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Ten Years Ago Today, The DOJ And SEC Released The FCPA Guidance


In the “time sure does fly” category, ten years ago today the DOJ and SEC released its so-called FCPA Guidance. (See here for the prior post).

From my perspective, the most interesting aspect of the 2012 FCPA Guidance was its back story and how release of the Guidance was seemingly a political act as described below.

In 1988, as part of the FCPA’s amendments that Congress passed, Congress encouraged the DOJ to issue FCPA guidance.

For instance, a relevant House report stated, ‘‘In order to enhance compliance with the provisions of the FCPA [the FCPA amendment] establishes a procedure for the [DOJ] to issue guidance describing examples of activities that would or would not conform with the [DOJ’s] present enforcement policy regarding FCPA violations.’’

The U.S. Court of Appeals for the Sixth Circuit noted that the 1988 amendments ‘‘clearly evince[d] a preference for compliance in lieu of prosecution.’’ However, in spite of Congress’s suggestion, DOJ determined in 1990 that ‘‘no guidelines are necessary.’’

In 2002, the Organization for Economic Cooperation and Development, in its Phase 2 report of U.S. enforcement efforts of the OECD Anti-Bribery Convention, encouraged the United States to issue guidance. In pertinent part, the OECD report stated:

“Despite the abundance of articles and commentaries on [the FCPA], there is only limited amount of authoritative or official guidance available on compliance with the twenty five-year old statute. . . . Much of the authority or guidance regarding the Act comes from speeches from DOJ and SEC officials, DOJ opinions, DOJ and SEC complaints, settlements that have been filed, and informal discussions of issues between companies’ counsel and the DOJ or the SEC. . . . The status of these various sources of information is however not always clear: there could be merit in regrouping and consolidating them in a single guidance document.”

The OECD Phase 2 report concluded on this issue as follows:

“In the view of the lead examiners, the time has come to explore the need for further forms of guidance, mainly to assist new players . . . on the international scene, and to provide a valuable risk management tool to guide companies through some of the pitfalls which might arise in structuring international transactions involving potential exposures.”

No guidance was issued by the DOJ/SEC.

In 2010, the OECD issued its Phase 3 Report on the United States and stated as follows:

‘‘The evaluators recommend that the United States consider consolidating and summarizing [all relevant sources of FCPA information] to ensure easy accessibility, especially for [companies] which face limited resources.’’

No guidance was issued by the DOJ/SEC.

In short, despite Congress suggesting FCPA guidance in 1988, and repeated OECD recommendations for guidance in 2002 and 2010, DOJ refused. For instance, in the aftermath of a Nov. 30, 2010, Senate FCPA hearing, Sen. Amy Klobuchar (D-Minn.) asked DOJ, ‘‘Do you believe companies could comply with more certainty with the FCPA if they were provided with more generally applicable guidance from the Department in regards to situations covered by the FCPA that are not clear cut or fall into gray areas?’’

DOJ’s response was that it ‘‘believes it provides clear guidance with respect to FCPA enforcement through a variety of means,’’ and it then listed the same general categories of information the OECD identified in 2002 as being deficient.

Although the enforcement agencies stated in the Guidance that its issuance was ‘‘in part, a response to [the OECD’s] Phase 3 recommendations,’’ DOJ’s above response after the OECD Phase 3 recommendations calls into question the genuineness of this motivation.

Another likely motive for issuing the FCPA Guidance in 2012 was the desire of the enforcement agencies to forestall introduction of an actual FCPA reform bill. As to this issue, the following background is relevant.

After the November 2010 Senate hearing, FCPA reform gained steam heading into a June 2011 House Judiciary Committee hearing. The House hearing evidenced bipartisan support for certain aspects of FCPA reform, and then committee Chair James Sensenbrenner (R-Wis.) stated at the conclusion of the hearing that ‘‘we will be drafting [an FCPA reform] bill.’’

Against this backdrop, in November 2011, Assistant Attorney General Lanny Breuer announced that in 2012 DOJ intended to issue FCPA guidance. Those on Capitol Hill who were inclined to introduce an FCPA reform bill said they would await DOJ’s FCPA guidance before introducing such a bill.

That the Guidance was issued very soon after the November 2012 presidential election and during a lame duck Congress would seem to advance, in addition to the above information, the notion that issuance and the timing of the Guidance was in part political.

Regardless of the enforcement agencies’ motivations in issuing the Guidance when they did, it is telling that it took more than a year from the time of the DOJ’s announcement that the Guidance was coming to actually issuing the Guidance. After all, both the SEC and DOJ had (at the time and continue to have) specific FCPA units, and both enforcement agencies had indicated (at the time and continue to indicate), in various ways and in various settings, that the FCPA is a clear and unambiguous statute.

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