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DOJ’s Centralized FCPA Enforcement Policy

Yesterday’s post highlighted a 1979 speech by the DOJ’s Assistant Attorney General outlining the DOJ’s FCPA  enforcement priorities.  (See here).  In the speech, the Assistant Attorney General talked about DOJ’s centralized FCPA enforcement policy and stated as follows.

“To maintain consistency in enforcement policy and to keep close liaison with the  Department of State, SEC, and foreign law enforcement agencies, we have  concluded that enforcement responsibility under the Act should be substantially centralized. Unlike other law enforcement areas where primary responsibility for  prosecution rests with 94 different U.S. Attorneys around the country, most  prosecutions under the Foreign Corrupt Practices Act for payment activities will  be supervised by the Multinational Fraud Branch in the Criminal Division in Washington.”

The speech also referenced improper payments leading to the downfall of foreign governments and the foreign policy implications of such payments.  Indeed, as told in my article “The Story of the Foreign Corrupt Practices Act,” what primarily motivated Congress to enact the Foreign Corrupt Practices Act was payments to foreign government officials such as the Prime Minister of Japan, the President of Korea, the President of Gabon, and Italian political parties.  Congress really didn’t care (at least enough to legislate) about the many other questionable payments it learned of during its multi-year investigation and deliberation of the foreign corporate payments problem in the mid-1970’s.  We know this because Congress excluded from the original definition of “foreign official” government employees whose duties were ministerial or clerical.

In 1982, Richard Shine (Chief of the DOJ’s Multinational Fraud Branch, the name then given to the DOJ’s FCPA Unit) likewise spoke of the DOJ’s centralized enforcement policy and stated as follows (see here for the prior post).

“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.”

The point is this.

As reflected in the above speeches, there was a time when the DOJ recognized Congressional intent in enacting the FCPA and based on this recognition the DOJ wisely implemented a centralized enforcement policy.

After all, did the country really want an Assistant U.S. Attorney in Seattle, Miami, you name it, bringing an enforcement action concerning payments to foreign government officials that could cause the downfall of a foreign government and raise a host of foreign policy and national security issues?

Centralized FCPA enforcement is still the DOJ’s policy and the U.S. Attorneys Manual states as follows.

“No investigation or prosecution of cases involving alleged violations of the [FCPA] shall be instituted without the express authorization of the Criminal Division.  Any information relating to a possible violation of the FCPA should be brought immediately to the attention of the Fraud Section of the Criminal Division. Even when such information is developed during the course of an apparently unrelated investigation, the Fraud Section should be notified immediately.  […] The investigation and prosecution of particular allegations of violations of the  FCPA will raise complex enforcement problems abroad as well as difficult issues  of jurisdiction and statutory construction. For example, part of the  investigation may involve interviewing witnesses in foreign countries concerning their activities with high-level foreign government officials. In addition, relevant accounts maintained in United States banks and subject to subpoena may be directly or beneficially owned by senior foreign government officials. For  these reasons, the need for centralized supervision of investigations and  prosecutions under the FCPA is compelling.”

According to the DOJ’s website, this Attorneys Manual excerpt is from 2000 and even then the DOJ still recognized that its FCPA enforcement efforts were targeted at high-level government officials and other senior foreign government officials.

Things have obviously changed with the DOJ’s FCPA enforcement program.

Most enforcement actions in this new era involve alleged payments to state-owned or state-controlled enterprises with many attributes of private commercial enterprises, employees of various foreign health care systems such as physicians, or actions based on payments to ministerial or clerical officials concerning mundane foreign licenses, permits or customs issues.

Can it truly be said that these enforcement actions concern payments that could lead to the downfall of foreign governments or payments that have “significant foreign policy and national security implications”?

Tracing the history of the DOJ’s centralized FCPA enforcement policy and its original policy justifications actually speaks volumes to how FCPA enforcement has changed in this new era.

There is another point to be made as well concerning DOJ’s centralized FCPA enforcement policy.

It is a special policy.

As noted in this recent post, before recently leaving the DOJ for FCPA Inc., then DOJ Deputy Chief of Staff for the Criminal Division Daniel Suleiman rightly noted as follows.  “It is Justice Department policy that no FCPA prosecution can be brought without authorization from the Criminal Division, which distinguishes FCPA prosecutions from most other kinds of federal criminal cases.”

Likewise, former DOJ Assistant Chief for FCPA Enforcement Billy Jacobson also rightly observed (see here for the prior post) as follows.

“The FCPA has been recognized and treated as different by the U.S. government since its passage in 1977. […]  [The FCPA] is one of just a few, select statutes to be prosecuted centrally from one DOJ office. The over-whelming majority of federal criminal statutes may be brought by each of the country’s U.S. Attorney’s Offices, but FCPA actions may be brought only by the Fraud Section of the Criminal Division within Main Justice.”

What this special DOJ FCPA policy means is that FCPA enforcement is highly centralized and, from a supervisory and discretionary standpoint, very few individuals control FCPA enforcement.  Because of the DOJ resolution vehicles typically used to resolve FCPA enforcement actions, these few individuals largely “enforce” the FCPA behind closed doors in Washington D.C. often without any meaningful judicial scrutiny and in the general absence of case law of precedent setting the parameters of the FCPA.

The DOJ’s special policy warrants another special policy.

And that is, as I have long suggested, a prohibition on DOJ FCPA enforcement attorneys with supervisory and discretionary authority from providing FCPA defense or compliance services for five years upon leaving government service.

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