practices in other countries so long as we do not do it at home?
Plenty. Bribes are morally, ethically and economically wrong. They create national security problems, distort normal market forces and, by corrupting officials, jeopardize the political stability of friendly nations. They suffer, and the United States suffers from that ‘way of life.’
5. Transferring jurisdiction over the act from the Securities and Exchange Commission will insure that bribery of foreign officials will go undiscovered. After all, the S.E.C. was solely responsible for the disclosure of illegal payments that brought the whole issue to a head in 1975-76.
False. The S.E.C., under its charter, would continue to police the financial disclosures of American concerns and protect the rights of public investors. The proposals seek to differentiate between the duties of different Government agencies. The Justice Department is now responsible for enforcing all criminal penalties but only some civil penalties under the act, leaving the law subject to interpretation by two enforcement authorities. The changes consolidate under the Justice Department the enforcement authority for all domestic and foreign anti-bribery laws.
6. The real way to curb bribery around the world is through international negotiations.
True, but don’t hold your breath. Until now, the United States has had to go it alone. For six years the United Nations Economic and Social Council and the General Assembly have failed to obtain a commitment by other nations to an international agreement outlawing bribery. Still, the Administration’s proposals would require the President to pursue international agreements to prohibit illicit payments to foreign officials. We can strengthen our leadership in attaining international agreements by demonstrating to our trading partners that we have created a stringent yet fair prohibition against bribery without sacrificing exports.
Changing the act is a complex issue, and emotions will run high in the debate. But the mandate of the American people is clear; a law should be understandable, enforceable and reserve sure and certain punishment for the few who violate it. As it is now, the act penalizes the innocent more predictably than the guilty, and along with both, our competitiveness in world trade.”
Amendments To Simplify The FCPA For U.S. Businesses
Foreign Corrupt Practices Act reform may be in sleep mode at the moment, but this has not stopped (nor should it) forward-thinking individuals from contemplating FCPA reform.
Case in point, Stephen Clayton, with today’s guest post. Clayton is currently an attorney in private practice specializing in FCPA services. Previously, he was an in-house counsel, including for Sun Microsystems. At Sun, he responsible for all legal work in East and South Asia, Latin America, Australia/New Zealand and Canada, and then became Senior Director, Anti-Corruption Compliance, responsible for Sun’s global FCPA compliance. Sun was acquired by Oracle in early 2010 at which point Clayton established his private practice. Clayton also teaches an FCPA-related course for Golden Gate University’s School of Accounting.
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Amendments to Simplify the FCPA for US Businesses
Proposals for and against amending the FCPA have been percolating in Congress for the past 2 years. The U.S. Chamber of Commerce took a lead role, advocating that substantial changes are needed to promote international business by U.S. companies. Other groups, including the Open Society Foundations, have opposed any revisions that they say would weaken the FCPA or impede enforcement. The amendments that would provide the most help US business people have not been proposed by any of the parties lobbying Congress.
Bribery is still very common in international business and US companies are harmed by it every day. Congress should consider common sense changes to the 35-year-old FCPA that would make the law less confusing and more in tune with anti-corruption compliance practices in 2012. If changes are to be made to the FCPA, they should enable good companies and ethical business people understand and follow the law. It is easier for business people to comply with a clearly worded, strict law than try to deal with a complicated, confusingly worded law that has to be filtered through layers of lawyers. The proposals by the Chamber and its opponents retained all of the complexity and confusion in the current law, so in the end would not benefit business.
There are six changes would substantially reduce the confusion business people and in house lawyers have about the FCPA and thereby enable them to do international business with a clear understanding of their legal risks and implement effective compliance programs.
1. Eliminate the Exception for Facilitating Payments.
This exception creates the illusion that minor bribery of employees of foreign governments can be “legal.” Å corporate policy allowing employees to pay any bribes is morally indefensible. Even if corporate management believes small bribes are a necessary practice, it is extremely difficult to determine which bribes Congress considers “legal.” The facilitating payments exception is offensive to normal US ethical standards for corporate governance. The majority of companies that examine facilitating payments prohibit their employee and agents from paying them. Congress should eliminate the exception.
