[This post has been updated with additional commentary since first published]
This post provides a roundup of commentary (law firm, individuals, and civil society organizations) relating to this week’s FCPA guidance issued by the DOJ and SEC. See here for my previous statement.
As detailed below, the consensus among those who have publicly stated a position on the guidance appears to be that the guidance offers little in terms of actual new substance and that FCPA reform issues remain. It appears that the only contrary publicly stated position is a press release from a variety of civil society organizations.
“For those steeped in anti-corruption counseling, the Guide contains few surprises, but it does helpfully confirm advice that practitioners have given clients across a range of areas, much of which was based primarily on accumulated wisdom and common sense. Because of the dearth of judicial precedent and other definitive guidance relating to the FCPA, we previously have described anti-corruption counseling as more art than science. The Guide has now injected more science into the mix, at least at the margins. In particular, we expect that the Guide will enable a much broader range of compliance professionals to take a more rigorous and uniform approach to straightforward compliance questions that arise most frequently in this area. The thornier compliance questions almost always are highly fact-bound and industry-specific, however, and they defy uniform guidance. The Guide provides little guidance on the tougher compliance calls, and, as a consequence, advising on those will remain less science and more art.”
“The Guide does not contain any significant change to or novel interpretation of DOJ and SEC policy. Instead, it primarily compiles information from previously available materials, such as enforcement actions, cases, statutes, opinion releases and jury instructions. The Guide also comes with the disclaimer that “[i]t is non-binding, informal, and summary in nature,” and “does not in any way limit the enforcement intentions or litigating positions” of the DOJ, SEC or any other U.S. government agency.”
“At bottom, the Guide breaks little new ground. […] As expected, the DOJ and SEC have said nothing that would constrain their ability in the future to pursue cases under even expansive interpretations of the FCPA.”
“The Guide collects and synthesizes the enforcement agencies’ positions on a wide variety of FCPA-related risks and topics, and provides practical tips for companies seeking to design appropriate corporate compliance policies. While the Guide may not provide the direct or specific statutory interpretations that some commentators were hoping for, it remains an essential tool for U.S. businesses, foreign officials, and non-governmental officials who may be impacted by the FCPA.”
Paul Weiss (authored by Mark Mendelsohn, former DOJ FCPA unit chief)
“Although the Guide clearly is a useful tool for both businesses and practitioners, it breaks no new ground and, not surprisingly, tends to avoid bright-line standards. [..] Notably missing is new guidance or significant relief from enforcement in certain circumstances for which some in the business community have advocated, including with respect to companies that have instituted effective anti-corruption compliance programs, self-reported alleged violations of the FCPA, or acquired through merger or acquisition other companies with past FCPA violations.”
“Notably, the Guide does not signal any retreat from the government’s assertive enforcement of the FCPA nor provide any additional defenses. Compliance counsel will likely find the Guide’s hypothetical and real-life examples helpful, although large corporations with extensive FCPA experience may be disappointed that the Guide does not resolve or eliminate the FCPA’s numerous gray areas.”
“Initial commentary on the recently issued [FCPA Guide] is nearly unanimous: it is a useful resource that presents the views of the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) in one place, but it breaks little new ground. [..] DOJ and SEC take care to note that the FCPA Guide does not “create any rights” and readers should also bear in mind that it does not create any law either. In several places, the agencies set forth their interpretations of the law almost as though those interpretations were widely accepted or reflect settled precedent.”
“[The Guide] does not contain ground-breaking legal revelations but does offer helpful information to companies transacting business in foreign countries.”
“Unfortunately the new guidance does not provide the bright line rules for which practitioners and compliance professionals had (perhaps somewhat unrealistically) hoped, given the high stakes, the paucity of judicial interpretation of the FCPA, and the limited judicial oversight of FCPA enforcement actions. Rather, apart from summarizing the law, the scant judicial guidance, and settled enforcement actions, the guide sets forth fairly simple hypotheticals that will more-often-than-not provide meaningful assistance only to smaller companies and those with limited international touch points, as larger companies with well-established and sophisticated compliance programs are routinely faced with more complex scenarios in their day-to-day businesses.”
