New FCPA Guidance Provides Insight Into Government’s View of Corporate Compliance Authors: G. Derek Andreson, Mark R. Hellerer, Ryan R. Sparacino, William M. Sullivan, Jr., John A. McMillanOn November 14, 2012, the Foreign Corrupt Practices Act “Resource Guide” (the “Guidance”) was finally published, and at well over 100 pages, it constitutes a “non-binding informal summary” of various statutes, U.S. Department of Justice pronouncements and opinion releases, enforcement actions and settlements. While the Guidance offers no new substantive statutory interpretations, procedural reforms or formal policy statements, it does offer insights into how the government assesses corporate behavior, compliance and liability, as well as what mitigation factors can influence the enforcement decision process.
As FCPA enforcement has dramatically expanded over the last ten years, the business community and the U.S. Chamber of Commerce have been increasingly vocal in calls for legislative reform. Although the FCPA has been the basis for dozens of enforcement actions, billions of dollars in criminal and civil fines, and several jail terms, trials have been few, and unlike other prominent criminal statutes (e.g., Sherman Act, Clean Air Act), there is very little case law, and no formal agency regulations, interpreting the Act. As a result, many corporate citizens have felt unsure as to how to conform their conduct to the law, and unclear as to the government’s perspectives on consistent application and enforcement, as well as the proper exercise of its prosecutorial discretion. Movement towards legislative reform was accelerating, although very public allegations against Wal-Mart earlier this year, combined with election year politics, largely stalled that effort. In what was widely seen as an attempt to stave off action from Congress, the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) promised written guidance, which was published late last week.
Before discussing what the FCPA Guidance is, one must note what it is not. The FCPA Guidance does not represent formal rulemaking or regulatory pronouncement. It is not binding on the DOJ or the SEC, and it does not create substantive legal rights (or obligations) for businesses. Instead, it is merely advisory. Nevertheless, the FCPA Guidance does reflect the first instance in which the DOJ and SEC have formally articulated their collective views on how the FCPA should be applied, and it therefore must be analyzed and understood. While much of the Guidance restates prior government positions on statutory construction and enforcement, and addresses areas of little controversy (e.g., excessive travel entertainment for government officials), it does offer some helpful insights into the government’s current FCPA views in a few critical areas. In fact, for the very first time, DOJ, through the Guidance, has disclosed that it has declined to prosecute “several dozen cases against companies where potential FCPA violations were alleged.” (Guidance, p. 75) The Guidance provides six examples of declination decisions, each of which included a comprehensive internal investigation, immediate corrective action upon detection, cooperation, and self-disclosure.
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