2. Eliminate the affirmative defense for bribes that are “lawful under the written law or regulation of the country.”
Countries do not have written laws that permit conduct that is illegal under the FCPA. But business people and non-specialist lawyers see this language in the statute and think it must have some meaning. Here again they are forced to guess which types of bribes Congress considers to be “legal.” What difference does it make to good corporate governance if a country rigs its laws to allow bribery of members of its royal family or specific government employees? It is still bribery and clean, ethical US companies would lose business to the bribe payers. This affirmative defense is essentially meaningless and confusing and there is no reason for it to remain in the law.
3. Add provisions to the FCPA making commercial (private) corruption a federal crime.
The most glaring flaw of the FCPA is that it makes it a crime to bribe only certain people, i.e. “foreign officials” including employees of “instrumentalities” of foreign governments. By making that distinction, Congress created the impression that US companies can legally pay bribes to all other people. The FCPA as it is now written causes companies and their lawyers to spend an extraordinary amount of time trying to determine if corrupt payments made on their behalf are legal or illegal. This is the most confusing aspect of the FCPA and puts company management in an ethical conundrum. Amending the FCPA to criminalize all bribery of anyone in international business will end the confusion. In international business in the 21st century, it should not matter if the recipient of a bribe is a government official or works for an instrumentality of a government or is an employee or officer of a commercial company.
4. Add a U.K. style strict liability crime of failure to prevent bribery to the FCPA and a corresponding affirmative defense for proving an adequate compliance program.
The U.K. Bribery Act of July 2011 contains a new crime that does not exist in the FCPA: Failure by a Business Organization to Prevent Bribery. It’s a strict liability crime – if bribery of anyone occurred in a company’s business, the company has violated this law. To balance strict liability, the UKBA includes an affirmative defense. If the company whose employees paid bribes can prove it had in place adequate processes to prevent bribery before the bribery occurred, it may avoid liability for this specific crime.
Congress should consider amending the FCPA to incorporate this U.K. legal innovation that makes it easy for company management to understand that all bribery by employees and agents is a crime.
5. Amend the FCPA to clarify that a parent company is responsible for the violations of its subsidiaries.
Executives of US companies create, manage and are responsible for their company’s foreign subsidiaries. US management hires the subsidiary’s managers and gives them their instructions and goals. Subsidiaries exist to generate profits and provide business advantages to the parent company. U.S. law should be unambiguous on the point that subsidiaries and their employees cannot be a convenient and easily manipulated shield from criminal liability for bribery.
Limiting a company’s liability for the FCPA violations of its subsidiaries adds to the list of gray areas that perpetuate the argument that Congress intended that only certain types bribes of certain people are illegal. Congress can remove uncertainty by amending the FCPA so it is impossible to doubt that a parent company is always responsible for the bribery, corruption and false records of any of its subsidiaries. This is the kind of clear legal guidance US companies need.
6. Widen the scope of the FCPA’s “reasonable and bona fide expenditures” affirmative defense.
Companies should be able to engage normal sales and marketing operations and be confident this will not violate the law. Congress needs to promote legitimate, properly documented business practices. The current affirmative defense is poorly worded and unnecessarily restrictive. It limits bona fide business expenditures to those “directly related to the promotion, demonstration or explanation of products or services; or the execution or performance of a contract…” That limitation is not necessary and is confusing to business people.
Conclusion:
These six amendments would make it easier for corporate management and in house lawyers to understand what is prohibited by the FCPA and significantly improve their ability to develop reasonable compliance programs. Many major companies already have policies that prohibit facilitation payments, make commercial (private) bribery by their employees and agents a terminable offense and apply their FCPA compliance program to all their subsidiaries. Congress should follow this leadership by business and bring the FCPA into the 21st century. Congress should not enact a slate of amendments that only serve to perpetuate the most obvious flaw in the FCPA – that it prohibits only certain (poorly defined) bribery of certain (poorly defined) people and therefore permits all other bribery. Amendments that merely play with the definitions of who can be bribed in what manner will not help US companies. All bribery in international business harms US companies and must be clearly illegal.
Assistant Attorney General Breuer’s Unconvincing Defense Of DPAs / NPAs
Last week in this speech before the New York City Bar Association, Assistant Attorney General Lanny Breuer defended the DOJ’s frequent use of NPAs and DPAs. See here for video of the speech.
