Thoughts On The “Combating Global Corruption Act Of 2017”
Recently Senator Ben Cardin (D-MD), along with Republican co-sponsors such as Senator David Perdue (R-GA) and Senator Marco (R-FL) and others, introduced a bill titled the “Combating Global Corruption Act of 2017.”
As stated in the preamble, the bill seeks “to identify and combat corruption in countries, to establish a tiered system of countries with respect to levels of corruption by their governments and their efforts to combat such corruption, and to assess United States assistance to designated countries in order to advance anti-corruption efforts in those countries and better serve United States taxpayers.” Corruption is defined as “the exercise of public power for private gain, including by bribery, nepotism, fraud, or embezzlement.”
This post provides a summary of the bill and offers two thoughts regarding the bill relevant to the Foreign Corrupt Practices Act.
A Q&A Regarding The Uncomfortable Truths And Double Standards Of Bribery Enforcement
The below Q&A first appeared in Bloomberg BNA’s White Collar Crime Report on February 5th.
In the Q&A, I respond to questions posed by BNA’s Robert Wilhelm regarding my recent article “The Uncomfortable Truths and Double Standards of Bribery Enforcement.”
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Q: In your opinion, does the U.S. government walk-it-like-it-talks-it in terms of FCPA enforcement?
A: No I don’t and hence the reason I wrote the article.
There are a number of instances in which the U.S. government has been an active participant in bribery, had knowledge of and supported private sector bribery, has selectively enforced bribery laws given the company under scrutiny, and has otherwise used overblown and inconsistent rhetoric when speaking of enforcement of bribery laws. And these instances are just based on information in the public domain.
After reading the article, individuals can decide for themselves whether the U.S. government ‘‘practices what it preaches’’ (as stated by the government) when it comes to enforcement of bribery laws and whether the United States is indeed ‘‘in a unique position to spread the gospel of anticorruption’’ (as also stated by the government).
Q: Are the selfish and political reasons for passage of the FCPA in 1970s any different then how the DOJ enforces the act today?
A: Yes, very much so. The primary policy reason Congress enacted the FCPA were the foreign policy implications of corporate payments to foreign government officials such as the Prime Minister of Japan, the President of Gabon, the President of Honduras, and other traditional government officials.
In the modern era of FCPA enforcement, few enforcement actions involve such ‘‘foreign officials.’’ Rather, the alleged ‘‘foreign officials’’ are employed by alleged state-owned or state-controlled entities. For instance, in 2015 FCPA enforcement actions the alleged foreign officials included employees of a real estate development firm, a sugar factory and a cement company. Moreover, a prominent enforcement theory (used in 17 corporate enforcement actions) is that physicians, lab personnel, and even a mid-wife, employed by various foreign healthcare systems are ‘‘foreign officials’’ and thus occupy a status on par with Presidents and Prime Ministers.
Q: Why isn’t there a ‘‘Giffen’’ defense, considering that the U.S. government knew exactly what he was doing, condoned it, yet then one day (different) charges him?
A: Perhaps one day, the real story about the Giffen enforcement action (an action discussed in the article to highlight several uncomfortable truths about U.S. government bribery enforcement) will be known, but I doubt it. It would appear that when the DOJ charged Giffen in 2004 it was unaware that other components of the government were aware of, and condoned of, his activities. A classic case perhaps of the left hand not knowing what the right hand was doing.
Interestingly, the FCPA does indeed state that ‘‘with respect to matters concerning the national security of the United States, no duty or liability . . . shall be imposed upon any person acting in cooperation with the head of any Federal department or agency responsible for such matters if such act in cooperation with such head of a department or agency was done upon the specific, written directive of the head of such department or agency pursuant to Presidential authority to issue such directives.’’ The FCPA further provides as follows. ‘‘Each head of a Federal department or agency of the United States who issues such a directive pursuant to this paragraph shall maintain a complete file of all such directives and shall, on October 1 of each year, transmit a summary of matters covered by such directives in force at any time during the previous year to the Permanent Select Committee on Intelligence of the House of Representatives and the Select Committee on Intelligence of the Senate.’’