“Consistent with its stated purpose of providing “helpful information,” and its disclaimer that the Guide “does not constitute rules or regulations,” the Guide provides limited interpretive guidance, beyond that already reflected in existing precedents. The Guide generally does not articulate new policy or more clearly delineate the reach of the FCPA in certain critical areas such as the definition of a foreign official, or the real value of voluntary disclosure. In several areas, such as the discussion of the FCPA’s jurisdictional reach and corporate liability for the acts of subsidiaries and predecessor companies, the Guide restates previously announced government policies that have not yet been litigated.”
“[T]he Guide makes no sharp departures from current practice, but does confirm some previously unwritten enforcement policies and practices and explicitly clarifies the government’s view of provisions that may appear ambiguous to companies new to the statute and counsel who do not regularly practice in the area. Overall, the Guide clarifies the law and how it is applied by the enforcement agencies, expressly confirms pre-existing enforcement practices and policies, and consolidates current agency thinking in a single, comprehensive reference source
“There is little new in the Guide to clarify the circumstances under which the government will charge companies or individuals with FCPA violations. Instead, the Guide reiterates previous government pronouncements that the FCPA should be construed broadly, and cites its own charging decisions as “authority” for what the statute proscribes. Basically, the Guide is a comprehensive compilation of “authority” formerly found only in various Government press releases, settlement agreements and guilty pleas. Thus, the guidance is somewhat of a disappointment for the experienced FCPA practitioner and for companies that already have robust compliance programs.”
“Although the Guide does not change the FCPA enforcement landscape, it does provide important insight into the DOJ and SEC’s interpretation of the specific provisions and their approaches to enforcement. Companies would be well advised to study it closely.”
“While the new Guide does not present any notable changes in policy, it provides a useful and comprehensive overview of FCPA enforcement. The Guide reviews relevant case law, includes instructive hypotheticals and provides some insight into the perspective of the DOJ and SEC attorneys who enforce the law. Not surprisingly, however, the Guide relies extensively on the most progovernment case law and on settled cases where the government’s most aggressive theories have not truly been tested in front of judges and juries.”
“Although many, if not all, of the principles summarized in the Guidance, with the exception of the declination discussion, was publicly available and known to FCPA practitioners, the comprehensive and coherent nature of the Guidance provides a much needed step forward in FCPA enforcement. The SEC and DOJ are speaking with one voice about a unified set of policy goals and enforcement considerations. Although there may be much to disagree about and discuss in terms of how the FCPA should be interpreted, the Guidance does provide a clear starting point for those disagreements and discussions.”
“While the Guide breaks little new ground – indeed, the Guide is largely a compilation of prior positions that the government has articulated in enforcement actions, opinion procedure releases, and speeches – it does contain some useful insights that will be important for companies and their anti-corruption advisors to know.”
“The guidance, is not an FCPA watershed that pronounces revamped enforcement priorities or alters the government’s previously stated positions on some more controversial issues, as some may have hoped. And, to be sure, the Guide is non-binding—a fact highlighted in the Guide’s opening disclaimer. The courts will continue to have the final word on interpreting the Act.”
“Although the Resource Guide will serve as a good reference tool for FCPA practitioners and in-house lawyers, it does not announce new policies or provide guidance that has not been gleaned from existing cases, settlements and opinion letters. […] Of course, the Resource Guide is an expression of the government’s views rather than judicial precedent. Accordingly, while the Resource Guide is helpful in assessing compliance issues and future conduct, as well as in predicting the government’s position in investigations and in court, the views in the Resource Guide — particularly regarding jurisdiction and knowledge — remain subject to challenge in enforcement proceedings.”
“The manual is a guidance document, and not more. […] The manual “is non-binding, informal, and summary in nature,” “does not constitute rules or regulations,” and does not “limit the enforcement intentions or litigation positions” of the government. The manual does not articulate any new or different interpretations of the FCPA, nor does it prevent the DOJ or SEC from shifting its future position on key anti-bribery provisions of the statute.”
“There is some value to this report in that it’s a helpful collection of points and principles, with useful case law examples. But there are some key omissions on points of law that could have been very useful for international businesses that could fall within the FCPA’s jurisdiction.”
