Yesterday, former Senator Arlen Specter passed away.
In November 2010, Senator Specter chaired a Senate Judiciary subcommittee hearing titled “Examining Enforcement of the Foreign Corrupt Practices Act.” (See here for the hearing transcript, here for the video). I had the privilege to testify at the hearing (see here) and to work with Senator Specter’s office after the hearing on several issues of his concern (see here).
Much of the focus of Senator Specter’s comments and concerns centered on the 2008 record-setting FCPA enforcement action against Siemens and the fact that, then, there had not yet been any related enforcement actions against individuals.
In an exchange with Greg Andres (the DOJ representative who testified at the hearing), Specter stated as follows.
SPECTER: Mr. Andres, you talk about collecting more in criminal fines than anyone else, prosecuted more cases than other countries who are parties to the [OECD] convention, and you say you do not hesitate to go after individuals. But whom have you sent to jail? Did anybody go to jail in the Siemens case?”
ANDRES: Senator, as we have said before, in the Siemens case, that investigation is ongoing. There are a number of prosecutions ongoing in Germany.
SPECTER: Are there individuals who are being prosecuted?
ANDRES: That investigation is ongoing, Senator.
SPECTER: Are there any individuals being prosecuted? When you see all the publicity on Siemens, a big fine and $100 billion in revenues, $8 billion in profits, and no jail sentence, what effect does that have? Is this not really a signal that you can violate the act and pay a fine?”
Also during the hearing, Senator Specter stated as follows regarding FCPA reform testimony by Andrew Weissman who testified at the hearing on behalf of the Chamber of Commerce. “I think you [Weissman] make some good points when you talk about a compliance defense, talk about rogue employees.”
Even after the hearing, indeed, even after he left the Senate, Specter continued to question why no individuals were prosecuted in connection with the record-setting Siemens action. At the Dow Jones Global Compliance Symposium in March 2011 he stated as follows. “If you don’t have a jail sentence in a case like Siemens, when are you going to have one?” (See here for the Wall Street Journal Corruption Currents post).
Approximately one year after the Senate FCPA hearing, the DOJ brought criminal charges against several former Siemens executives relating to conduct in Argentina. (See here and here for prior posts). As this Wall Street Journal Law Blog post stated, “Justice Department and SEC officials either got the message that day [the Senate 2010 FCPA hearing] or were biting their tongues, knowing that an ongoing investigation would eventually produce charges.” As noted in this previous post, while the Siemens individual enforcement actions (which have largely been dormant for the past year) were a step forward, several issues remain. First, Siemens itself was never charged with FCPA anti-bribery violations for the same conduct its former employees and agents are now facing FCPA anti-bribery charges. Second, the DOJ and SEC have addressed – through individual enforcement actions – only a sliver of the conduct at issue in the 2008 enforcement action. As alleged by the enforcement agencies, the corruption at Siemens involved more than $1.4 billion in bribes to government officials in Asia, Africa, Europe and the Americas.
Back to Senator Specter.
The timing of the November 2010 Senate hearing and Senator Specter’s motivations in calling it (at the time he was a so-called lame duck) have always been a mystery. Perhaps he was motivated to shine a light on the lack of Siemens individual prosecutions; perhaps he wanted to provide a public and high-profile forum for FCPA reform discussion in that the Chamber’s FCPA reform whitepaper was released a month earlier; perhaps he was motivated by both.
Whatever his motivations, the hearing helped usher in a new era of critical analysis and examination of the FCPA and FCPA enforcement. Thank you Senator Specter for helping to shine light on important FCPA topics.