The above provisions, as written would appear to only apply to the FCPA’s books and records and internal controls provisions, and not the anti-bribery provisions, but I believe that this was a drafting error. Regardless, the public surely does not have access to the materials of the Senate Select Committee on Intelligence. Thus, how often a ‘‘Giffen’’-like defense is asserted in practice is largely a black hole.
Q: Does the DOJ use the FCPA as leverage against the large companies to essentially force the company to plead to a lesser charge?
A: Plead? Very few business organizations are required to that as a condition of resolving an FCPA enforcement action. Rather, since 2010 when this ‘‘new era of FCPA enforcement’’ was declared by the DOJ, approximately 85% of corporate FCPA enforcement actions have involved non-prosecution agreements or deferred prosecution agreements.
In the NPA/DPA process, the law and facts largely take a backseat to the leverage the DOJ has against risk averse business organizations. My recent article ‘‘Measuring the Impact of NPAs and DPAs on FCPA Enforcement’’ (49 U.C. Davis Law Review 497), tests a hypothesis and concludes that while NPAs and DPAs have resulted in a higher quantity of FCPA enforcement, they have also resulted in a lower quality of FCPA enforcement. In short, there is an open question whether the conduct at issue in several NPAs or DPAs violated the FCPA as passed by Congress and as interpreted by courts.
As a dean of the FCPA bar has stated: ‘‘One reality is the enforcement agencies’ views on issues and enforcement policies, positions on which they are rarely challenged in court. The other is what knowledgeable counsel believe the government could sustain in court, should their interpretations or positions be challenged. The two may not be the same. The operative rules of the game are the agencies’ views unless a company is prepared to go to court or to mount a serious challenge within the agencies.’’
Indeed, in the FCPA’s history the DOJ is 0-2 when put to its ultimate burden of proof by business organizations and has an overall losing record when put to its ultimate burden of proof by individuals. If more business organizations would put the DOJ to its burden of proof in FCPA enforcement actions, it is likely that the modern era of FCPA enforcement would look much different.
What is occurring in the FCPA space and beyond is troubling when you consider that this country otherwise values the rule of law.
Q: Regarding the latest change in DOJ guidelines in charging corporations and requiring disclosure of employee misconduct, will there be more high-profile targets? Will a CEO of a major firm (a business that does less than $5 million in contracts with the federal government) be charged?
A: I do not believe that the Yates Memo will have any meaningful impact on FCPA enforcement. For instance, the DOJ has been talking for years about the importance of individual FCPA enforcement. Yet approximately 70 percent of corporate FCPA enforcement actions lack any related charges against company employees (for reasons addressed above). Regardless of what impact the Yates Memo may have on FCPA enforcement, it is likely to be short-lived as the current crop of DOJ politicians are likely to leave the DOJ in the next 10-12 months with the change in executive administration.
It is troubling that the DOJ Fraud Section is driven by individual policies. For instance, in the past decade there have been numerous DOJ policy memos guiding corporate enforcement (the Holder Memo, the Thompson Memo, the McNulty Memo, the Filip Memo, and now the Yates Memo).
Q: How many enforcement actions would there be if corporations simply decided to not self-disclose?
A: In the FCPA’s modern era, there tend to be between 10-15 core corporate enforcement actions per year. Approximately 50 percent of those actions originate from corporate voluntary disclosures. Several other corporate enforcement actions—including many of the largest enforcement actions from a settlement amount perspective—originate not in U.S. law enforcement activity, but foreign law enforcement activity.
Another question to ask is how many corporate enforcement actions there would be if NPAs and DPAs did not exist? To a certain extent, the answer can be found in FCPA enforcement statistics from 1977 to 2004 (when the DOJ first brought alternative resolution vehicles to the FCPA context).
FCPA risk clearly needs to be on the radar screen of business organizations competing in the global marketplace. However, and even accounting for the factors highlighted above, there is not very much FCPA enforcement considering that every single U.S. business organization (public or private) is subject to the FCPA, approximately 1,000 foreign companies with shares traded on a U.S. exchange are subject to the FCPA, and to the extent a certain jurisdictional nexus is met all companies in the world can be subject to the FCPA.