This post first contains excerpts of Breuer’s speech and then comments on it and the issues raised.
Breuer began his speech as follows. “Over the past three-and-a-half years, the Department of Justice has entered into dozens of DPAs, and non-prosecution agreements, or NPAs. I’ve heard people criticize them and I’ve heard people praise them. What I’m here to tell you, is that, along with the other tools we have, DPAs have had a truly transformative effect on particular companies and, more generally, on corporate culture across the globe. Though the U.S. Supreme Court blessed the concept of corporate criminal liability over 100 years ago – in New York Central Railroad Company v. United States – until roughly 20 years ago, we had only the blunt instrument of criminal indictment with which to attack corporate crime. Prosecutors faced a stark choice when they encountered a corporation that had engaged in misconduct – either indict, or walk away. In the 1990s, however, the government began doing something new: agreeing to defer prosecution against the corporation in exchange for an admission of wrongdoing, cooperation with the government’s investigation, including against individual employees, payment of monetary penalties, and concrete steps to improve the company’s behavior. And, over the last decade, DPAs have become a mainstay of white collar criminal law enforcement. The result has been, unequivocally, far greater accountability for corporate wrongdoing – and a sea change in corporate compliance efforts. Companies now know that avoiding the disaster scenario of an indictment does not mean an escape from accountability. They know that they will be answerable even for conduct that in years past would have resulted in a declination. Companies also realize that if they want to avoid pleading guilty, or to convince us to forego bringing a case altogether, they must prove to us that they are serious about compliance. Our prosecutors are sophisticated. They know the difference between a real compliance program and a make-believe one. They know the difference between actual cooperation with a government investigation and make-believe cooperation. And they know the difference between a rogue employee and a rotten corporation.”
Breuer further stated as follows. “One of the reasons why deferred prosecution agreements are such a powerful tool is that, in many ways, a DPA has the same punitive, deterrent, and rehabilitative effect as a guilty plea: when a company enters into a DPA with the government, or an NPA for that matter, it almost always must acknowledge wrongdoing, agree to cooperate with the government’s investigation, pay a fine, agree to improve its compliance program, and agree to face prosecution if it fails to satisfy the terms of the agreement. All of these components of DPAs are critical for accountability. Perhaps most important, whether or not a corporation pleads guilty … or enters into a DPA with the government, the company must virtually always publicly acknowledge its wrongdoing. And it must do so in detail. This often has significant consequences for the corporation, and it prevents companies from explaining away their resolutions by continuing to deny that they did anything wrong.”
Breuer concluded as follows.
“To be clear, the decision of whether to indict a corporation, defer prosecution, or decline altogether is not one that I, or anyone in the Criminal Division, take lightly. We are frequently on the receiving end of presentations from defense counsel, CEOs, and economists who argue that the collateral consequences of an indictment would be devastating for their client. In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects. Sometimes – though, let me stress, not always – these presentations are compelling. In reaching every charging decision, we must take into account the effect of an indictment on innocent employees and shareholders, just as we must take into account the nature of the crimes committed and the pervasiveness of the misconduct. I personally feel that it’s my duty to consider whether individual employees with no responsibility for, or knowledge of, misconduct committed by others in the same company are going to lose their livelihood if we indict the corporation. In large multi-national companies, the jobs of tens of thousands of employees can be at stake. And, in some cases, the health of an industry or the markets are a real factor. Those are the kinds of considerations in white collar crime cases that literally keep me up at night, and which must play a role in responsible enforcement.”
“When the only tool we had to use in cases of corporate misconduct was a criminal indictment, prosecutors sometimes had to use a sledgehammer to crack a nut. More often, they just walked away. In the world we live in now, though, prosecutors have much greater ability to hold companies accountable for misconduct than we used to – and the result has been a transformation in the culture of corporate compliance. In appropriate circumstances, large corporations, such as Siemens AG, must plead guilty for their crimes. In other cases, because the company has gone to extraordinary lengths to turn itself around, for example, or provided the government with extensive cooperation, a deferred prosecution agreement or non-prosecution agreement may be the best resolution. No matter what, individual executives and employees must answer for their conduct. And, perhaps most important of all, companies know that they are now much more likely to face punishment than they were when our choice was limited to indicting or walking away. Overall, this state of affairs is better for companies, better for the government, and better for the American people.”
