I’ve said it before and I will say it again.
One of the fun things about writing on FCPA and related issues on a daily basis is that often I just need to wait for a former high-ranking enforcement official to say the same things that have been highlighted on this site for years.
For instance, for years FCPA Professor has been chronicling:
(i) the amount of pre-enforcement action professional fees (for instance see this specific subject matter tag “Investigate Fees” as well as discussion of pre-enforcement action professional fees and expenses in the article “FCPA Ripples“); and
(ii) the length of time it takes FCPA enforcement agencies to resolve instances of FCPA scrutiny. (Among other posts, see “The Gray Cloud of FCPA Scrutiny Simply Lasts Too Long” as well as this specific subject matter tag “Gray Cloud”).
As to the gray cloud, as noted in the prior posts, statute of limitations are ordinarily the remedy the law provides for legal gray clouds.
Yet in corporate FCPA enforcement actions, the fundamental black-letter legal principle of statute of limitations seems not to matter because cooperation is the name of the game and to raise bona fide legal arguments such as statute of limitations is not cooperating in an investigation.
Given the “carrots” and “sticks” relevant to resolving corporate FCPA enforcement actions, one of the first steps a company the subject of FCPA scrutiny often does to demonstrate its cooperation is agree to toll the statute of limitations or waive any statute of limitations defenses.
Given this dynamic, the enforcement agencies face little or no time pressure in bringing corporate FCPA enforcement actions. The end result is that the gray cloud of FCPA scrutiny often hangs over a company far too long.
Against this backdrop, I was delighted to see Paul Pelletier‘s (former principal deputy chief of the DOJ Criminal Division’s Fraud Section) recent Wall Street Journal editorial titled “The Foreign Bribery Sinkhole at Justice.” In pertinent part, Pelletier writes:
“Absurdly long and costly investigations, however, may cause companies to reassess the value of reporting FCPA violations to the federal government.
When bribery investigations are publicly resolved in a timely fashion, other businesses can more readily identify ongoing bribery schemes operating within their industry or region and ensure that their anti-bribery compliance programs adequately address those current schemes. That opportunity is lost when criminal resolutions drag out for five or more years. Deterrence then is principally the size of the monetary penalty.
The Justice Department needs to do more than churn out resolutions to foreign bribery cases notable only for their record-breaking penalties. Rigorous and prompt FCPA enforcement can have a dramatic impact on the insidious and corrosive effect of corruption overseas and provide … restorative justice …”.
Is the DOJ (and SEC) part of the problem here? Yes, of course they are.
However, like many problematic issues that define this new era of FCPA enforcement, business organizations subject to FCPA scrutiny (and their counsel) are also part of the problem.
Simply put, the roll-over-and-play-dead mentality of most companies subject to FCPA scrutiny has broad consequences – namely fundamental legal principles, legal elements, and burdens of proof do not matter.
And the broad consequences impact not just the specific company under FCPA scrutiny, but others as well. Call it an FCPA tragedy of the commons.
If business organizations would actually mount bona fide legal defenses in the face of FCPA scrutiny, this new era of FCPA enforcement would look much different.