Q: Why does the DOJ continue with rhetoric that enforcing the FCPA ensures that roads and schools are built, when in reality, the bribery at issue was not for a contract to build said road or school?
A: Because it makes for good politics and nonprofits, NGOs and others who presumably never read FCPA enforcement actions fall for the rhetoric hook, line and sinker. Not only do few FCPA enforcement actions involve the conduct you identify, but also most companies that resolve FCPA enforcement actions are otherwise viewed as selling the best product for the best price and there is rarely an allegation or suggestion of any kind in the enforcement action that the product at issue was compromised.
This of course is not to condone the alleged underlying conduct, only to demonstrate that the U.S. government’s rhetoric about the nature and purpose of its FCPA enforcement program is often hollow.
Q: If U.S. national security is a reason not to enforce the FCPA, why does the DOJ link enforcement actions to national security concerns?
A: Again, it makes for good politics. When the government tries to link FCPA enforcement to national security it sort of puts the enforcement program in an untouchable category. After all, if the goal of FCPA enforcement is to keep Americans safe, how can anyone ask questions about FCPA enforcement? Well, we should ask questions because upon further examination this justification makes little sense given the allegations in a typical enforcement action including the alleged ‘‘foreign officials.’’ Moreover, as highlighted above, approximately 50 percent of corporate enforcement actions are the result of voluntary disclosures.
Notwithstanding the simplicity and hollowness of the national security link, again many are falling for this DOJ rhetoric hook, line and sinker. Here is a recommendation to those inclined to believe the rhetoric: Read the actual enforcement action, the alleged facts including the alleged ‘‘foreign officials,’’ the origins of the enforcement action, and ask yourself is there any credible link to national security in this enforcement action?
Q: The Double Standard Problem: Why is it bribery if a CEO throws a party for a foreign dignitary to ensure access to that official, but the same activity for a U.S. senator is legal?
A: I guess the short answer is because the DOJ is likely to say it is. But as highlighted in the article, this is the double standard problem. The ‘‘domestic bribery statute’’ (18 U.S.C. 201) was enacted prior to the FCPA, has similar elements, and indeed the FCPA was largely modeled on 18 U.S.C. 201.
However, time and time again we see situations in which business interactions with ‘‘foreign officials’’ seem to be subject to different standards than business interactions with U.S. officials? Similarly, we tend to reflexively label a ‘‘foreign official’’ who receives ‘‘things of value’’ from private business interests as corrupt, yet generally turn a blind eye when it happens here at home.
Ought not there be some consistency between enforcement of the FCPA and the domestic bribery statute? Of course there ought to be, but there sure does not seem to be much consistency.
Q: Is there a solution to the double-standard problem?
A: One can look at this two ways. Is enforcement of the ‘‘domestic bribery statute’’ too lax or is enforcement of the FCPA too aggressive?
When it comes to corporate interaction with U.S. government officials, I think enforcement of 18 USC 201 and related laws are too lax. But here, there are complicating factors because the U.S. Supreme Court has held that money is a form of speech and that ingratiation and access are not corruption.
When it comes to corporate interaction with ‘‘foreign officials,’’ I think enforcement of the FCPA in many cases is too aggressive. Indeed, many FCPA enforcement actions involve an expansive category of ‘‘foreign officials’’ and contain allegations about travel and entertainment, and other nominal things of value such as karaoke bars, flowers, cigarettes, and most recently internships. What is the solution? Here again, we can ask two questions in connection with many FCPA enforcement actions. The first is why did the DOJ/SEC assert an aggressive enforcement theory? The second, recognizing that the action likely originated from a corporate voluntary disclosure, is why did the company with the advice of its FCPA counsel disclose the conduct in the first place? Part of that answer requires one to acknowledge that voluntary disclosures are the fuel that fires the multi-billion dollar industry known as FCPA Inc.
Q: Why isn’t it illegal for the U.S. government to lobby on behalf of American businesses, when the same action by a private actor is an FCPA violation? Isn’t the law supposed to be blind?