“While it is a must-read for U.S. FCPA practitioners and compliance officers who deal with corruption issues, the Guidance breaks little new ground analytically and, for the most part, seems to reaffirm prior pronouncements and policy positions contained in the government’s speeches and legal briefs. The Guidance lacks clarity on some important issues that needed to be addressed, such as criminal and civil distinctions in assessing parent-subsidiary liability.”
“With the new Resource Guide, DOJ and the SEC have done a service to FCPA practitioners and corporate compliance officers alike by providing a well-organized synthesis of their prior enforcement actions and pronouncements. Although the Resource Guide offers few unqualified answers, arguably in no other area of U.S. criminal law is such detailed guidance from the U.S. Government available.”
“The US government’s Guide does not break any particularly new ground. If anything it solidifies the government’s position on some of the issues that have been the subject of intense criticism, some founded and some not, by commentators and the private sector. In other words, those who were hoping the government would back down or soften some of their positions will undoubtedly be disappointed and critical of the Guide. That said, the Guide does provide valuable insight into the factors that the DOJ and the SEC use to evaluate a corporation’s behavior, what they consider essential elements of a compliance program, and how they approach enforcement decisions. Although much of this may have been apparent through reading of the tea leaves in enforcement decisions, it is helpful, even if you don’t agree with all of it, for the government to have consolidated and, in some cases, explained its position.”
Although the Guidance—which Assistant Attorney General Lanny Breuer championed as “the boldest manifestation of [the DOJ’s] transparent approach to enforcement” – is essentially a nonbinding compilation of past positions taken by the regulators – it does blend statutory interpretation, case analysis, and practice recommendations in a comprehensive and teachable manner.”
“While the fine-print disclaimer makes clear at the outset that the 120-page Guidance is “non-binding, informal, and . . . does not constitute rules or regulations,” it is nonetheless a useful resource that organizes important information about the FCPA in one convenient place and sheds some light on the enforcement authorities’ perspectives …”.
“As expected, the Guide thoroughly consolidates and recites existing case law and resolutions and provides new examples of cases in which the DOJ or SEC previously issued declinations. While the Guide may be helpful to many, those expecting something groundbreaking may be disappointed, as the Guide does not provide any new substantive interpretations. Nor does it address many of the nuanced questions with which many companies grapple.”
“Although the 130-page guidance does not break any significant new ground, and generally reiterates positions that the government has previously taken in Foreign Corrupt Practices Act (FCPA) litigation and settlements, the document does provide useful information to companies regarding compliance with, and government enforcement of, the FCPA. […] In sum, the long-awaited FCPA guidance is a comprehensive and useful restatement of the government’s positions with respect to the statute, but fails to provide the type of “bright line” rules regarding FCPA compliance that many practitioners and commentators had hoped for. Indeed, the guidance expressly states that it “is non-binding, informal, and summary in nature, and the information contained herein does not constitute rules or regulations.”
“A comprehensive tome of 120 pages, the Guide largely reiterates the agencies’ longstanding enforcement principles. Even so, the Guide promises to be a tremendously useful tool because it collects and rationalizes prior enforcement decisions and provides detailed guidance and hypotheticals in a number of areas. Moreover, the fact that the Guide was issued jointly is an important reassurance that the agencies have adopted a unified approach to FCPA enforcement.”
“[T]he Guidance is an important and valuable resource for companies and their legal and compliance advisors in developing effective compliance programs and preventing violations of the FCPA. However, as a non-binding compilation of the views of the U.S. enforcement agencies, the Guidance leaves tremendous latitude for prosecutorial discretion in enforcement decisions and is no substitute for greater clarity in the statutory language of the FCPA. We expect that the perspectives offered by the DOJ and the SEC, like the FCPA itself, will now be subject to considerable debate and interpretation.”
“The Guide collects DOJ’s and SEC’s prior opinions and releases and provides helpful clarifications and hypothetical case studies for corporate counsel. The Guide, however, is just that—a guide—and is not binding on courts or even the agencies themselves.” [Among the authors of the Perkins piece is Markus Funk, co-chair of the ABA Global Anti-Corruption Task Force who previously formally presented a proposed Resolution, supported by the current and incoming Chairs of the ABA Criminal Justice Section, regarding FCPA reform (see here for the prior post)].
