What is the substantive difference between a “pause” in FCPA enforcement and advocating for a enforcement agency policy that would result in no FCPA enforcement action in certain instances?
Stanley Sporkin was the Director of the SEC’s Division of Enforcement in the mid-1970s and played a key role in addressing the foreign corporate payments issue that led to enactment of the FCPA in 1977.
Some refer to him as the “Grandfather of the FCPA,” a term I always found a bit unusual given that Sporkin’s SEC never wanted to play any role in enforcing the FCPA’s anti-bribery provisions.
After leaving the SEC and having a distinguished career in many roles – including as a federal court judge – in a 2006 speech, Sporkin noted that the DOJ and SEC “can do something forward-looking which would be win-win for both the government and the private sector.”
Sporkin proposed an “FCPA Immunization-Inoculation Program. ”
According to Sporkin, the program would serve the dual purpose of:
“(1) creating suitable incentives to compliance-minded companies to adopt and maintain high ethical standards in the conduct of their business; and (2) reducing the case load and investigative burden of governmental agencies that enforce the FCPA while reassuring regulators that companies are taking active steps to limit corruption in their foreign contracting and other activities.”
Sporkin believed that such a program “would provide the right-thinking corporate community with the necessary assurances that it needs to develop a vibrant overseas business without having to defend itself against very costly and time consuming investigations.”
Sporkin’s “quasi-amnesty program” would consist of the following:
- (i) “[a]greement by participating firms to conduct a full and complete review [conducted jointly by a major accounting firm or specialized forensic accounting firm and a law firm] of the company’s compliance with the FCPA for the previous 3 years”;
- (ii) the company would “agree to disclose the results of the legal- accounting audit to the SEC, its investors and the public”;
- (iii) “[i]f any violations turned up in the process of the audit, the participating [company] would agree to take all steps to eliminate the problems and implement the appropriate controls to prevent further violations”;
- (iv) “participating [companies] would agree to subject themselves to a similar audit on an annual basis for at least 5 years to ensure that compliance was being maintained”;
- (v) “participating [companies] would be required to create the position of FCPA compliance officer, whose sole responsibility would be to ensure the company’s compliance with the FCPA” and “make an annual certification”; and
- (vi) “[i]n exchange . . . the SEC and DOJ would give qualified assurances that no actions would be brought for violations exposed by the review.”
As envisioned by Sporkin, “[t]he limited amnesty would not apply if the violations rose to a flagrant or egregious level.”
Was this advocating for a “pause” in enforcement?