A: Of course Lady Justice is blind, but the reality is she often lifts up the blindfold to take a peek. The FCPA community often talks about code words and euphemisms to hide bribery. Well it happens here in the United States as well. When the U.S. government uses taxpayer money to influence foreign governments or foreign officials to advantage U.S. business, the government constructs programs around it and gives it names such as foreign aid or foreign military assistance. But when a private actor uses shareholder money to accomplish the same thing, the government tends to call it bribery.
Bribery ought to be bribery pure and simple, and subtle distinctions should not be drawn based on the source of money or influence. Doing so merely creates a distinction without a difference.
The Use Of Overblown And Inherently Inconsitent Rhetoric In Connection With FCPA Enforcement Continues
This post is not about whether the Foreign Corrupt Practices Act is a fundamentally sound statute. It is, even though the FCPA and FCPA enforcement policies and procedures could be improved.
This post is not about whether FCPA enforcement by the DOJ and SEC – when facts legitimately satisfy FCPA elements – is in the public interest. It is, for a variety of reasons.
Rather this post is about overblown and inherently inconsistent government rhetoric in connection with FCPA enforcement.
As highlighted in this post, there is seemingly little connection between the bulk of FCPA enforcement actions and U.S. national security. Indeed, as further highlighted in this post, U.S. national security is, as a matter of law and seemingly as a matter of practice, a reason not to enforce the FCPA.
Last week, Assistant Attorney General Leslie Caldwell delivered this speech.
The general topic was “about the enforcement of our nation’s federal criminal laws in the 21st Century, and how the Justice Department constantly is adapting its approach to new challenges presented by the global economy and expansion of crime beyond national borders.”
As to the FCPA, Caldwell stated:
“The Foreign Corrupt Practices Act, or FCPA, is a law that prohibits the paying of bribes to foreign government officials to assist in obtaining or retaining business.
You may be asking yourself why the U.S. Justice Department is involved in the fight against corruption abroad. In fact, there are people who claim that taking aim at foreign bribery puts U.S. companies at a competitive disadvantage in countries where bribery is just business as usual.
The threats posed to the United States by international corruption, however, cannot be overlooked. Foremost, corrupt countries are less safe. Corruption thwarts economic development, traps entire populations in poverty, and leaves countries without a credible justice system. Corrupt officials who put their personal enrichment before the benefit of their citizenry create unstable countries. And as we have seen time and again, unstable countries become the breeding grounds and safe havens for terrorist groups and other criminals who threaten the security of the United States.
International corruption also inhibits the ability of American companies to compete overseas on a level playing field. Once bribery and corruption take hold, fair and competitive business practices are eliminated. Nobody but the corrupt official benefits from bribery.
For all of these reasons, fighting foreign corruption is not a service we provide to the global community, but rather a necessary enforcement action to protect our own national security interests and the ability of our U.S. companies to compete on a global scale.
And, it is not just the United States that is recognizing the importance of foreign bribery laws. There is an ever growing chorus of countries voicing support for the fight against this type of corruption. More and more countries are joining international bodies that provide uniform standards for the criminalization of bribery of foreign public officials in international business transactions. This type of collaboration is critical if we are going to have a meaningful impact on international corruption.”
The notion that FCPA enforcement is “necessary” to “protect our own national security” causes me to once again ask the question: do high-ranking DOJ officials actually read the allegations in most FCPA enforcement actions? (See here for the prior post).
Recent DOJ FCPA enforcement actions have included the following.
- Against HP related entities concerning conduct that occurred 7-14 years in which alleged improper payments were made in selling telecommunications, computer equipment, and other technology products in Russia, Poland and Mexico.
- Against an Alcoa entity concerning conduct that occurred 15-20 years in which alleged improper payments were made in connection with an aluminium smelter project in Bahrain.
- Against ADM concerning alleged improper payments made in Ukraine in connection with value added tax (VAT) refunds, notwithstanding the fact that the company was legitimately owed the VAT refunds.
Moreover, in the past several years approximately 15 corporate FCPA enforcement actions have concerned business relationships with foreign physicians, lab personnel and yes even a mid-wife.
