My new article was recently published in the U.C. Davis Law Review.
The summary is as follows.
“Historically, the Department of Justice (“DOJ”) had two choices when a business organization was the subject of Foreign Corrupt Practices Act (“FCPA”) scrutiny: either charge the entity with an FCPA violation or not charge. However, in 2004 the DOJ brought to FCPA enforcement a third option: alternative resolution vehicles called non-prosecution agreements (“NPAs”) and deferred prosecution agreements (“DPAs”).
The use of alternative resolution vehicles to resolve FCPA scrutiny is not authorized by the FCPA nor any other specific Congressional legislation. Moreover, DOJ policy states that alternative resolution vehicles are to be used only “under appropriate circumstances.” However, this article demonstrates that alternative resolution vehicles have become the dominant way the DOJ resolves corporate FCPA scrutiny and serve as an obvious reason for the general increase in FCPA enforcement over the past decade. To the many cheerleaders of increased FCPA enforcement, NPAs and DPAs are thus worthy of applause.
Yet in a legal system based on the rule of law, quality of enforcement is more important than quantity of enforcement. Through empirical data and various case studies, this article measures the impact NPAs and DPAs have on the quality of FCPA enforcement and concludes that NPAs and DPAs — while resulting in higher quantity of FCPA enforcement — result in lower quality of FCPA enforcement. This disturbing finding matters not only in the specific context of the FCPA but more broadly as other nations with “FCPA-like” laws adopt U.S.-style alternative resolution vehicles.”
The article can be downloaded at this link.
In analyzing the impact NPAs and DPAs have on the quality of FCPA enforcement, readers are encouraged to ponder the numerous statistics highlighted in the article such as:
- The percentage of FCPA enforcement actions against business organizations that resulted in related prosecution of company employees prior to alternative resolution vehicles being introduced to the FCPA context compared to the percentage of FCPA enforcement actions against business organizations that resulted in related prosecution of company employees after alternative resolution vehicles were introduced to the FCPA context;
- Since 2008, the percentage of corporate FCPA enforcement actions there were the result of a criminal indictment or resulted in a guilty plea that have resulted in related criminal charges of company employees compared to the percentage of corporate FCPA enforcement actions resolved solely with an NPA or DPA that have resulted in related criminal charges of company employees; and
- Two aggressive FCPA enforcement theories (not subjected to any meaningful judicial scrutiny) that have yielded 17 DOJ enforcement actions against business organizations in which the DOJ extracted approximately $350 million in corporate settlements, yet 0 of these enforcement actions have resulted in any related criminal prosecution of individuals associated with the companies resolving the enforcement actions.