The Foreign Corrupt Practices Act guidance (here) released yesterday by the DOJ and SEC was a year long effort, no doubt subject to multiple revisions and review, and was highly scripted.
Not so with the press conference yesterday by Assistant Attorney General Lanny Breuer and SEC Enforcement Division Director Robert Khuzami. This post highlights certain of the comments made by Breuer and Khuzami at the press conference and contains a few comments of my own.
Breuer began the conference by noting that the guidance represents the “most comprehensive effort ever [by the DOJ] to explain [its] approach to enforcement as to a particular statute.” He said that the DOJ strives to be “transparent” in this area and wants everyone to “understand why we prosecute cases as vigorously as we do and why we make our charging decisions.”
Khuzami added that the guidance should “clear up some myths about the types of conduct that get prosecuted.”
In response to a question whether the Chamber of Commerce should be satisfied with the guidance, Breuer stated that he called former Attorney General Michael Mukasey [who has lobbied on behalf of the Chamber for FCPA reform) prior to the conference and that the guidance reflects the Chamber’s suggestion for various hypotheticals. Breuer said that “any fair-minded person” should see the guidance as a “substantial step forward in transparency in a very real way.”
Breuer was asked specifically about an FCPA compliance defense and said such a defense would be “dangerous and antithetical to the way [the DOJ] pursues criminal justice cases.” Breuer stated that such a defense “runs the risk of a race to the bottom” and that there “can’t be an absolute defense.”
As to declinations and the inclusion in the guidance of various generic examples of apparent enforcement agency declinations, Breuer stated that the enforcement agencies “tried to provide clarity as to how [they] use [their] discretion” and that the guidance tries to give reader sa “fair sense of how we evaluate the cases.” Khuzami added that the declination “numbers are not really that important” but the principles behind the declinations are and that “companies can mold behavior” based on the declination examples given.
From my perspective, one of the more important statements made during the press conference was when Khuzami and Breuer spoke about how companies should spend compliance dollars.
In reference to the various hypotheticals in the guidance concerning travel and entertainment, Khuzami said that he heard from companies that they were spending compliance dollars to guard against these issues, that companies were spending a huge amount of resources on such issues and that such a focus was taking dollars away from compliance efforts as to high risk activity. Khuzami said that this was an argument he and Breuer have heard and that this argument “makes perfect sense.” Khuzami said that he was “interested in companies spending compliance dollars in the most sensible way” and he hoped that the guidance and the hypotheticals provided would help companies as to where they can “minimize investment and where they can maximize it.” Breuer added that the DOJ wants compliance programs “to address real matters of concern.”
One can interpret Khuzami’s and Breuer’s remarks on this topic as they like, but my interpretation was that they were saying that part of the reason why companies have such a high level of FCPA anxiety is not necessarily because of the FCPA or its enforcement, but rather the marketing and commentary by certain segments of FCPA Inc. If that was their intent and purpose, I agree.
Breuer next was asked whether the guidance will put an end to the Chamber’s concerns surrounding the FCPA and its enforcement. He said that “like with everything in life there is a process” and that the Chamber will probably want ongoing discussions about the FCPA and its enforcement and that the DOJ “welcomes that discussion.” Breuer said that the guidance was likely not “complete closure” as to various concerns regarding FCPA issues. Khuzami added that he “expects further commentary and proposal and expression of dissatisfaction” but that this “is the nature of the business we are in and an important part of the process.”
As to “foreign official” and the lack of a bright-line rule in the guidance, Khuzami said that they declined to draw a bright line because control of an enterprise can occur in different ways and that there are “many indirect ways of ownership and control.” Breuer did say that the guidance acknowledges that it is unlikely that less than 50% control will result in an enterprise being considered an instrumentality, but that there might “specific factors” that may make such an enterprise an instrumentality.
To those who are inclined to believe that the guidance represents anything new, Breuer said that the guidance “does not represent a change in policy” but it “gives others a window and greater guidance” as to the enforcement agencies policies. Khuzami agreed and said that Breuer’s comment was “absolutely right.” Khuzami said that the “real value [of the guidance] is its clarity and transparency” and that the guidance is a unique opportunity “to communicate directly with the regulated community.” He said that this opportunity does not always exist and that companies often receive information that is delivered and deciphered through counsel. Khuzami said that the real “value of the guidance is that [corporate] officials can put this on their desk and read it, understand it directly and not through others.” He said that this is the “great value” of the guidance. I agree and previously stated (here) that the guidance collects in one document information that was previously scattered and that in this way the guidance has substantial value and is easily accessible to anyone.
Breuer was next asked whether the enforcement agencies plan to update the guidance over time or whether it represents a one-time publication. Breuer stated that “for the foreseeable future” the guidance is it. He said that the public needs to be realistic as to the roles the DOJ has and that by devoting time to the guidance prosecutors were not spending time prosecuting cases. Khuzami added that rather than a “second-edition” that the guidance may be clarified over time through speeches or other commentary.