Moreover, during this new era of enforcement, a substantial percentage of FCPA enforcement actions concern alleged conduct in connection with obtaining foreign licenses, permits, certifications and the like.
Moreover, most of the large FCPA enforcement actions in the past several years have concerned alleged improper relationships between foreign companies and foreign officials in which the alleged conduct seemingly has little actual connection to the U.S.
Moreover, many FCPA enforcement actions have involved, to name just a few, allegations about a bottle of wine (see here), a Cartier watch (see here), a camera (see here), kitchen appliances and business suits (see here), television sets, laptops and appliances (see here), and tea sets and office furniture (see here).
I invite anyone to submit a guest post articulating a credible and direct link between the above enforcement activity and U.S. national security.
The implicit suggestion of course from Caldwell’s speech is that if one is critical of certain FCPA enforcement efforts, one is somehow against U.S. national security.
I reject that.
Indeed, U.S. national security is, as a matter of law and seemingly as a matter of practice, a reason not to enforce the FCPA.
The FCPA itself states:
“(3)(A) With respect to matters concerning the national security of the United States, no duty or liability under [the FCPA] shall be imposed upon any person acting in cooperation with the head of any Federal department or agency responsible for such matters if such act in cooperation with such head of a department or agency was done upon the specific, written directive of the head of such department or agency pursuant to Presidential authority to issue such directives. Each directive issued under this paragraph shall set forth the specific facts and circumstances with respect to which the provisions of this paragraph are to be invoked. Each such directive shall, unless renewed in writing, expire one year after the date of issuance.
(B) Each head of a Federal department or agency of the United States who issues such a directive pursuant to this paragraph shall maintain a complete file of all such directives and shall, on October 1 of each year, transmit a summary of matters covered by such directives in force at any time during the previous year to the Permanent Select Committee on Intelligence of the House of Representatives and the Select Committee on Intelligence of the Senate.”
That the above provision specifically invoke the FCPA’s books and records and internal controls provisions, but not the FCPA’s anti-bribery provisions, would seem to be a scrivener’s error.
Moreover, U.S. national security also seems to be a reason not to enforce the FCPA as a matter of practice.
Consider the BAE enforcement action. Despite the DOJ alleging conduct that clearly implicated the FCPA’s anti-bribery provisions, BAE (a large U.S. defense contractor) was not charged with violating the FCPA. (To learn more about the BAE enforcement action, see “The Facade of FCPA Enforcement” pgs. 993-996).
Consider also the mysterious conclusion to the James Giffen enforcement action. In 2003, James Giffen was criminally charged with “making more than $78 million in unlawful payments to two senior officials of the Republic of Kazakhstan in connection with six separate oil transactions, in which the American oil companies Mobil Oil, Amoco, Texaco and Phillips Petroleum acquired valuable oil and gas rights in Kazakhstan.” However, Giffen’s defense was that his actions were made with the knowledge and support of the CIA, the National Security Council, the Department of State and the White House. The DOJ did not dispute that Giffen had frequent contacts with senior U.S. intelligence officials or that he used his ties within the Kazakh government to assist the United States. With the court’s approval, Giffen sought discovery from the government to support his public authority defense and much of the delay in the case was due to the government’s resistance to such discovery and who was entitled to see such discovery. In 2010, the enforcement action took a sudden and mysterious turn when Giffen agreed to plead guilty to a one-paragraph superseding indictment charging a misdemeanor tax violation. The enforcement action ended with the presiding judge imposing no jail time on Giffen and stating that he was a Cold War hero and that the enforcement action should have never been brought in the first place. Giffen presumably prevailed over the DOJ not because of the facts or the law, but because he possessed significant leverage over the government in that he asserted his actions were taken with the knowledge and support of the highest levels of our government.
Consider also the fact that there has been no FCPA enforcement actions concerning contracts at the Manas airbase in Kyrgyzstan (which the U.S. used to route personnel and equipment headed for Afghanistan). (To learn about the Manas contracts see here for a U.S. House hearing devoted to the subject and here, here and here for additional information).
In short, the DOJ’s recent “national security” rhetoric concerning FCPA enforcement was overblown and inherently inconsistent.