“In large measure, DOJ and the SEC re-enforce previous guidance regarding how they exercise their prosecutorial discretion. […] While the Guide helps clarify many issues regarding how DOJ and the SEC exercise their prosecutorial discretion, the Guide does not necessarily make FCPA compliance any easier.”
“Ultimately, the guidance appears valuable primarily as a convenient and practical compilation of previously available reports, prosecution guidelines, policy manuals, agency opinions, and judicial decisions. It remains to be seen whether a push for legislative reform of the FCPA will continue in the next Congress.”
“Although much of the guidance walks through established DOJ and SEC positions and practices, the Guide does, through the use of real-world examples and detailed hypotheticals, provide more concrete direction than was previously available.”
“The Resource Guide does not represent a shift in the government’s FCPA policy so much as it gives unprecedented insight into where the government is likely to focus its expanding enforcement efforts in the coming years.”
“While the Resource Guide did not provide any groundbreaking changes or developments, it is a useful tool to educate businesses on many of the nuances of FCPA compliance and enforcement. Moreover, it offers useful insight into which aspects of FCPA compliance and enforcement the DOJ and the SEC consider most important and, consequently, the issues and objectives to which companies should devote the most significant attention.”
“In sum, while the Guide fails to provide an earth-shattering new interpretation of the FCPA, it far surpasses its previously issued “Lay Person’s Guide” to the FCPA in terms of depth.”
“The Guide does not provide the FCPA reform some in the business community were hoping for and is largely in line with prior government commentary. Nevertheless, and despite the caveat that the Guide is “non-binding, informal, and summary in nature” and that FCPA enforcement actions are evaluated on a case-by-case basis; the Guide provides useful insight into the regulators’ views on commonly-encountered issues, enforcement priorities, and best practices for FCPA compliance programs.”
“Although largely restating the government’s prior positions on FCPA liability and enforcement, at over 130 pages, the Guide serves as a useful and comprehensive FCPA resource. The Guide aggregates information from court opinions, enforcement actions and plea agreements, DOJ advisory opinions, and even previously undisclosed matters that the DOJ and SEC declined to pursue to provide a clearer picture of the DOJ and SEC’s interpretation and enforcement of the FCPA.”
Despite the fact the Guide is 130 pages, it is a surprisingly easy read. It provides a rare glimpse into the DOJ and SEC’s interpretation of the FCPA and the guiding principles for enforcement. Although the Guide will undoubtedly provide much awaited guidance on existing issues with which companies are currently grappling, it also serves to reinforce the well held belief that the DOJ and SEC are taking a hard line view on the FCPA.
“The agencies described the guidance as “an unprecedented undertaking by DOJ and SEC to provide the public with detailed information about our FCPA enforcement approach and priorities.” Well, that’s not quite true. Much of the guidance does not change or add to any of the positions advanced by the agencies in its prior enforcement actions or prior advisory opinions.”
“Such guidance from the government is always welcome. It sharpens the enforcement focus and is a strong indicator of enforcement trends. While the Guide is unprecedented in both its length and detail, it does not provide clear-cut answers to many of the questions regarding the FCPA.”
“The most useful thing about the Guide may be that it collects the thinking of the agencies, along with descriptions of their past practices, in one place. It does offer some specific guidance in a few of the areas that have been of concern to companies and their counsel and provides some helpful descriptions of hypothetical situations that would, would not, or might constitute violations of the FCPA, but it also leaves the status quo intact in many ways.”
“While guidance by definition can never provide the same certainty as an affirmative statute, we’re hopeful that this document will help companies seeking to comply with the law in good faith and prosecutors charged with enforcing it. The business community will continue to engage with the DOJ and the SEC as they enforce the statute consistent with today’s guidance.”
