A supreme irony regarding last week’s announcement by the DOJ of a “new” Foreign Corrupt Practices Act “pilot program” is that the substantive document highlighting the “pilot program” bears the signature of Andrew Weissmann (Chief of the DOJ’s Fraud Section).
As highlighted in this prior post, Weissmann assumed this position in January 2015 after being a vocal critic of various aspects of the DOJ’s FCPA enforcement program as well as corporate criminal liability principles generally.
As stated in the FCPA “pilot program” that bears his signature, the goal of the program is the following:
“The principal goal of this program is to promote greater accountability for individuals and companies that engage in corporate crime by motivating companies to voluntarily self-disclose FCPA-related misconduct, fully cooperate with the Fraud Section, and, where appropriate, remediate flaws in their controls and compliance programs. If successful, the pilot program will serve to further deter individuals and companies from engaging in FCPA violations in the first place, encourage companies to implement strong anti-corruption compliance programs to prevent and detect FCPA violations, and, consistent with the memorandum of the [Yates Memo] increase the Fraud Section’s ability to prosecute individual wrongdoers whose conduct might otherwise have gone undiscovered or been impossible to prove.”
Prior to last week’s announcement of the “pilot program,” the DOJ last Fall also announced the new position of “compliance counsel,” a development that Weissmann is widely viewed as motivating. Regarding the compliance counsel position, in this recent interview, Weissmann stated that a motivation in creating the DOJ’s new compliance counsel position was to “empower a robust compliance function within organizations. We can play a big role in fostering that development.”
Asked what he “hope[d] to accomplish in general and specifically to assist the compliance professional,” Weissmann responded: “I hope that, in seeing how seriously the Department of Justice takes compliance, we will strengthen the voice of the compliance professionals and help them get a stronger seat at the table as a key stakeholder in how businesses are run.”
Whether its the stated goal of the “pilot program” to “encourage companies to implement strong anti-corruption compliance programs to prevent and detect FCPA violations” or to best “empower a robust compliance function within organizations” and best “strenghten the voice of the compliance professional [to] help them get a strong seat at the table,” Weissmann should have listened to his former self because his former self seemed to recognize that the DOJ’s recent announcements are not the best answer to accomplish its stated goals.
To repeat, when Weissmann assumed his current DOJ position in January 2015 after being a vocal critic of various aspects of the DOJ’s FCPA enforcement program as well as corporate criminal liability principles generally.
In arguing for an FCPA compliance defense, Weissmann wrote:
“The FCPA should incentivize the company to establish compliance systems that will actively discourage and detect bribery, but should also permit companies that maintain such effective systems to avail themselves of an affirmative defense to charges of FCPA violations. This is so because in such countries even if companies have strong compliance systems in place, a third-party vendor or errant employee may be tempted to engage in acts that violate the business’s explicit anti-bribery policies. It is unfair to hold a business criminally liable for behavior that was neither sanctioned by or known to the business.”
According to Weissmann, an FCPA compliance defense, as well as other FCPA reforms he advocated, were “best suited for Congressional action.”
In other words, Weissmann did not believe that changes to DOJ policy were enough.
The notion that internal DOJ policies do not provide maximum incentives to business organizations to adopt best-in-class compliance policies and procedures is demonstrated through the below vignette (originally published here under the title “It’s More Like Bronze Dust” and updated below in underlined language to incorporate recent developments).
Scenario A
Compliance Officer: Boss, I need more money and resources to devote to FCPA compliance.
Executive: Why?
Compliance Officer: Well, boss, if anything ever happens within our business organization, an effective FCPA compliance program can lessen the impact of our legal liability.
Executive: What do you mean?
Compliance Officer: Well, the money we spend on FCPA compliance will not eliminate our legal exposure, but the DOJ and SEC have said that the existence of an effective compliance program may perhaps lower our criminal or civil fine or penalty amount and perhaps even persuade an enforcement attorney to go lightly on us in case our compliance program is ever circumvented by an employee. Indeed, the DOJ recently announced in non-binding guidance that it may offer us a criminal fine reduction to the extent we voluntarily disclose the conduct, cooperate with the enforcement agencies and remediate. Moreover, the DOJ recently announced that it has a compliance consultant on its staff who is going to assist DOJ prosecutors in evaluating our compliance program at the time of the improper conduct to see if we should include qualify for a fine reduction.
Scenario B
Compliance Officer: Boss, I need more money and resources to devote to FCPA compliance.
Executive: Why?
Compliance Officer: Well, boss, an effective FCPA compliance program can reduce our legal exposure as a matter of law.
Executive: What do you mean?
Compliance Officer: Well, the money we spend on investing in FCPA best practices will be relevant as a matter of law. In other words, if we make good faith efforts to comply with the FCPA when doing business in the international marketplace, we will not face any legal exposure when a non-executive employee or agent acts contrary to our compliance policies and/or circumvents our policies.
Under which scenario is the compliance officer most likely to receive the budget and resources needed for a best-in-class FCPA compliance program?
I have not yet had the opportunity to run this scenario with the updated language, but every time I ran the original scenario with participants in my FCPA Institute (a group that includes in-house counsel and compliance professionals from leading companies, lawyers in private practice, as well as other compliance and business professionals), the answer has been unanimous.
Scenario 2 will best allow the compliance officer to receive the budget and support needed to most effectively do his/her job.
I am under no illusion that an FCPA compliance defense will magically result in 100% best-in-class FCPA compliance in all business organizations. However, I am confident that if the DOJ’s goals are to “encourage companies to implement strong anti-corruption compliance programs to prevent and detect FCPA violations” or to best “empower a robust compliance function within organizations” and best “strenghten the voice of the compliance professional [to] help them get a strong seat at the table,” the recent DOJ announcements of an FCPA “pilot program,” and prior to that, a compliance counsel position are not the best answers.
In previous FCPA reform advocacy, Weissmann rightly acknowledged that reform should best motivate compliance “on a daily basis” and “regardless of what the Department of Justice is doing.” The FCPA compliance defense that Weissmann previously advocated was designed to do just that and will accomplish much more than the DOJ’s recent announcements.
In short, Weissmann should have listened to his former self.