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Ms. Caldwell of course did not invent overblown or inherently inconsistent rhetoric to describe FCPA enforcement. Rather such rhetoric is a carry-over from former DOJ officials. To learn more, read this article.
We Really Ought To Pause And Reflect
As noted in this prior post, in October 2010 Judge Jackson Kiser (W.D. Va.) sentenced Bobby Elkin Jr. Elkin (the former Country Manager for tobacco company Dimon International Kyrgyzstan) pleaded guilty to a one count criminal information charging conspiracy to violate the FCPA. (See here for the prior post). Like many federal court judges before him and after him, Judge Kiser did not see the FCPA conduct at issue in the black and white terms the DOJ often portrays, but rather saw shades of gray. In rejecting the DOJ’s requested 38 month sentence, Kiser sentenced Elkin to probation. According to media reports, Judge Kiser stated that the CIA routinely bribes Afghan warlords, but the CIA’s conduct is not illegal and that this “sort of goes to the morality of the situation.”
Yes it does and it took this recent New York Times story “With Bags of Cash, CIA Seeks Influence in Afghanistan” to put our stark double standards in the headlines once again. (See this tag for numerous double standard posts). The NY article states, in pertinent part, as follows.
“For more than a decade, wads of American dollars packed into suitcases, backpacks and, on occasion, plastic shopping bags have been dropped off every month or so at the offices of Afghanistan’s president — courtesy of the Central Intelligence Agency. All told, tens of millions of dollars have flowed from the C.I.A. to the office of President Hamid Karzai, according to current and former advisers to the Afghan leader. […] The C.I.A., which declined to comment for this article, has long been known to support some relatives and close aides of Mr. Karzai. But the new accounts of off-the-books cash delivered directly to his office show payments on a vaster scale, and with a far greater impact on everyday governing. […] The cash does not appear to be subject to the oversight and restrictions placed on official American aid to the country or even the C.I.A.’s formal assistance programs, like financing Afghan intelligence agencies. […]”
For additional coverage, see videos here and here from NBC and CNN.
As noted in my recent article, in this new era of FCPA enforcement those subject to the FCPA have been frequently reminded that ‘‘we in the United States are in a unique position to spread the gospel of anti-corruption, because there is no country that enforces its anti-bribery laws more vigorously than we do.’’ We have been told that “robust FCPA enforcement has become part of the fabric of the Justice Department” and that its “global anti-corruption mission has seeped into the Criminal Division.” We have been told by the DOJ that FCPA enforcement is “our way of ensuring not only that the Justice Department is on the right side of history, but also that it has a hand in advancing that history.”
The conduct at issue in the NY Times article of course goes above the DOJ, but what to think of our “unique position to spread the gospel of anti-corruption” after the NY Times article?
Is the U.S. truly on the “right side of history”?
During this era of FCPA enforcement, enforcement actions frequently include allegations of corporate payments to “foreign officials” for such items as wine, watches, cameras, kitchen appliances, business suits, television sets, laptops, tea sets and office furniture. Last week’s Ralph Lauren enforcement action (here) included allegations related to perfume, dresses and handbags.
This conduct pales in relation to the conduct described in the NY Times article and is made even more egregious given that FCPA enforcement actions invariably involve use of private shareholder/owner funds, whereas the campaign of bribery in Afghan is using public funds.
One of the best statements found in the FCPA’s extensive legislative history (see here for my article “The Story of the Foreign Corrupt Practices Act”) was from Theodore Sorensen. Sorensen’s career included several notable accomplishments and, as President Kennedy’s speechwriter, he had a way with words.
As to the basic issue of defining bribery, Sorensen observed as follows: [T]here will be countless situations in which a fair-minded investigator or judge will be hard-put to determine whether a particular payment or practice is a legitimate and permissible business activity or a means of improper influence. […] Reasonable men and even angels will differ on the answers to these and similar questions. At the very least such distinctions should make us less sweeping in our judgments and less confident of our solutions.”
Sorensen’s insight was spot-on when made approximately 35 years ago and still holds true today.