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Let’s probe the two reasons why the “old” system, in which the DOJ either brought criminal charges or didn’t, seems to trouble Breuer.
First, he stated as follows. “Prosecutors faced a stark choice when they encountered a corporation that had engaged in misconduct – either indict, or walk away.” There is absolutely, positively nothing wrong with this choice. Bringing criminal charges against person (natural or legal) should not be easy. It should be difficult. Our founding fathers recognized this as a necessary bulwark against an all powerful government. There is no legal or policy reason warranting a change from such a fundamental and long-lasting principle.
Second, Breuer, without specifically mentioning the prosecution, carries forward the Arthur Anderson effect that has guided DOJ policy for over a decade ((i.e. the notion that indicting a company will result in a corporate death sentence). Breuer stated as follows. “I personally feel that it’s my duty to consider whether individual employees with no responsibility for, or knowledge of, misconduct committed by others in the same company are going to lose their livelihood if we indict the corporation. In large multi-national companies, the jobs of tens of thousands of employees can be at stake.” However, as highlighted in this recent guest post, Gabriel Markoff recently debunked the Arthur Anderson effect as factually false.
Breuer is clearly troubled, with good reason, by traditional notions of corporate criminal liability. However, rather than seek substantive solutions to this issue, either on a statute by statute basis (such as a compliance defense to the FCPA – see here for “Revisiting a Foreign Corrupt Practices Act Compliance Defense”) or more comprehensively, Breuer instead defends an alternate reality that is equally problematic.
Use of NPAs and DPAs to resolve alleged corporate criminal liability presents two distinct, yet equally problematic public policy issues.
The first is that such vehicles, because they do not result in any actual charges filed against a company, and thus do not require the company to plead to any charges, allow egregious instances of corporate conduct to be resolved too lightly without adequate sanctions and without achieving maximum deterrence. On this issue, Breuer states in his speech that “when a company enters into a DPA with the government, or an NPA for that matter, it almost always must acknowledge wrongdoing.” This is a false statement. While the standard NPA and DPA templates do contain a section concerning acceptance of responsibility, the acceptance is as to conduct and alleged facts, not actual legal charges.
The second is that such vehicles, because of the “carrots” and “sticks’ relevant to resolving a DOJ enforcement action (for more on this issue, see “The Facade of FCPA Enforcement – here), often nudge companies to agree to these vehicles for reasons of risk-aversion and efficiency and not necessarily because the conduct at issue actually violates the law. Breuer essentially admitted as such in his speech when he stated as follows. “[Companies] know that they will be answerable even for conduct that in years past would have resulted in a declination.”
Thus, use of NPAs or DPAs allow “under-prosecution” of egregious instance of corporate conduct while at the same time facilitate the “over-prosecution” of business conduct.
The alternate reality that Breuer defends is defined by the absence or practical absence of judicial scrutiny of many DOJ enforcement theories. Thus, by supporting use of DPAs and NPAs, Breuer is advocating an enforcement climate that insulates DOJ’s enforcement theories from judicial scrutiny in all but the rarest of circumstances. It is not hard to see why the DOJ favors such a system. Such a system makes its job easier and places the DOJ in the role of prosecutor, judge and jury all at the same time. Former Attorney General Alberto Gonzales rightly observed as follows. “In an ironic twist, the more that American companies elect to settle [through DPAs and NPAs] and not force the DOJ to defend its aggressive interpretation of the [FCPA], the more aggressive DOJ has become in its interpretation of the law and its prosecution decisions.” (See here for the prior post).
In short, Breuer’s defense of DPAs and NPAs was unconvincing. The Assistant Attorney General is clearly troubled by traditional notions of corporate criminal liability. However, rather than seek substantive solutions to this issue, Breuer instead defended an alternate reality that is equally problematic. This alternative reality benefits the DOJ, benefits the private bar, but harms other stakeholders and undermines the rule of the law and justice.