Civil Society Organization’s Press Release
[Global Witness, Global Financial Integrity, Open Society Foundation, International Compliance Accountability Roundtable, Earthrights International]
“Civil society groups contend that the new Guidance renders moot calls from the U.S. Chamber of Commerce’s Institute for Legal Reform, for broad amendments to the FCPA that would weaken key anti-bribery applications. “The Guidance thoroughly addresses aspects of the law that the U.S. Chamber has described as vague and difficult to translate into everyday business practice,” said Heather Lowe, Legal Counsel & Director of Government Affairs at Global Financial Integrity. “In light of the content of the Guidance, we can’t see any basis for the Chamber’s attacks on the FCPA to continue.”
Jan Hanzlik (Venable- defense counsel in the DOJ’s recent failed prosecution of Lindsey Manufacturing and its executives)
“The new Guidance amounts to much sound and fury, signifying very little. Instead of responding to widespread concerns about the Act’s lack of clarity, the Guidance for the most part simply reiterates positions taken by the DOJ and SEC in past enforcement actions. DOJ now cites as settled law its own interpretations of the Act and the “principles” developed over the years through deferred prosecution agreements. If the objective was to pull together the principles of prosecution and enforcement proceedings in one place, the Guidance succeeds. But it’s doubtful US companies and individuals trying to understand the consequences of their actions when doing business abroad will find much real guidance here.”
Rita Glavin (Seward & Kissel – former Assistant Attorney General DOJ) in a Law360 article.
“This is going to be the definitive resource on the FCPA, but there’s nothing in here that’s a surprise.”
Peter Henning (Professor, Wayne State University Law School and author of the White Collar Crime Watch on the New York Times)
“Now that the resource guide has arrived — providing only limited insight into what constitutes a violation or what might be a mitigating defense — I expect to see a reinvigorated effort to change the statute and provide brighter lines for companies doing business abroad.”
Ryan McConnell (Baker & McKenzie – former DOJ prosecutor) in a Corporate Counsel article.
“The intended audience appears to be experienced FCPA practitioners (not a lay person), but the guidance omits much of the practical advice sought by readers to address FCPA compliance risk. Few companies that have given any consideration to the FCPA are struggling with such issues as whether a $10,000 dinner or a trip to Paris for a government official and spouse are appropriate under the FCPA, as addressed in the new guidance. What about having a government official attend the 2014 World Cup? The UK Bribery Act guidance squarely addresses this issue in just a third of the pages. As noted by the WSJ, a close review of a few of the footnotes raises questions about the reliance on enforcement actions to establish FCPA guidance. For instance, the guidance notes that, “the FCPA covers corrupt payments to low-ranking employees and high-level officials alike.” Some practitioners believe that this issue is still awaiting resolution by the U.S. Court of Appeals for the Eleventh Circuit (U.S. v. Esquenazi), which is currently considering whether payments made to employees of the Haitian state-owned telecom qualify as payments to “foreign officials.” The guidance also relies on non-pattern jury instructions that “a number of courts have approved” and, in one instance, on the DOJ’s own opposition motion. The guidance says that these sources are authoritative because the decisions “are consistent with the acceptance by district courts around the country of over 35 guilty pleas by individuals.” Notably missing from the DOJ’s collection of sources are cases where the DOJ’s FCPA enforcement efforts have fallen flat.”
Steven Tyrrell (Weil, Gotshal, former chief of the DOJ fraud section) in a Wall Street Journal article. The guidance “does little to fill in the gray areas” and it is “more of a scrapbook of past DOJ and SEC successes than a guide book for companies who care about playing by the rules.”
Erich Schwartz (Skadden, former Assistant Director SEC Division of Enforcement) in a Compliance Week article.
“This voluminous Resource Guide is clearly a substantial effort to organize the government’s thinking on a variety of issues that are important in understanding how to comply with the FCPA. It is not, however, a clear roadmap for compliance. The guide largely avoids announcing new policy.”
Paul Pelletier (Mintz Levin – former Principal Deputy Chief in the DOJ’s Fraud Section) in a Corporate Counsel article.
“There’s nothing Earth-shattering here, but it’s a great one-stop shopping manual for both practitioners and compliance officers.”
In addition, see here from Wall Street Journal (Corruption Currents) (a collection of views), here from on-line news site Main Justice (a collection of views) and here from Trustlaw (a collection of views)