The recent NY Times article concerning government sanctioned bribery using public funds really ought to cause us to pause and reflect on much in the bribery and corruption space.
Richard Shine’s 1982 Lecture – “Enforcement Of The FCPA By The Department Of Justice”
Before Charles Duross, Mark Mendelsohn and others headed the DOJ’s FCPA unit, there was Richard Shine. The year was 1982 and Shine was Chief, Multinational Fraud Branch, Criminal Division, U.S. Department of Justice (the name given to the DOJ’s then de facto FCPA Unit). Shine gave a lecture titled “Enforcement of the FCPA by the Department of Justice” at Syracuse University that was published by the Syracuse Journal of International Law & Commerce – see 9 Syr. J. Int’l L. & Com. 283 (1982).
Three things stand out from Shine’s lecture.
First, the lecture is populated with references to the FCPA’s legislative history. On one level, this is not surprising given that in 1982 the DOJ was likely still finding its way as to the FCPA and its enforcement and it is logical that the legislative history which evidences Congressional intent would be a guide.
Yet the passage of time should make the FCPA’s legislative history and the Congressional intent it represents no less relevant today.
Second, under the heading “Enforcement Policies of the Justice Department,” Shine’s lecture evidences DOJ’s recognition and understanding of the primary foreign policy motivation Congress had in enacting the FCPA and how FCPA inquiries focused on the conduct of foreign governments and thus presented national security issues. Shine stated as follows. “Because of the obvious sensitivity both from a national security point of view and a foreign policy point of view, the Department has administered the enforcement of this statute quite differently than the enforcement of most of the provisions of Title 18 of the United States Code. Administration of the enforcement effort has been highly centralized. Generally, FCPA cases, by the terms of the United States Attorney’s Manual, are not investigated and prosecuted by the ninety-four United States Attorney’s Offices around the country. They are primarily investigated and prosecuted by the Multinational Fraud Branch in the Criminal Division at the Justice Department. Among other reasons, that is being done to make sure that there is a nationally uniform enforcement policy. Moreover, virtually any step that is taken in the investigative process, even more than in the post-indictment process, has potentially significant foreign policy and national security implications.” In speaking of “Investigative Procedures,” Shine stated as follows. “When an informant or an insider tells us that there is a bribe in process or that a bribe of a foreign government official has already occurred, we do not immediately notify the foreign government. As you can well imagine, if we started to communicate to a foreign government every unsupported and uncorroborated allegation of bribery of its officials, there would be worldwide foreign relations turmoil …”. Only after we have concluded, as a result of our initial investigation, that indeed there is a significant reason to believe a bribe was paid or offered to a foreign government official, do we notify the foreign government.”
With numerous FCPA enforcement actions in this new era based on alleged payments to alleged state-owned or state-controlled enterprises with many attributes of private commercial enterprises and with numerous FCPA enforcement actions also based on foreign licenses, customs, and certification issues, can it truly be said that in this new era most FCPA enforcement actions present “significant foreign policy and national security implications.” If the answer is no, what does it say about these numerous enforcement actions?
Third, Shine discusses the identity of the foreign official allegedly bribed. Shine stated as follows. “In our public pleadings, whether we are bringing an indictment or filing a civil complaint, generally we will not agree to withhold the identity of the foreign country or of the foreign official.”
As highlighted in this recent post concerning the SEC’s response to the Jackson and Ruehlen motion to dismiss, the SEC argues that “the name, title or exact position of the official need not be pleaded or proved” and the DOJ has likewise argued the same in other actions.
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I first learned of Shine’s lecture and published article this past March when Duross participated in “The FCPA at Thirty-Five and Its Impact on Global Business” symposium at The Ohio State University Moritz College of Law (see here for the prior post). Duross referenced the article in stating that the DOJ’s FCPA enforcement practices and policies have been consistent over time and that even though the FCPA is approaching its 35th year, not much has changed in terms of DOJ practices and policies. To be sure, Duross is correct in part. Yet, as the above excerpts from Shine’s 1982 lecture demonstrate, when viewed in the context of the FCPA’s new era, there are some things that have changed.