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In his speech, Breuer also supported the premise underlying an FCPA compliance defense when he stated as follows. “Companies also realize that if they want … to convince us to forego bringing a case altogether, they must prove to us that they are serious about compliance.” In my “Revisiting a Foreign Corrupt Practices Act” article (here), I demonstrate that despite the DOJ’s institutional opposition to an FCPA compliance defense, the DOJ already recognizes a de facto FCPA compliance defense albeit in opaque, inconsistent, and unpredictable ways. Breuer’s statement once again demonstrates the truth of this position. However, unpredictable de facto defenses have no place in a justice system based on the rule of law. Thus, an FCPA compliance defense accomplishes, among other things, the policy goal of removing factors the DOJ already considers in assessing corporate criminal liability from the opaque, inconsistent, and unpredictable world of DOJ decision making towards a more transparent, consistent and predictable model.
A Wide-Ranging Interview
The FCPA Report is an online publication that contains articles on a variety of FCPA topics to assist lawyers in relevant practice areas, in-house counsel, and risk and compliance managers stay ahead of the curve. It launched this June and features thematic sourced and researched by primarily lawyers, as well as contributed articles by experts in the field, interviews with leading figures, and reports on important developments. It is available to subscribers and trial subscribers at www.fcpareport.com.
I was pleased to do a telephone interview with the FCPA Report in mid-August. Today’s post sends you to the wide-ranging Q&A previously published, in two parts, in the FCPA Report and linked to here with permission.
Topics covered in the Q&A include the following: statute of limitations, judicial scrutiny, the duration of FCPA scrutiny, voluntary disclosure, Wal-Mart’s FCPA scrutiny, facilitation payments, obtain or retain business, foreign official, corporate fines, victims issues, a private right of action, FCPA Inc. and the revolving door, the three buckets of FCPA financial exposure and Foreign Corrupt Practices Act reform.
Add Alberto Gonzalez To The List Of Former High-Ranking DOJ Officials Who Support An FCPA Compliance Defense
In my article “Revisiting a Foreign Corrupt Practices Act Compliance Defense” (Wisconsin Law Review – here), I highlight that against the backdrop of the DOJ’s current institutional opposition to an FCPA compliance defense, there is growing chorus of former DOJ officials who support a compliance defense. This group includes a former Attorney General (Michael Mukasey), a former Deputy Attorney General (Larry Thompson), a former Chief of the DOJ’s FCPA Unit (Joseph Covington), and former high-profile corporate crime prosecutor (Andrew Weissmann).
Add another former Attorney General to the list.
In a May speech (here) to the Lawyers for Civil Justice, Alberto Gonzalez (Attorney General 2005-2007) stated as follows. “I do not support bribery, but I support reforms to the FCPA that adds a compliance defense and a willfulness requirement for corporate criminal liability.”
On this topic, Gonzalez stated, for instance, as follows.
“I think that companies have an obligation of due diligence and should have in place a strong compliance program – particularly when doing business in countries where corruption is routine and expected. Companies cannot purposefully remain ignorant. The question is how much do they have to do? I think if the company follows the DOJ Principles of Prosecution: 1) makes a voluntary disclosure of wrongdoing, 2) if there was no participation in the illegal conduct by senior management, 3) if there is full cooperation with the government, including providing evidence and information against employees, officers, directors, and agents of the company, 4) if the company implements remedial measures to prevent future violations, including disciplining culpable employees, implementing internal controls, and improving anticorruption training, and 5) if the company has in place a strong compliance program before the alleged behavior happened, then I question the fairness in going after the company for the unknown violations by an agent in a foreign land.” (emphasis added).
In his speech, Gonzales also offered this perspective from his time as Attorney General.
“Because of the increased American business activity overseas, we made a conscious decision during the Bush Administration to allocate more time and resources to FCPA enforcement. And we quickly discovered two important truths. One, the FCPA gives prosecutors tremendous discretion in defining its scope, and, thus, tremendous leverage in charging decisions. Two, corporations do not like to be investigated by the Justice Department or the SEC for violations of the FCPA. It’s bad for business. So, these cases often settled, charges were dropped in exchange for either nonprosecution or deferred prosecution agreements. In an ironic twist, the more that American companies elect to settle and not force the DOJ to defend its aggressive interpretation of the Act, the more aggressive DOJ has become in its interpretation of the law and its prosecution decisions.”
For more on this dynamic, see my 2010 article “The Facade of FCPA Enforcement” (Georgetown Journal of International Law – here).